Mounting domestic and international demand for biofuel will benefit the industry.
New York, NY (PRWEB) July 11, 2014
The Corn Farming industry experienced solid growth during the five years to 2014 on the heels of fresh biofuel demand. The Federal Renewable Fuel Regulations of 2010 prompted farmers to dedicate a larger share of their farmland to cultivating high-value corn used in ethanol production. More specifically, the regulations required the mixing of 5.0% renewable content in gasoline across Canada. Similarly, rapidly expanding biofuel production in the United States created a key export market for Canadian corn, further supporting demand. “In addition, the growing share of genetically modified corn plantings enhance yields, thereby bolstering production,” according to IBISWorld Industry Analyst Antal Neville. Consequently, industry revenue has expanded at an average annual rate of 9.2% to $2.3 billion during the five years to 2014, even despite a 1.0% drop in 2014 revenue.
A rise in global demand significantly facilitated industry expansion. In 2010, exports skyrocketed 130.9% due to a poor coarse grain harvest in Europe. Consequently, European markets developed a strong appetite for Canadian corn, driving up revenue 14.7% during the year. However, the most significant production hike occurred in 2012, when domestic corn production grew about 13.8%. During the year, revenue jumped 26.2% as a result of demand from the drought-stricken United States and the rising price of corn worldwide. “Facilitated by the North American Free Trade Agreement and their shared border, the United States is Canada's largest trading partner for corn,” says Neville. Therefore, the US appetite for Canadian corn, which is used primarily for biofuel production and livestock feed, largely dictates industry success.
Over the five years to 2019, the favourable market conditions of the past five years are expected to fade. Growing ethanol production worldwide that had pushed up grain prices is expected to slow as countries readjust their biofuel targets. The high prices of the past five years are therefore expected to fall in the early part of the next five years, leading farmers to limit their cropland devoted to corn and focus on higher-margin crops. Nevertheless, following this boom and the bust cycle, industry growth will stabilize, and IBISWorld expects the industry to show positive revenue growth starting in 2017. Overall, revenue is forecast to fall an annualized 2.0% to $2.1 billion in the five years to 2019.
For more information, visit IBISWorld’s Corn Farming in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry primarily grows corn (except sweet corn) and produces corn seeds. Corn commonly refers to the grains or kernels of Zea mays, a tall annual cereal grass. Corn is a staple cereal in many parts of the world. Corn is used to make biofuel, sweeteners, oil and other products.
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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