High corn and soybean prices allowed producers to raise prices, boosting revenue
Los Angeles, CA (PRWEB) December 14, 2012
In the past several decades, marked changes in livestock production have paralleled shifts in farm animal feed formulation. Bolstered by spikes in feed prices and increasing demand from downstream farm supplies wholesalers, the Farm Animal Feed Production industry's revenue has increased at an annualized rate of 3.7% to $31.7 billion during the past five years. According to IBISWorld industry analyst Anna Son, “global population growth and expansion of developing economies have further boosted demand for meat, requiring greater supply of feeds to match growing production.” Despite a decline in per capita meat consumption in the United States, demand for farm animal feed was maintained by downstream industries, such as dairy farms. Consequently, industry revenue is expected to rise another 1.5% during 2012.
The industry has benefited from escalating feed prices, which were largely driven by the growing use of soybeans and corn in biofuel production. As a result of growing corn and soybean prices, farm animal producers turned to wheat instead. However, challenging weather conditions in major wheat-producing nations drove up wheat price too. Consequently, feed prices experienced double-digit spikes in 2007 and 2008 before reaching its five-year high in 2011. Surging prices ultimately translated to higher revenue for the Farm Animal Feed Production industry. Furthermore, the industry has undergone consolidation as operators have been searching to achieve economies of scale through mergers and acquisitions. “Given that economies of scope and scale are imperative to maintaining profitability, consolidation is expected to persist in the future,” says Son. With large companies like Archer Daniels Midland and Cargill getting larger through these efforts, industry concentration is increasing.
During the five years to 2017, IBISWorld forecasts industry revenue to increase, albeit at a slower rate than in the past five years. Economic emergence of developing countries and an expanding middle-class that craves more meat in their diets will facilitate global meat consumption that will increase herd stocks, especially poultry, cattle and swine. Thus, booming livestock numbers will drive demand for farm animal feed from meat producers. The industry is forecast to sustain its profitability as a result of an increasing level of investment in technology and equipment that will improve productivity and expand production volumes without the need for additional labor. For more information, visit IBISWorld’s Farm Animal Feed Production in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes animal feed manufacturers that make food for livestock. Producers use remnants of flour milling, sugar production and other food processing as ingredient inputs to animal feed.
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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