Growers of fruit for processing in particular have been hurt by imports, as processors demand lower prices to match cheap import prices.
Melbourne, Australia (PRWEB) March 09, 2014
The Apple, Pear and Stone Fruit Growing industry in Australia has been through tough times. Over the past five years, farmers have struggled to produce healthy crop yields and industry revenue has suffered. According to IBISWorld industry analyst Brooke Tonkin, “adverse weather patterns, difficult trading conditions and unfavourable exchange rates have all contributed to the industry's decline.” As a result, industry revenue is estimated to decline at a compound annual rate of 1.4% over the five years through 2013-14 to $1.1 billion. Conditions have tested even the most experienced fruit farmers, forcing some to leave the industry altogether. With revenue forecast to decline by 4.9% in 2013-14, some fruit growers have been forced to bulldoze 60-year-old trees and face the threat of losing family businesses.
Extreme weather conditions have plagued the industry. Water shortages, especially across the Murray-Darling Basin, have pushed up production costs and lowered profitability. “Increasing wholesale bypass has increased industry contact with larger purchasers of fruit, primarily supermarkets,” says Tonkin. This has contributed to downward pressure on sale prices due to the immense buying power of the major supermarkets. The bargaining power of the big supermarkets has left farmers at a significant disadvantage in price negotiations for fruit, which has negatively affected industry revenue. Additionally, farmers have faced rising competition from cheaper imported goods, which has placed further downward pressure on prices. Growers of fruit for processing in particular have been hurt by cheaper imports, as processors demand lower prices from local growers to match cheap import prices. Consequently, industry consolidation has accelerated, with an increased number of farmers facing financial difficulty and being forced out of the industry. Still, market share concentration is low and there are no major players in the industry.
The prospects of the Apple, Pear and Stone Fruit Growing industry remain bleak. Over the next five years, the industry will be confronted by a combination of increasing competition from low-priced imports, uncertainty in the downstream processing industry and ongoing pressures from supermarkets. These factors will cause great concern for farmers, as they will continue to place downward pressure on prices and profit margins. Fruit farmers will remain at the mercy of rainfall and weather conditions over the period. The possible return of the El Nino effect in particular has the potential to wreak havoc on the industry.
For more information, visit IBISWorld’s Apple, Pear and Stone Fruit Growing report in Australia industry page.
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IBISWorld industry Report Key Topics
Producers in the industry grow and harvest pome fruit and stone fruit. Pome fruit contains seed chambers and an outer flesh. Stone fruit are also fleshy but have a hard stone at their core that surrounds the seed.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.