The industry stayed afloat during the recession and expects moderate gains in the future
Los Angeles, CA (PRWEB) May 30, 2012
Vegetables are not going away anytime soon; their staple status in the American diet makes them a part of most consumers' daily routine. Although per capita vegetable consumption has declined at an average annual rate of 0.6% over the past five years, rising prices have generally offset the trend. Greenhouse growers have fared relatively well over the past five years because their product is of higher quality and is available year-round, which allows them to demand a premium rate. Vegetable Farming revenue is expected to grow at an average annual rate of 1.0% over the five years to 2012, including a 0.7% increase in 2012, taking the total to $25.4 billion. Over the past five-year period, imports have increasingly supplemented domestic production, growing at an average rate of 5.8% per year to $7.2 billion. “Imported vegetables are usually priced lower than domestically grown ones, which makes them attractive to downstream supermarkets and food service companies,” said IBISWorld industry analyst Nikoleta Panteva. Over the five years through 2017, though, imports of fresh vegetables are forecast to slow. As the domestic greenhouse cropping segment expands, the need for foreign-sourced, out-of-season vegetables will decrease.
Drastic changes are not expected within the Vegetable Farming industry over the next five years. Revenue will continue to inch up at a slow annualized rate. Vegetable consumption has plenty of room to grow to meet dietary standards; IBISWorld expects that industry associations and government spending will help promote healthy eating through vegetable marketing. Economies of scale will be an increasingly important factor for farmers remaining in the industry. According to Panteva, downstream wholesale bypass will also put increasing pressure on the farming sector as superstores continue to source directly from producers. Farmers who cannot meet high quality standards at shrinking prices will be squeezed out of vegetable farming.
The majority of farms, including those growing vegetables and melons, are small family-run enterprises. Farmers generally own and operate their farms supplementing family labor with hired hands only during key periods such as harvesting season. On the other end of the spectrum are a smaller number of commercial farms, which dominate industry revenue and acreage. Even so, the production value is dispersed such that no single farm receives a large proportion of the industry's total revenue. The distribution of employment is linked closely to production values, with the few commercial mega-farms employing the vast majority of laborers. This low concentration of market share results in a transfer of price-setting power to the large buyers. Farmers are price takers in many ways, with their options for improving margins limited to controlling costs or improving quality so that it can be sold to the fresh markets. In an effort to regain some of this diminished power, farmers commonly pool their resources to form cooperatives. These organizations act on behalf of their members to improve demand and returns, often through marketing and promotional activities. Additionally, these cooperatives may vertically integrate into storing, packing and transportation operations, resulting in additional returns and cost savings for farmers. For more information, visit IBISWorld’s Vegetable Farming in the US industry report page.
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IBISWorld industry Report Key Topics
Establishment in this industry grow vegetables and melons in open fields and in greenhouses. This report does not include some notable crops such as corn, soybeans or wheat, which have their own reports.
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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