Revenue will continue climbing, as demand for local and organic produce heightens.
Los Angeles, California (PRWEB) September 19, 2013
During the five years to 2013, revenue for the Hydroponic Crop Farming industry has maintained positive growth, indicating that the recession had a minimal effect on industry operators. Over the five-year period, a growing number of individuals shifted to healthy eating and consuming organic produce, resulting in high demand. In addition, extreme weather conditions damaged many crops for fresh field farmers, so grocery stores and farmers markets quickly turned to hydroponic farmers to meet their demand. In particular, the 2012 drought in the continental United States harmed agricultural industries all across the board, presenting an opportunity for hydroponic crop farmers. Consequently, industry revenue jumped 8.1% due to this unmet demand. In the five years to 2013, industry revenue is expected to increase at an average annual rate of 3.6% to $606.8 million. In 2013 alone, revenue from hydroponic crop farming is anticipated to grow 4.9% as a result of rebounding demand from fruit and vegetable markets.
No drastic changes are expected within the industry over the next five years. Revenue will continue to increase over the five years to 2018. Vegetable and fruit consumption has plenty of room to grow to meet Americans' dietary standards; IBISWorld expects that industry associations and government spending will help promote healthy eating through vegetable marketing. Demand for quality organic produce will keep rising, fostering this industry's growth. "In addition, poor weather conditions are projected to increase downstream purchasers' reliability on hydroponic farmers," says IBISWorld Industry Analyst Agiimaa Kruchkin. Mexican imports will pose a small threat to the domestic industry, as the country increases its hydroponic farming capabilities. Nevertheless, as consumers increasingly purchase locally grown produce, imports will not pose a substantial threat.
As revenue and downstream demand continue to expand in the next five years, the number of enterprises is projected to grow. Many of these new firms will focus exclusively on growing organic fruits and vegetables to help meet the demand at fresh markets. Meanwhile, other operators will start farms to provide goods solely on a local basis.
Concentration in the Hydroponic Crop Farming industry is low. The two largest companies are Eurofresh Farms and Village Farms International. These players benefit from managing their own distribution networks and marketing agreements, which have enabled them to increase their market share over the five years to 2013. In addition, their revenue figures have attracted the attention of large private equity and hedge fund managers, who have helped them access debt markets to fund expansion. In contrast, the rest of the industry is composed of small farms. According to Kruchkin, "Consumer demand has helped grow the number and earnings for small hydroponic farms, but their market share is limited because of their production capacity, distribution constraints and smaller localized demand." IBISWorld projects industry concentration will remain steady over the next five years as expansion by the top firms is mitigated by growing consumer demand for locally grown produce.
For more information, visit IBISWorld’s Hydroponic Crop Farming in the US industry report page.
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IBISWorld industry Report Key Topics
Hydroponics is a method of growing plants using mineral nutrient solutions in water, without soil. Operators in this industry generally grow food crops under glass or protective cover.
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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