Agribusiness is becoming more corporatized and integrated, helping profit expand
Los Angeles, CA (PRWEB) March 09, 2012
The US agribusiness industry is diverse and has attracted more corporate interest recently than at any other stage in its history. It includes businesses that range from meat processors, grain wholesalers and agricultural machinery manufacturers to many kinds of farming. From 2011 to 2012, industry revenue is expected to climb, driven both by global shortages that have marginally raised commodity prices and by a slight return of consumer spending. According to IBISWorld industry analyst Nikoleta Panteva, “Large multinational companies are increasingly becoming involved in agribusiness.” These corporations are encouraging vertical integration in the industry and are actively increasing the industry's profitability as a whole. Family farms are still very prevalent across the nation, and the industry still has a low level of concentration. The market share of the top four agribusiness firms is under half of the industry total; however, the revenue generated by corporate farms is substantially higher than these traditional farms. The two largest players, Cargill and Archer Daniels Midland Company, have expanded more rapidly than their competitors by acquiring smaller family farms and contracting these former owner-operators to continue production.
Over the five years to 2012, the agribusiness industry has been affected by increasing interest in biofuels, strong growth in the number of free trade agreements (FTAs) signed by the federal government and a rise in the prevalence of genetically modified (GM) seeds. Until mid-2008, rising commodity prices boosted the profit of farmers and sellers of farm inputs alike. However, says Panteva, “When prices corrected strongly and fell in mid-2008, though, farm and agribusiness incomes dropped.” This negative trend resulted in a decline in industry revenue in 2009. Despite the recession years of 2008 and 2009, agribusiness revenue is expected to decline only 0.2% per year on average over the five years to 2012.
However, the sun is shining on the future of the industry, with increasing corporate involvement supplying resources to farmers and producers. Also, domestic and export demand are expected to rise as consumer income, sentiment and spending around the world rebound to previous levels. As the global economy recovers after the previous period's massive economic downturn, export revenue is expected to reach high and steady levels. Given these conditions, IBISWorld projects that industry revenue will grow over the five years to 2017. For more information, visit IBISWorld’s agribusiness report in the US industry page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
The agribusiness industry includes businesses that directly engage in or directly benefit from agricultural activities. Businesses in this industry may produce agricultural commodities, buy agricultural produce or supply goods and services to farms and the agriculture industry. This industry focuses on the food-supply chain up to, but not including the point of retail sale.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.