Free-trade agreements and interest in biofuels are benefiting industry performance
New York, NY (PRWEB) January 08, 2014
In recent years, the diverse US Agribusiness industry has attracted more corporate interest than at any other stage in its history. Today, the industry includes a variety of businesses, ranging from meat processors to grain wholesalers to agricultural machinery manufacturers to numerous types of farmers. As the industry expands and diversifies, large multinational companies are becoming increasingly involved in agribusiness. According to IBISWorld Industry Analyst Antal Neville, “These global corporations are encouraging and implementing vertical integration within the industry, while actively enhancing the industry's overall profitability.” Traditionally, family farms, which are still prevalent across the nation, have dominated agribusiness. However, the revenue corporate farms generate substantially exceeds the earnings of traditional farms.
During the five years to 2013, the growing interest in biofuels, the strong rise in the number of free-trade agreements the federal government has signed and the expanding prevalence of genetically modified seeds have all aided the Agribusiness industry. Until mid-2008, rising commodity prices boosted profit for farmers and sellers of farm inputs alike. However, when prices corrected themselves and fell in mid-2008, farm and agribusiness incomes dropped. Consequently, industry revenue declined significantly in 2009. Agribusiness has since recovered because of global crop shortages that pushed up commodity prices. Following the extensive US drought in 2012 (the worst in more than 50 years), which harmed most domestic crops, industry revenue is expected to rebound slowly by 0.9% to total $2.0 trillion in 2013 because of shortages that raised commodity prices. Nevertheless, the harm from the recession during 2008 and 2009 lingers; consequently, Agribusiness industry revenue is expected to grow marginally at an annualized rate of 1.4% over the five years to 2013.
Despite these difficulties, the industry is expected to benefit from increasing corporate involvement supplying more resources to farmers and producers. Also, “domestic and export demand are expected to rise as consumer income, sentiment and spending around the world rebound to previous levels,” says Neville. As the global economy recovers from the massive economic downturn, export revenue is expected to reach high and steady levels. IBISWorld considers this industry to have a particularly low level of concentration. Agriculture is a naturally fragmented industry because farms are never big enough to control any market in which they participate.
For more information, visit IBISWorld’s Agribusiness in the US industry report page.
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IBISWorld industry Report Key Topics
The Agribusiness industry includes businesses that directly engage in or directly benefit from agricultural activities. Businesses in this industry may produce agricultural commodities, buy agricultural produce or supply goods and services to farms and the agriculture industry. This industry focuses on the food-supply chain up to, but not including, the point of retail sale.
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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