Government mandates for renewable fuel and ethanol usage will keep corn prices high.
Los Angeles, CA (PRWEB) November 23, 2013
The Corn Farming industry experienced fresh growth over the five years to 2013, mainly due to the crop's status as a major input in biofuel production. The Energy Policy Act of 2005 provided the impetus for the United States to begin weaning itself off its heavy dependence on foreign oil and instead use corn as a renewable energy source to make ethanol. The Energy Independence and Security Act of 2007 further raised demand for industry products by setting the goal to produce 36.0 billion gallons of biofuel by 2022. “These regulations created a significant new market for corn, reinvigorating demand,” according to IBISWorld Industry Analyst Antal Neville. As a result, industry revenue is expected to increase at an annualized rate of 5.2% to $68.5 billion over the five years to 2013.
Global demand for corn also rose over the past five years. A depreciating dollar made domestic products relatively inexpensive to foreign buyers and stimulated industry exports. In order to meet such high demand, farmers turned to genetically modified seeds to produce high-yield crops that were resistant to diseases and pests. A devastating drought in 2012 harmed the industry, however, causing exports to plummet 31.5% during the year. Prices spiked in 2012 as a result, then subsequently reacted by dropping in 2013. As a result of low corn prices, industry revenue is expected to decline 12.9% in 2013.
During the next five years, limited government funding in the form of subsidies for corn farmers is anticipated to keep revenue volatile. Still, the future for US corn farmers remains sunny. “Government mandates for renewable fuel will keep corn prices above historical levels for the five-year period,” says Neville. Also, demand from emerging nations will keep US exports high, expanding another revenue stream for the Corn Farming industry. Still, after high price growth during the past five years, continued price growth is expected to subside, in turn reducing overall revenue growth compared with the past five years.
For more information, visit IBISWorld’s Corn Farming in the US industry report page.
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IBISWorld industry Report Key Topics
Participants in the Corn Farming industry primarily grow corn (except sweet corn) and produce corn seeds. Corn commonly refers to the grains or kernels of the tall annual cereal grass, Zea mays. Corn is a staple cereal in many parts of the world. In the United States, it is most commonly used as livestock feed and in the production of ethanol, sweeteners, oil and other products.
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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