Consolidation activity will continue to benefit and change the landscape of the industry
New York, NY (PRWEB) September 25, 2014
The Dairy Farms industry has teetered on the edge of growth in the five years to 2014. Industry revenue displayed an average annual decline during the five-year period. Although moderate, this drop occurred in the midst of a recession when consumers experienced high unemployment and falling disposable incomes. However, the industry operates on a supply management system, which manages production volumes according to domestic demand, thus protecting the industry from significant revenue volatility.
According to IBISWorld Industry Analyst, Antal Neville, “although dairy farmers are protected by high tariffs on dairy imports, the industry has been victimized by rising imports of milk protein isolates.” The Canadian government imposes stiff tariffs (between 200.0% and 300.0%) on dairy products imported over the commitment access. However, there is no cap on the amount of milk protein isolates that can be imported from the United States. As a result, Canadian dairy processors have practically quadrupled their import of lower-priced milk protein isolates from about 3,700 metric tonnes in 2008 to 15,300 metric tonnes in 2012, the bulk of which arrived from the United States. This equated to about $113.0 million in lost revenue for domestic producers in 2012. With the momentum not expected to slow, IBISWorld expects the rising threat from imports to limit industry revenue growth.
Still, the industry will survive as it is forecast to grow in the five years to 2019. Consolidation activity will continue to change the landscape of the industry and create larger farms that are more efficient and technologically advanced. “Dairy operations will increasingly require higher-skilled labourers, prompting industry wages to rise,” says Neville. The industry's growth will largely result from increased production of higher-value organic milk and accelerated penetration of robotic milking systems.
For more information, visit IBISWorld’s Dairy Farms in Canada industry report page.
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IBISWorld industry Report Key Topics
The Dairy Farms industry primarily milks dairy cattle. Dairy cattle are raised for both milking and meat production, but raising, feeding and fattening cattle as dairy herd replacements are excluded from the industry.
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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