Farmers opted to postpone large investments when revenue fell, causing the industry to suffer
Los Angeles, CA (PRWEB) May 21, 2013
Combine harvesters are farm machinery that combine the tasks of harvesting, threshing and cleaning grain crops. They primarily are used in the harvesting of field crops, and end-users include a range of farmers, including those that harvest soybean and wheat. Unlike other components of the US economy, the agricultural sector was not as negatively impacted by the recession. Nonetheless, agricultural industries did experience declines during the recessionary years. For example, revenue for the Combine Harvester Manufacturing industry fell an estimated 7.8% in 2009, in response to falling farm income. “Farmers, experiencing lower production and revenue levels, opted to postpone purchasing farming equipment,” says IBISWorld industry analyst Radia Amari. Other factors like difficult lending conditions further precluded farmers from purchasing industry products during 2009. Nonetheless, the industry has experienced positive growth overall during the period from 2008 to 2013. Over the past five years, industry revenue has increased at an estimated average annual rate of 1.6% to $6.4 billion, including expected growth of 2.5% in 2013.
Several factors, including high commodity prices and strong farm incomes, have been driving industry growth. As commodity prices rise, farmers increase their production output. In turn, they increasingly rely on machinery to maximize efficiency: Combine harvesters help farmers reduce the amount of labor they require to harvest grain crops. Additionally, the depreciated dollar has contributed to revenue growth. As the dollar has weakened over the past five years, exports have increased, helping expand revenue. Industry profit margins also have risen over the past five years. In 2013, IBISWorld estimates industry profit will amount to an estimated 9.8% of revenue.
Over the five years to 2018, industry revenue is expected to continue increasing. While industry revenue is projected to grow, company numbers are anticipated to decrease through 2018 because of acquisition activity. Players like Fiat Industrial completed acquisitions over the five years to 2013 in order to expand their market share. This trend is anticipated to continue as the industry's product line remains saturated and firms experience the most growth potential through mergers and acquisitions. The Combine Harvester Manufacturing industry exhibits a moderate level of concentration. With more than 150 enterprises operating in this industry, the top three companies generate about 49.9% of all revenue. According to Amari, a high level of research and development, large economies of scale, extensive dealer networks and long-standing reputations make it difficult for new players to compete with the major operators. For example, Fiat Industrial's 2012 acquisition of CNH Global created the world's third-largest capital goods company and increased the dominance of the industry's largest players. IBISWorld expects mergers and acquisitions to increase industry concentration through the coming five years. For more information, visit IBISWorld’s Combine Harvester Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures combine harvesters. Combines, also known as threshers, combine the tasks of harvesting, threshing and cleaning grain crops. They are primarily used in the harvesting of field crops, but also small fruits and other food crops. This industry excludes hay and straw combine harvesters.
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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