The industry is flourishing amid favourable conditions
Melbourne, Australia (PRWEB) October 25, 2012
The Hydroponic Crop Farming industry in Australia has blossomed over the past five years despite an economic downturn and adverse weather conditions. Industry revenue is estimated to grow at an annualised 2.9% over the five years through 2012-13 to reach $889.8 million. According to IBISWorld industry analyst Suzannah Rowley, “the strength of the industry has been due to efficient production methods that have much smaller water requirements”. The high quality of the industry's products also helped nurture demand for hydroponic crops. As such, industry revenue is expected to grow in 2012-13, unaffected by an expected decline in rainfall.
Profitability is expected to have increased over the past five years. Dry weather conditions hurt the productivity of soil-based farmers, which reduced competition in retail markets. The reduced competition enabled hydroponic crop farmers to widen their profit margins. Furthermore, industry operators invested in new equipment that increased productivity. “The reduced reliance on labour has also aided profitability increases”, Rowley adds. The industry is forecast to sprout faster growth over the next five years. Industry revenue is forecast to increase over the five years through 2017-18. The industry will continue to benefit from its ability to use water efficiently. Forecast dry weather conditions and environmental concerns will weigh in favour of the industry's water efficiency and closed systems.
Profitability in the Hydroponic Crop Farming industry in Australia is forecast to rise over the next five years. Profitability in the industry is tied to scale economies. Consequently, hydroponic crop farms are expected to consolidate to spread overhead and investment cost over more produce. This will be especially beneficial as the industry invests in machinery to automate farming processes further. Farmers that do not consolidate are expected to form cooperatives to benefit from scale economies in terms of marketing and bargaining power when dealing with supermarkets. There are no major players in the Hydroponic Crop Farming industry. Market share concentration is low because most hydroponic farm companies are small. They tend to specialise in certain crops and geographic locations and are able to use to smaller patches of land near capital cities. The use of this land gets operators closer to their markets and lowers transport costs.
For more information, visit IBISWorld’s Hydroponic Crop Farming report in Australia industry page.
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IBISWorld industry Report Key Topics
Hydroponics is a method of growing plants using mineral nutrient solutions in water, without soil. Operators in the industry generally grow food crops under glass or protective cover.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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