Originally considered alternative food only purchased in local markets, organic food is becoming increasingly popular with consumers
Melbourne, Australia (PRWEB) October 02, 2014
Originally considered alternative food only purchased in local markets, organic food is becoming increasingly popular with consumers. This has fuelled demand for the Organic Livestock and Poultry Farming industry in Australia. According to IBISWorld industry analyst Brooke Tonkin, “the popularity of organic meat has surged over the past five years, contributing to rapid growth and expansion at the farming level.” Over the five years through 2014-15, industry revenue is projected to post exceptional annualised growth of 19.1%, to reach $239.7 million. Profit margins remain strong, but have fallen slightly over the period. This is due to increased competition caused by the entry of new players, which has pushed farmgate prices down slightly. Following growth in demand for organic produce, some farmers converted their conventional farms to organic production. However, the drought that plagued eastern Australia during the mid-2000s made it difficult for many farmers to succeed, with high input costs, stagnant demand and unfavourable production conditions. Consequently, many farmers reverted back to conventional farming methods or sold organically raised livestock and poultry to conventional markets, just to make ends meet.
The break of the drought in 2009-10 coincided with a consumer shift towards organic meat. This created an almost perfect scenario for farmers, with strong demand keeping farmgate prices high, and a return to favourable production conditions. This has contributed to the industry's astounding performance over the past five years, with strong revenue growth achieved consistently over the period. “Rising disposable incomes, ongoing health consciousness and environmental concerns have contributed to growth in domestic demand,” says Tonkin. Demand from overseas markets will be a significant contributor to projected revenue growth of 15.7% in 2014-15. Downstream demand for organic meat products will continue to benefit organic livestock and poultry farmers over the next five years. Exports are anticipated to become a vital market, as more players enter the industry and domestic demand growth begins to ease.
The Organic Livestock and Poultry Farming industry exhibits a low level of market share concentration. This is typical of agriculture industries, due to the high proportion of farms that are family owned and operated. Additionally, the industry is in its early stages of development, relative to the conventional livestock and poultry farming industries. Consequently, no player has expanded the size or scale of its production enough to hold a commanding share of the industry. The increasing dominance of the supermarket giants, Coles and Woolworths, is expected to contribute to rising concentration over the next five years. This is because the major supermarkets demand consistent supply volumes, which only farmers with sufficient operating scale can fulfil.
For more information, visit IBISWorld’s Organic Livestock and Poultry Farming industry in Australia report page.
Farms in this industry primarily produce certified organic livestock or poultry. Organic farming is free of synthetic chemicals, fertilisers or genetically modified organisms. The industry excludes farms that are not primarily engaged in organic farming.
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