Export growth from greater meat consumption, a rise in pet ownership drive demand.
Los Angeles, CA (PRWEB) February 26, 2012
From cattle to cats, the Animal Food Production industry provides sustenance for livestock and pets in the US and around the world. Since 2007, spikes in feed prices, increasing demand from farm supplies wholesalers and steady growth in pet ownership have boosted industry revenue at an annualized rate of 3.8%. However, according to IBISWorld industry analyst Josh McBee, "the industry's future prospects are modest, with slow but sustained growth anticipated through the next five years. Advancements in crop technology and alternative energy sources combined with product innovation are projected to alleviate some of the inherent risks associated with commodity-based goods. Also, a forecast increase in disposable incomes and, subsequently, pet ownership will likely drive demand for pet food, a segment typified by high profit margins and brand-loyal consumers. Export growth is also anticipated during the next five years, as the economic rise of countries in the Asian Pacific and Latin America drive demand for meat and animal feed."
Given the grain-based nature of most types of feed, movements in agricultural inputs like corn, soybeans and wheat heavily influence profit for animal food producers. Likewise, feed demand stems from the agricultural viability of livestock commodities like beef, pork and poultry. Feed prices, downstream demand for animal products and commodity movements are the key drivers of the industry's fortunes. Demand for pet foods augments total sales. With regard to commodities, corn's relationship to oil has seen increasing feed prices, but recent spikes in the crop's value have been to the detriment of feed producers. Meanwhile, growth in global meat consumption and, consequently, herd stocks has sustained modest revenue gains as meat producers demand more livestock feed. Also, Americans have stood by their pets during the Great Recession, with canine and feline ownership growing even as personal disposable incomes have fallen.
According to McBee, "the Animal Food Production industry has a medium level of company concentration, with the industry's top four players expected to account for about 68% of total market share in 2012. The industry has experienced an increasing level of concentration over the past five years as major companies actively invest in new operations to further strengthen scale economies." Further, the rapidly growing and high-margin pet-food segment has encouraged many producers to switch their production lines from livestock feed to these products. Industry consolidation is expected to continue in the future through sustained merger and acquisition activity, primarily driven by major players such as Cargill, ADM and Mars. Given that economies of scale are imperative to maintaining industry profitability, it is very likely there will be fewer animal food manufacturers servicing wider geographic markets over the next five years.
For more information visit IBISWorld’s Animal Food Production in the US industry page
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IBISWorld industry Report Key Topics
Firms in this industry process raw ingredients into food for animal livestock and pets. The products are packaged and sold to cattle ranches, dairy farms, other animal-production farms, grocery 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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