As is often the case for industries that are dependent upon agricultural commodities, revenue volatility is very high.
Melbourne, Australia (PRWEB) November 20, 2013
Grain is one of Australia's most valuable agriculture products and the Cereal Grain Wholesaling industry plays a key part in the dispersion of the various grains produced. Wholesalers play a major role in the distribution of grain from the farmer to the retail market, both domestically and internationally. Over the five years through 2013-14, industry revenue is forecast to grow by an annualised 4.3% to reach $8.3 billion. According to IBISWorld industry analyst Emily Witham, "in 2013-14, industry revenue is expected to increase by 1.3%, as prices rise because of lower global production due to unfavourable weather conditions across several major producing regions."
As is often the case for industries that are dependent upon agricultural commodities, revenue volatility is very high. Grain production is dependent upon annual rainfall and the occurrence of natural disasters such as floods, cyclones and bushfires often has severe adverse effects on industry revenue. The supply of cereal grains from the Grain Growing industry is the most important factor affecting wholesalers' revenue. A significant portion of the grains produced in Australia is exported. As a result, fluctuations in the Australian dollar affect demand for the industry's products. "Similarly, the world price of grains, particularly wheat, has a significant effect on the industry because cereal grains are traded globally," says Witham. Large fluctuations in global grain prices have had a major effect on industry revenue over the past five years. Major price spikes occurred in 2010-11 due to low global grain stocks. This translated to 39.3% growth in industry revenue for that year. The industry is highly concentrated, with the four largest companies being Co-operative Bulk Handling Limited, Glencore Grain Pty Ltd, GrainCorp Limited and Cargill Australia Limited.
Looking ahead, the Cereal Grain Wholesaling industry in Australia will be buoyed by growing grain consumption due to population growth, increased demand for ethanol fuel, rising incomes in developing countries and the subsequent rise in the consumption of livestock products. A possible return to drought conditions and Australia's ongoing water scarcity issues could restrict growth over the next five years. However, improved water management and irrigation infrastructure should help reduce the effect of extreme weather conditions. The rise in growers bypassing wholesalers to sell directly to food manufacturers could also be a barrier to growth over the medium term.
For more information, visit IBISWorld’s Cereal Grain Wholesaling report in Australia industry page.
Follow IBISWorld on Twitter: http://twitter.com/#!/ibisworldau.
IBISWorld industry Report Key Topics
This industry consists of companies that wholesale wheat or other cereal grains.
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
About IBISWorld Inc.
Recognised 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 Australian 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 Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.