Once considered to be an alternative food eaten only by minority groups, a growing number of consumers are now purchasing organic food
Melbourne, Australia (PRWEB) July 11, 2014
Organic Crop Farming in Australia has benefited from organic food being launched into the limelight over the past decade. According to IBISWorld industry analyst Brooke Tonkin, “Although it was once considered to be an alternative food eaten only by minority groups, a growing number of consumers are now purchasing organic food.” Organic crop farmers have reaped the benefits of growing demand for organic fruits, vegetables, grains, nuts and herbs over the past five years. Industry revenue is expected to post annualised growth of 11.0% over the five years through 2014-15, to reach $264.9 million. This includes forecast growth of 6.0% for 2014-15. Strong consumer demand for organic produce has driven the industry's growth over the past five years. Organic fruits and vegetables are often perceived to be healthier than their conventionally farmed counterparts due to the absence of chemicals and genetically modified organisms in their production. This perception has fuelled demand for organic crops over the past five years.
Farmers have benefited from direct consumer demand for fruits and vegetables and indirect demand, through processors, for organic grains for use in breads and cereals. To a lesser extent, concerns about the negative environmental effects of conventional farming have also driven the industry's growth. Operators have been drawn towards the industry by the price premiums and higher profit margins that organic produce attracts. It takes three years for a potential entrant to become certified organic, meaning there is a substantial lag between planning to enter the industry and actually becoming a participant. Growth prospects for the industry remain strong. “Consumer demand for organic produce is anticipated to strengthen, on the back of rising health consciousness and growth in disposable incomes,” says Tonkin. Furthermore, strong overseas demand for organic beef is expected to bode well for organic crop farmers, through demand for organic feedstock produced from grains.
The Organic Crop Farming industry is characterised as having a low level of market share concentration, which is partly influenced by the largely labour-intensive nature of organic farming. This creates an absence of sizeable economies of scale in organic crop production, which discourages larger players from entering the industry. Consequently, there are no major players in the industry. Low industry concentration is the prevailing trend across the broader agriculture sector, given the prevalence of family-owned enterprises. Industry operators tend to specialise in the production of several organic products, to obtain some level of economies of scale. The increasing importance of large supermarket chains as final markets may contribute to increased concentration in the industry over the next five years. This is because supermarkets demand consistent supply levels, which are usually achieved through expansion and vertical integration.
For more information, visit IBISWorld’s Organic Crop Farming report in Australia industry page.
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IBISWorld Industry Report Key Topics
Farmers in this industry grow organic crops such as fruits, vegetables, grains, fibres, nuts and oilseeds. Crops must be grown without manufactured fertilisers, pesticides, growth regulators or any other plant modifications.
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
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