As consumers' incomes fell, so too did their demand for high-value fresh fruits and nuts
Los Angeles, CA (PRWEB) October 19, 2012
The Fruit and Nut Farming industry (excluding citrus fruits) weakened over the past five years in response to poor economic conditions. When consumers' incomes fell during the recession, so did their demand for high-value fresh fruits and nuts. Farmers slashed prices to stimulate demand, but per capita consumption did not improve and the industry suffered revenue declines. Lowering prices also caused profit to fall over the past five years. The peanut farming segment did not fare well either due to a widespread salmonella scare that initiated a massive recall, leaving the segment shaken in 2009. As a result, industry revenue declined at an average annual rate of 0.8% to $20.0 billion in the five years to 2012, according to IBISWorld industry analyst Olivia Tang. In 2012 alone, revenue is expected to turn around, growing 1.6% as consumers loosen their purse strings.
While the industry underperformed over the past five years, its size slowly increased from 151,040 fruit and nut farms in 2007 to an estimated 157,811 in 2012, Tang says. Because it is difficult to enter or exit the industry, annual fluctuations in farm numbers are low. In fact, it can take up to four years for fruit- and nut-bearing trees to produce output, so the significant time and land commitments keep farmers in the industry. New farmers are enticed by the potential for high returns, and IBISWorld expects this trend to continue into the next five years. The number of fruit and nut farms is forecast to grow by 2017, with employment following suit.
IBISWorld anticipates industry revenue will rise over the next five years. Continued advancements in transportation technology will extend the reach of high-quality, high-value domestically grown fruit in the global market. As such, the exports are forecast to grow in 2017. In addition, a growing population will help boost the total consumption of fruit and vegetables, while consumers regain their spending power and demand more high-valued fresh fruit. These trends will drive revenue up over the five years to 2017. Also, farmers will be able to charge higher prices due to higher demand for industry products, which is anticipated to increase profit margins. The majority of farmers, including those growing fruits and nuts, are small family-run enterprises. They generally own and operate their farms supplementing family labor with hired hands only during key periods such as harvesting season. For more information, visit IBISWorld’s Fruit & Nut Farming in the US industry report page.
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IBISWorld industry Report Key Topics
Farmers in this industry grow nuts, such as almonds and peanuts, as well as fruits, such as apples, berries, grapes and other non-citrus fruits. Operators sell their crops to downstream processors and fresh produce wholesalers and retailers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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