Tobacco Growing in the US Industry Market Research Report from IBISWorld has Been Updated

Higher cigarette consumption rates and fewer tobacco product regulations in major export markets such as China will drive industry demand in the next five years; furthermore, farmers will look to new opportunities for demand, such as using tobacco for ethanol and biodiesel. For these reasons, industry research firm IBISWorld has updated a report on the Tobacco Growing industry in its growing industry report collection.

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Government regulation will harm domestic sales, but thriving exports will spur growth

Los Angeles, CA (PRWEB) April 09, 2013

The effects of the 2005 federal deregulation continue to linger over the Tobacco Growing industry. The initial removal of production quotas and price supports caused revenue and employment to crash; about a third of tobacco farmers exited the industry. Without government support, small and otherwise unprofitable farmers left the industry, decreasing the number of establishments at an annualized rate of 5.3% over the five years to 2013. The remaining 6,589 farms represent growers with large operations and established international reputations; therefore, they have garnered substantial profit growth. “Over the five-year period, average profit margins have increased as a share of revenue,” says IBISWorld industry analyst Agiimaa Kruchkin. “The once-controlled industry has found its place as an international supplier of tobacco.”

In 2013, IBISWorld expects Tobacco Growing industry revenue to increase 8.5% to $1.4 billion, indicating the start of a recovery from a substantial drop in 2010 and 2012. In 2010, industry revenue took a hit when domestic farmers were called on to help recover world food grain shortages resulting from severe weather conditions. During the year, the amount of planted tobacco declined and industry revenue dropped 16.6%. As a result, revenue is expected to fall overall at an average annual rate of 3.4% in the five years to 2013. “Revenue was also constrained by stringent restrictions on the downstream market for tobacco products,” adds Kruchkin. “Similarly, health-conscious Americans are cutting back on smoking, decreasing the domestic level of demand.”

Tobacco farming has a very low concentration of ownership; there are several thousand operators within the industry, none of which have substantial market power. This low concentration is primarily attributable to tough competition from within and outside the United States with respect to supply, so no single farmer can influence the market as a whole. However, concentration has increased due to the exit of many farmers from the industry. As such, industry revenue has been shared among fewer producers, although still too many to capture a measurable share of the total tobacco farming market.

IBISWorld expects the industry's reliance on international sales to drive revenue upward during the five years through 2018. Due to the significance of trade, the expected slow growth in the trade-weighted index over the five years to 2018 will benefit the industry. As the US dollar gains only minimal value, US tobacco leaf will remain price competitive, which will support sales and profit growth. IBISWorld forecasts that the industry will continue to grow over the next five years; however, because of the government's efforts to curb smoking levels, domestic conditions will become increasingly difficult. For more information, visit IBISWorld’s Tobacco Growing in the US industry report page.

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IBISWorld industry Report Key Topics

Farms in this industry grow tobacco leaf. Tobacco farmers purchase inputs, such as fertilizers, agricultural chemicals, pesticides, plant seeds, plant bulbs and curing fuel, from farm supply and other wholesaling industries. The tobacco leaf is exported or sold to domestic tobacco product manufacturers.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.


Contact

  • Gavin Smith
    IBISWorld
    310 866 5042
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