Computer technologies enable the documentation and monitoring of sales in real time and instantly provide useful information on inventory conditions and producers' preferences. Thus, marketers and distributors can obtain a faster response and reduce inventory costs. Also, marketers may be able to better identify quality preferences at specific locations and respond to them more promptly. Indeed, some of the recent product diversification in agriculture, especially in the poultry and produce sectors, took advantage of new information technologies, resulting in a higher quality and more diversified product. The efficiency gains that modern information technologies provide in marketing quality-differentiated products is likely to enhance the introduction and adoption of biotechnology.
Information technologies reduce the cost of product differentiation in agriculture, but also increase the relative advantage of contracting and vertical integration. The introduction of a new brand of differentiated products requires precise coordination among retailers (who provide the shelf space), distributors, and producers. It is subject to a strict timetable. The organization responsible for providing a new differentiated product to a retail chain will prefer to contract with farmers to produce a new product or control the production itself. Thus, the introduction of differentiated biotechnology products will be associated with "industrialization" of agriculture, including increased contracting and vertical integration.
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