Vertical Integration and Coordination in Modernising Staple Food Value Chains: Evidence From Myanmar's Rice Sector

ABSTRACT Increased vertical integration and coordination are defining features of transforming and modernising agricultural value chains in low‐ and middle‐income countries, with important implications for market efficiency and farm‐level transformation. However, research documenting these processes in transforming domestic value chains is limited, with existing studies largely focusing on large firms, foreign direct investment and high‐value food products, leaving less understood how domestic processors in staple food value chains expand into complementary businesses and services. We study these processes in the rice value chain—the most important staple in Southeast Asia—in Myanmar, using unique large‐scale data from domestic rice mills and farmers. We show that both modern and traditional mills serve as key nodes in local rice value chains, fulfilling diverse roles beyond processing at both the farm and post‐harvest levels. Yet, statistical tests that control for mill and farmer characteristics, respectively, show that modern mills are more engaged in vertical integration and coordination, particularly in post‐harvest value chain segments, highlighting the co‐development of modern processing and business expansion. Consistent with this pattern in the miller data, farmers using a modern mill are more likely to receive complementary services—especially post‐harvest—and to adopt modern production practices more broadly. However, this expansion is uneven, with services reaching large farms more frequently than small and medium farms.