The industry is expected to grow alongside demand for animal feed and pet food over the next five years
New York, NY (PRWEB) June 20, 2014
The Animal Food Production industry has struggled to grow over the past five years. Although certain industry segments have steadily improved, the industry as a whole suffered due to volatility in crop prices. Grains and oilseed prices increased dramatically in 2010 due to sustained growth in world demand for animal feed, as well as supply constraints due to Russian and Ukrainian export restrictions. Corn, wheat and other crop prices spiked again in 2012 during a summer drought that reduced production volumes. Unable to pass rising costs onto customers, industry operators absorbed price increases to the detriment of revenue, which fell at an annualized 1.4% over the period. Nevertheless, a more severe contraction in growth was forestalled by a rise in demand for specialty pet food products. The industry also benefited from growing global demand for meat and animal feeds, which helped drive up industry exports over the period. As a result, industry revenue is expected to grow by 1.9% to $6.8 billion in 2014, as increased crop production helps feed prices fall.
Price increases took their toll on industry operators' margins over the past five years. According to IBISWorld Industry Analyst Will McKitterick, “Demand for animal feeds plummeted in 2012, as many farmers culled or even liquidated their herds in order to reduce costs and improve productivity.” Feed producers cut costs in response, which lowered profit margins. Falling margins and excess production capacity contributed to the ongoing decline in the number of industry operators, which fell at an accelerated average annual rate of 2.0% to 459 in 2014.
The industry is expected to grow alongside demand for animal feed and pet food over the next five years. Rising disposable income will encourage more Canadians to purchase pets and pet food products. “In particular, premium brands will benefit as consumers are better situated financially to pamper their pets,” says McKitterick. Additional demand for industry products will come from growing international demand for meat products. Meat consumption in the developing world will continue to rise as citizens in emerging market countries become able to afford greater variety in their diets. As a result, Canadian producers will increase their export of feed products. IBISWorld expects these positive factors to help industry revenue grow in the five years to 2019.
For more information, visit IBISWorld’s Animal Food Production in Canada industry report page.
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IBISWorld industry Report Key Topics
The Animal Food Production in Canada industry processes raw ingredients into food for animal livestock and pets. The products are packaged and sold to cattle ranches, dairy farms, other animal-production farms, grocery wholesalers and retailers.
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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