High input prices will bolster revenue, but concerns about GM crops will limit sales
New York, NY (PRWEB) April 27, 2014
Over the five years to 2014, the financial performance of the Farm Supplies Wholesaling industry has been affected by unpredictable feed and fertilizer prices. Fertilizer and feed prices plummeted in 2009 and 2010, hampering industry revenue growth. The falling price of natural gas (a primary input for fertilizer) kept fertilizer prices low, while decreased demand for meat during the recession caused a reduction in feed prices. Nevertheless, global shortages strengthened the prices of commodities and gas in 2011. Feed and fertilizer prices increased dramatically that year, igniting industry revenue growth in 2011. As the price of natural gas has continued to rise, so too has the price of fertilizer. IBISWorld expects revenue growth in 2014, contributing to an annualized increase over the past five years.
Wholesalers within the industry are often integrated into the supply chain of farming cooperatives. Therefore, the threat of wholesale bypass (where retailers and consumers cut costs by buying directly from manufacturers) is not as prominent as in other wholesaling industries for most operators. Nevertheless, according to IBISWorld Industry Analyst Will McKitterick, “Over the five years to 2014, the industry's size has shrunk, albeit at a very slow pace.” A number of larger retailers have been able to work around wholesalers, assuming some of the market share serviced by smaller dealers and forcing them out of the industry. Consequently, “the number of enterprises is anticipated to fall at an average annual rate over the five years to 2014,” says McKitterick.
This high degree of fragmentation makes the Farm Supplies Wholesaling industry highly competitive and locally oriented. The next five years have the potential to radically change the industry. High input prices are expected to bolster revenue through 2014, but the uncertainty surrounding the development of genetically modified (GM) crops will have turbulent effects on sales as prices ease. That is to say, some farmers will choose to grow their produce organically, without the presence of altered genes or agricultural chemicals, which will decrease demand for farm supplies. On the other hand, growing domestic and global populations will require larger yields and drought-resistant crops, leading large-scale producers to rely more heavily on GM seeds, pesticides and fertilizers. IBISWorld expects that overall revenue will grow per year on average over the five years to 2019.
For more information, visit IBISWorld’s Farm Supplies Wholesaling in the US industry report page.
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IBISWorld Industry Report Key Topics
The Farm Supplies Wholesaling industry distributes a range of manufactured and other goods to crop and livestock farmers. A wholesaler may have exclusive distributorship to sell a particular brand within a specified territory, but most often they will sell such products in competition with other wholesalers.
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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