Growers of fruit for processing in particular have been hurt by cheaper imports, as processors demand lower prices from local growers to match import prices.
Melbourne, Australia (PRWEB) April 29, 2015
The Apple, Pear and Stone Fruit Growing industry is a longstanding part of the Australian economy. Over the past five years, growers have dealt with extreme weather patterns, water shortages, difficult trading conditions and unfavourable exchange rate movements. Furthermore, falling demand from fruit processors has forced growers to seek other markets, including wholesalers, supermarkets and, to a lesser extent, export markets. Industry revenue is projected to post annualised growth of 2.4% over the five years through 2014-15, to reach $1.09 billion. However, this growth is due to a low base year in 2009-10, rather than a strong performance by the industry over the period. Extreme weather conditions have plagued the industry. According to IBISWorld industry analyst Brooke Tonkin, “water shortages, especially across the Murray-Darling Basin, have pushed up the Apple, Pear and Stone Fruit Growing industry’s production costs and lowered its profitability.” Ongoing wholesale bypass has increased the industry's contact with larger purchasers of fruit, primarily supermarkets, contributing to downward pressure on sale prices due to supermarkets' immense buying power.
Additionally, farmers have faced rising competition from cheaper imported goods, which has placed further downward pressure on prices. “Growers of fruit for processing in particular have been hurt by cheaper imports, as processors demand lower prices from local growers to match import prices,” says Tonkin. Consequently, industry consolidation has accelerated, with more farmers facing financial difficulty and being forced out of the industry. Industry revenue is forecast to fall marginally over the next five years. The industry will also be confronted by a combination of increasing competition from low-price imports, uncertainty in the downstream processing industry and ongoing pressures from supermarkets. These factors will cause great concern for farmers, as they will continue to place downward pressure on prices and profit margins. Fruit farmers will remain at the mercy of rainfall and weather conditions over the period. The possible return of El Nino in particular has the potential to wreak havoc on the industry.
The Apple, Pear and Stone Fruit Growing industry has a low market share concentration level. No play commands a significant share of the market. This is a common trait agricultural industries, which are generally characterised by small, family farms. This generally discourages expansion of operations, as owners often view their farm as a way of life rather than a traditional business. Farmers normally only supplement their own labour with hired labour during harvest periods, when industry employment peaks. Industry consolidation has risen over the past five years, with both operators and the number of orchards declining. This has occurred mainly in response to pricing pressure from downstream buyers, requiring farmers to boost production levels in order to achieve economies of scale and boost profit.
For more information, visit IBISWorld’s Apple, Pear and Stone Fruit Growing industry in Australia report page.
Producers in the industry grow and harvest pome fruit and stone fruit. Pome fruit contains seed chambers and an outer flesh. Stone fruit are also fleshy but have a hard stone at their core that surrounds the seed.
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