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Global Agriculture Industry

World agricultural production is expected to grow nearly 1.5% yearly in the next few years, according to the Organization for Economic Co-operation and Development (OECD). Commodity prices are expected to decline from 2011 figures but will average at 20% or less for cereals and 30% or less for meats over the next decade. Due to rising production costs, crops including coarse grains and oil seeds, will see lower output. There will be little change in livestock production, with per capita set to rise more than 0.5% per year.

Rising global population is putting increased pressure on the agriculture industry to meet food demand. Important developments in fertilizers, chemicals and seeds have been key in helping the sector rise to the challenge. With the world population set to grow by 1.2 billion before the end of the decade, and daily caloric intake growing by over 500 calories a day over the past few decades, food consumption continues to climb and farmers are increasingly reliant on technology and mechanization to speed up output. By 2050, there will be 3 billion more people to feed, by which time meat production demand will grow almost 75% and cereal production will have to increase by 1 billion tons.

Key Market Segments

Worldwide demand for agricultural equipment is expected to grow at close to 5% per year through 2014 to reach $123 billion, according to Freedonia. Market growth will be fuelled by mechanization of emerging market agricultural industries. Expansion will be particularly strong in India and China due to economic growth, large populations and growing food consumption. Government investment in agriculture mechanization to improve crops will aid market growth. Most of the world’s top agricultural equipment manufacturers are headquartered in developed nations. China outpaced the US in 2009 as the world’s number-one supplier, making $17 billion worth of shipments.

The world seeds market is predicted to reach $47 billion by 2015, reports Global Industry Analysts. Rising population with higher food demand coupled with higher farming standards and biotechnology in growing seeds are fuelling the agriculture sector. Developments in seed production such as hybrid seeds, pest-resistant seeds and biotech crops are fuelling demand.

Demand for agricultural products such as fertilizers is expected to grow at 3% a year though 2014 to 380 million metric tons, according to Freedonia. Under pressure to produce better crops due to the declining surface of arable land available, growing population and high-protein products demand, farmers are increasingly reliant on fertilizers. Demand is also driven by the golf industry, which is building more golf courses across industrializing nations where middle-class incomes are rising. Fertilizer is used by both domestic and professional gardeners to improve lawn health in particular.

The world pesticide industry is expected to pick up again after the low of 2009. The industry, worth $45 billion, is forecast to rally and show some degree of growth, according to Freedonia. However, profit will be tempered by market maturity and challenging pricing practices. Due to market maturity in older markets such as Western Europe and North America, these regions will likely see under-average growth in the years to come. Asia-Pacific on the other hand is expected to see a good degree of market expansion, especially in Indonesia, China and Thailand. Developing countries that traditionally did not use pesticide are not adopting the practice, growing demand in places such as India.

Central and South America comprise the region expected to see the strongest growth. Brazil is predicted to register above regional average growth, which is already outpacing the world average. Growth will also be recorded in some regions of the Middle East and in Africa.

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