The industry will remain volatile as the price of inputs continue to fluctuate.
New York, NY (PRWEB) August 10, 2014
The Farm Supplies Wholesaling industry has struggled amidst volatility in agriculture input prices over the past five years. Industry operators sell a variety of fertilizers, seeds and animal feeds to farmers in the agricultural sector whose farmers are the primary determinant of industry demand. While demand from industries involved in crop and animal production has risen steadily, fluctuations in the price of fertilizer and commercial feed were enough to stifle overall revenue growth during the period. IBISWorld estimates revenue has increased at a slow annualized rate over the past five years. Meanwhile, a decline in the price of fertilizer and commercial feed prices are expected to cause revenue to fall in 2014.
The industry continues to mirror broader trends of contraction and consolidation occurring in Canada's agricultural sector. As the overall number of farms continues to decline, more independent operators are merging into partnerships or being bought out by large corporations. According to IBISWorld analyst Will McKitterick, "arms are becoming larger and more mechanized as their operators leverage economies of scale to increase production and profitability." Farm supplies wholesalers are mimicking this trend to meet the evolving needs of large-scale farming. As a result, "the number of small operators has shrunk within the industry," says McKitterick. Furthermore, wholesalers are investing in technology to economize and increase logistical efficiencies. While innovation has helped edge up profit margins, it has also squeezed the industry workforce, which is currently contracting.
The Farm Supplies Wholesaling industry is made up of a small number of business operators throughout Canada. The industry is expected to continue to face volatility over the next five years. Demand from key animal and crop production industries will strengthen as the overall economy improves and individuals spend more on food items. Fertilizer prices are highly dependent on natural gas for the production of ammonia-based fertilizers. As the United States expands its hydraulic fracking efforts and more natural gas spills onto the market, the price of fertilizers is likely to fall. Meanwhile, sales of other important farm inputs (such as seeds and animal feeds) will continue to fluctuate in accordance with developments global commodity chains, creating more revenue volatility for industry operators. Overall, industry revenue is expected to increase at a slightly faster average annual rate in the five years to 2019.
For more information, visit IBISWorld’s Farm Supplies Wholesaling in Canada industry report page.
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IBISWorld industry Report Key Topics
The Farm Supplies Wholesaling industry distributes a range of goods to crop and livestock farmers, including grain and other farm supplies. A wholesaler may have an exclusive distributorship to sell a particular brand within a specified territory, but generally they sell 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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