Poor weather conditions have affected production, outweighing increased prices
Melbourne, Australia (PRWEB) December 19, 2012
Australian sugarcane farmers have battled high industry volatility and adverse growing conditions over the five years through 2012-13 due to extreme weather patterns, volatile commodity prices and fluctuations in global sugar production. Over the five years, huge portions of Australia's sugarcane crop have been damaged or wiped out due to prolonged drought conditions, water scarcity, flooding and cyclones.
According to IBISWorld industry analyst Suzannah Rowley, “The biggest losses for the industry occurred during 2010-11 as the devastation wrought by tropical cyclone Yasi and flooding across eastern Australia caused production and revenue to plummet”. Industry performance has also been affected by the overall increase in global and domestic sugar prices as a result of increasing demand for alternative fuel sources such as ethanol, which is derived from sugar cane. This has helped offset some of the losses flowing from declines in production over the five years through 2012-13. However, it has not been enough to prevent the 4.5% annualised decline in revenue over the past five years. The Sugar Cane Growing industry's woes are expected to continue over 2012-13 given that the forecast rise in global production is expected to depress sugar prices and cause revenue to fall.
The Sugar Cane Growing industry has a low level of concentration compared with other sectors of the Australian economy. “Generally, the industry is characterised by the presence of a wide range of small and medium-size sugarcane farms”, says Rowley. There is only one major player in the industry - Finasucre Investments (Australia) Pty Limited. Industry consolidation is expected to increase the level of concentration over the five years through 2017-18 as smaller, less profitable growers leave the industry and larger farms expand their production area.
There will be further challenges ahead for Australian sugarcane growers due to declining global sugar prices, and therefore expected declines in the domestic price for sugar cane. Added to this will be the increased likelihood of adverse growing conditions, given the possible onset of global warming. On a brighter note, increasing demand for alternative fuel sources will support industry growth and open up additional revenue channels for the industry. There will also be rising sugar consumption across many developing economies, which is expected to fuel demand for sugarcane growers and sugar exports.
For more information, visit IBISWorld’s Sugar Cane Growing report in Australia industry page.
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IBISWorld industry Report Key Topics
This industry consists of companies mainly engaged in growing sugar cane.
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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