Operators will benefit from increasing livestock inventories and outsourcing trends.
New York, NY (PRWEB) December 20, 2013
Demand for the Livestock Production Support Services industry is growing in line with larger cattle and pig herds, bigger broiler flocks and increased milk production. As livestock farms increase their structures to address higher global demand due to rising cost pressures, they turn to this industry to increase operational efficiencies. In particular, higher feed costs and tighter food-safety regulations have led livestock producers to seek new technologies and more intensive farming techniques that increase output from fewer animals while also improving profit margins. At the same time, animal disease outbreaks, increasing health consciousness and the global economic recession have reduced meat consumption over the past five years, thus limiting revenue with which to spend on support services at the farm level. After an initial cutback in demand for industry services during the recession, recovery since 2011 and the overall push and pull of these offsetting factors is expected to lead revenue to marginally decrease an annualized 1.2% in the five years to 2013.
According to IBISWorld Industry Analyst Antal Neville, “Livestock support services form a small component of the US agricultural sector but include many activities pertaining to all manner of livestock.” The industry is highly fragmented, even in its mature stage. About half of all downstream markets are estimated to consist of beef- or dairy-based cattle farms and ranches. Selective breeding through genetic engineering and more traditional means remains the dominant industry service. A 1.1% recovery in 2013 from recession-related lows is expected to bring total industry revenue to $3.9 billion.
Through 2018, revenue in the downstream livestock industries is forecast to grow as the economy improves and demand recovers at the retail level, which bodes well for the industry. “Operators will benefit from growing livestock inventories and a trend among many farms toward outsourcing services instead of making large investments into capital equipment,” says Neville. Industry profit is also projected to grow as technological developments allow operators to provide farmers with more value-added products, such as DNA screening. Overall, these positive trends are forecast to increase industry revenue.