April 18, 2013
IBISWorld releases Australia's industry market research report on feed production
IBISWorld has released the farm animal feed production in Australia industry market research report.
According to 'Farm Animal Feed Production in Australia Industry Market Research Report Now Available from IBISWorld' the farm animal feed production industry has endured difficult trading conditions over the past five years due to unfavourable price movements and volatile weather conditions. According to IBISWorld industry analyst Suzannah Rowley, "prices for feed grains products have fluctuated substantially over the past five years in response to global production levels and prices".
This affects the industry, given that feed grains are its major product and it has a high level of international trade exposure. As such, the oversupply of grains and wheat on the global market during 2008-09 and 2009-10 caused world prices to plummet in line with industry revenue. The situation reversed in 2010-11. Wheat and other grain prices soared as global grain production plummeted due to adverse weather conditions across major producing regions. This was a boon for Australia grain and animal feed producers because their bumper crops could be sold at elevated prices.
"Greater domestic rainfall and better weather conditions have led to improved pasture conditions and farmers choosing to rebuild herds. This has decreased overall demand for the industry over the past few years," says Rowley. As a result, industry revenue is expected to decline at an annualised 5.8% over the five years through 2012-13 to reach US$4.41 billion. The Farm Animal Feed Production industry's performance is expected to improve over the next year, with revenue forecast to increase by 18.8% in 2012-13 in response to favourable price movements for major products. Profitability has also exhibited significant volatility over the past five years due to the erratic price movements for feed grain products. Moreover, producers of commercial fish feed have also enjoyed an increase in demand over the past five years thanks to the rapid growth of Australia's aquaculture industry.
The industry's fortunes are set to improve over the next five years. Demand for industry products is expected to increase on the domestic market given a possible return to drought conditions. Demand for Australian farm animal feed is also forecast to rise on the global market due to the rapid industrialisation of developing countries such as China. Feed grain and wheat prices are also expected to increase over the next five years, which will further buoy industry revenue growth and profitability.
The level of market share concentration within the industry is medium. The top four players are Ridley Corporation Limited, Riverina (Australia) Pty Ltd, Inghams Enterprises Pty Limited and Ricegrowers Limited.
Animal feed manufacturers make food for livestock. Producers use remnants of flour milling, sugar production and other food processing as ingredient inputs to animal feed. This industry excludes pasture grazing, hay and silage feed.
