Promoting locally grown produce and the rising health consciousness will support industry revenue.
Melbourne, Australia (PRWEB) January 17, 2015
A range of external factors have affected the performance of the operators in the Outdoor Vegetable Growing industry in Australia over the past five years. Outdoor vegetable growers were unable to deliver a consistent supply of produce due to weather impediments. Low rainfall levels in the years leading up to 2008-09 constrained production, as farmers heavily rely on favourable rainfall levels. Poor rainfall reduced the quality and quantity of produce available up until 2009-10. According to IBISWorld industry analyst Nick Flores, “returning rainfall over the two years through 2010-11 largely helped the industry back on its feet, although heavy flooding in Queensland and Victoria in early 2011 constrained national supply of some produce.” Strong domestic vegetable prices and rising vegetable consumption for much of the three years through 2013-14 have helped the industry return to growth. Industry revenue is forecast to grow at an annualised 3.6% over the five years through 2014-15, to reach $3.6 billion. However, falling consumption is anticipated to depress revenue by 2.1% in 2014-15.
The dominance of the supermarket chains Coles and Woolworths as a primary sales channel for industry produce has contributed to the downward pressure on prices for industry produce. Given the fairly homogenous nature of industry products, demand is influenced by sensitivity to price changes. This has placed great emphasis on mitigating costs for industry players, which were affected by stringent water restrictions and volatile fertiliser prices for the majority of the past five years. “The focus on mitigating costs to maintain profit margins favours the larger players, as economies of scale reduce per-unit costs to a certain extent,” says Flores. This supports moderate levels of industry consolidation. The industry displays a low level of market share concentration.
The industry is expected to contend with intensifying competition from cheap processed imports over the next five years. A moderate supply of annual rainfall is projected to spur industry supply. The focus on mitigating input costs is projected to continue. Outdoor Vegetable Growing industry consolidation is expected to prevail, with the number of enterprises projected to decline, as firms operating at a loss gradually exit the industry. The initiative to promote locally grown produce combined with rising health consciousness is projected to support industry revenue, as local and organic produce typically attract a premium.
For more information, visit IBISWorld’s Outdoor Vegetable Growing industry in Australia report page.
Farmers in this industry grow vegetables outdoors in open fields.
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