New York, NY (PRWEB) December 30, 2013
The Hay and Crop Farming industry, primarily comprising hay and sugar beets, largely depends on downstream demand and demand for substitute products. Overall, industry revenue is expected to have fallen marginally at an annualized rate of 0.1% to $21.9 billion over the five years to 2013. With hay generating nearly 90.0% of total industry revenue on more than half of the 520,375 industry farms, demand from beef cattle farmers is an essential driver. “In 2009, weather conditions and the recession limited cattle raising, subsequently reducing demand for hay,” according to IBISWorld Industry Analyst Agiimaa Kruchkin. However, over the past five years, demand for hay has been increasing as farmers shift away from corn and soybeans; the prices of these alternative livestock feeds have skyrocketed due to their growing use in ethanol production and the 2012 US drought that cut supplies. Consequently, industry revenue is expected to grow 3.2% in 2013.
Conditions in the sugar beet segment, which accounts for about 11.4% of industry revenue, are slightly different. Beet farmers are highly protected from international fluctuations in sugar prices and production through tariff-rate quotas. The biggest jump this segment has experienced over the past five years came in 2009, when low levels of rainfall limited sugar output in Brazil, the world's largest producer of sugar. World demand increased, driving up the price and production of US sugar beets.
“Profit for the industry is highly volatile, sometimes dipping into losses, depending on weather conditions and government support,” says Kruchkin. Over the past five years, profit has grown slightly due to expanding industry crop prices. IBISWorld anticipates an increase in organic hay farming to further boost industry profitability over the five years to 2018.
Driven by increased demand for beef (especially organic) the industry is facing a bright future. Changing consumer preferences toward organic meats and dairy will increase the demand for high-value organic hay. This industry subsegment is still small, yet presents a large opportunity for hay farmers. Likewise, due to studies linking high-fructose corn syrup to health problems, downstream snack producers are likely to move toward sugar from beets over corn sweeteners, giving the industry an added boost.
For more information, visit IBISWorld’s Hay and Crop Farming in the US industry report page.
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IBISWorld industry Report Key Topics
Over half the farms in the Hay and Crop Farming industry grow hay, while a small number grow sugar beets. A variety of other crops, such as hops and herbs, are included in the industry. Some establishments also gather agave, spices, tea and maple sap.
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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