Rising demand for grains, mainly for livestock feed in developing countries, has increased pressure on global grain stock levels.
Melbourne, Australia (PRWEB) October 06, 2014
Operators in the Grain Growing industry in Australia are highly export-oriented and produce crops such as wheat, barley, sorghum and other grains. The industry has sustained high levels of revenue volatility over the past five years, largely influenced by adverse weather conditions that have affected local supply. According to IBISWorld industry analyst Brooke Tonkin, “fluctuations in global grain prices and global crop supply over the past five years have added to revenue volatility.” Industry revenue is forecast to expand by an annualised 8.5% over the five years through 2014-15, to reach $13.8 billion. However, plummeting revenue in 2009-10 has skewed the industry's revenue growth figure over the period. Industry revenue is forecast to fall 3.8% in 2014-15, due to an anticipated reduction in the nation's grain crop.
The industry tends to follow a cyclical pattern, whereby sudden production declines cause prices to spike. Farmers then increase planting to reap the benefit of higher prices, but as production bounces back prices recede in the following season. Another long-term trend that has increased pressure on global grain stocks and prices has been the gradual rise in demand for grains, mainly for livestock feed in developing countries, as meat consumption rises in line with income. During 2010-11, industry revenue jumped as grain prices soared. “The price increase was in response to a sharp contraction in global grain production due to adverse weather conditions in major grain-producing countries,” says Tonkin. This was compounded by the long-term rise in global demand for grains used for livestock feed, biofuels and human consumption. The industry exhibits low levels of market share concentration and has no major players.
Industry performance remains susceptible to varying weather conditions. However, greater emphasis on increasing operational efficiency is expected to strengthen profit margins. Industry growth prospects will lie with emerging Asian economies, where rising per capita income and changing dietary habits are projected to support demand for Grain Growing industry products. Growing meat consumption will lead to the expansion of livestock industries, which drive demand for feed grains.
For more information, visit IBISWorld’s Grain Growing industry in Australia report page.
This industry consists of farms that grow coarse grains or other cereal crops. Other farms in the industry grow oilseeds, peanuts, lupins, dry field peas and beans. This industry excludes rice growing.
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