Extreme climatic conditions cause dramatic fluctuations in revenue
Melbourne, Australia (PRWEB) February 24, 2013
Grain growing is a highly volatile industry given that revenue and production are contingent on the state of the global grain market and changes in climatic conditions. As such, industry revenue has fluctuated substantially over the past five years due to dramatic swings in global grain prices and production levels. During 2010-11, grain prices soared to record highs in response to a sharp contraction in global grain production caused by adverse weather conditions across leading grain-producing countries. According to IBISWorld industry analyst Suzannah Rowley, “this was compounded by the long-term rise in global demand for grains used for feedstock, biofuels and human consumption”. Fortunately, the Australian Grain Growing industry was able to exploit the high prices in 2010-11 as a result of above-average rainfall across many major growing areas.
Over the past two years, farmers around the world have increased grain production in response to higher prices. “This has led to a recovery of global grain stocks and therefore a consistent decline in global grain prices”, says Rowley. For Australian grain producers, this has meant several declines in industry revenue despite the bumper crop produced during 2011-12. In response to these conditions, industry revenue is expected to decline at an annualized 2.6% over the five years through 2012-13. The return to normal yields and the continued decline in global and domestic prices over 2012-13 is expected to push revenue down further. The Grain Growing industry has a low level of ownership concentration. Generally, the industry is characterized by the presence of many small family farms. Although a number of large commercial operations exist, no single producer accounts for a significant proportion of industry output.
Looking ahead, industry revenue is expected to increase over the next five years due to rising production and a marginal increase in domestic grain prices. Price growth will be limited, however, due to high global production and a recovery in global grain stocks. Changes in domestic growing conditions are also expected to be an issue for grain producers given the likely return to drought conditions and the forecast decline in the annual level of rainfall.
For more information, visit IBISWorld’s Grain Growing report in Australia industry page.
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IBISWorld industry Report Key Topics
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.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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