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Breakthroughs that will shape the future of the crops and livestock products industries

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Global Agricultural Products Industry


Traditionally a labor-intensive activity, agriculture and agricultural products are increasingly mechanized industries. Agriculture employs around 35% of workers worldwide and has seen the services sector expand to become the world’s biggest employer. Agricultural production represents less than 5% of the gross world product.


The industry is driven by the rising population’s ever-increasing demand for food and evolving consumer tastes requiring more varied food choices. Demand for agricultural products is nearing record highs. With meat representing an increasing percentage of overall global food consumption, there is a far greater demand for grain to feed livestock.


Economic growth is another important factor in the demand for agricultural products. Growth is uneven, with non-OECD countries showing faster economic growth and rising incomes pushing consumers toward diets of more calorie-dense foods. Similarly to economic growth, population growth in non-OECD countries is also at a faster pace, fuelling agricultural product demand.



Key Market Segments


Agricultural products can be classed into different categories such as raw materials (bamboo and lumber), fibers (flax, silk, cotton, hemp and wool), foods (fruit, vegetables, livestocks and cereals), fuels (ethanol, biomass and methane) and beverages (such as wine or juices).


The world seeds market is expected to reach $47 billion by 2015, according to Global Industry Analysts. The market is driven by demand for pest-resistant seeds, hybrid seeds and biotech crops. Factors facilitating production include biotechnology and innovative farming practices.


The world’s need for fertilizers in horticulture will likely grow 3% yearly through 2014 to reach 380 million metric tons, reports Freedonia. Rising demand for food, and high-protein products in particular, continues to encourage farmers to improve soil quality in the hopes of yielding bigger crops, boosting demand for fertilizers.


The cereal crops industry consists of rice, wheat and coarse grains like oats and barley. MarketLine estimates the worth of the world cereal crops industry was just over $417 billion in 2010. This represents almost 8% yearly growth for the four preceding years. In the same period, cereal crop production grew at almost 3.5% yearly, settling to just under 1,875 million tons in 2010. Production rates are estimated to fall almost 3% to under 5% yearly between 2010 and 2015, bringing the industry to over $530 billion.


The world forest products industry was worth over $1.2 trillion in 2010, growing over 16% in the year, according to MarketLine. The industry is expected to reach a value in excess of $1.5 trillion in 2015, up over 26% in the five-year period. This highly fragmented market grew more than 1.5% in 2010 to a volume of over 2.9 billion cubic meters. In terms of volume, the global forest products industry is predicted to grow to over 3 billion cubic meters, a 5% increase compared with 2010. Wood fuel represents the largest sub segment of the market at over 31% of its overall value. Asia-Pacific represents almost 55% of the global forest products market in terms of value.


The world gardening market expanded almost 2% in 2009 to reach almost $163 billion, according to MarketLine. Market growth has been affected by the global recession, which saw consumers less willing to part with disposable income for leisure expenses, such as outdoor living and gardening products. As the market rebounds, it is predicted to expand 12% to reach almost $183 billion in 2014. Shrubs, growing media and plants account for almost 58% of the overall market, representing the biggest sub segment. Americas hold 40% of the market.



Market Outlook


The main agricultural products market segments in the US have seen huge fluctuation over the past decade. Grain prices have risen due to government pressure to boost biofuel. This is likely to continue moving forward. While animal stock breeding saw minimal price changes over the past decade, this is like to change due to climbing demand.


Rising disposable income will see increased demand for protein-based foods, especially in non-OECD countries. A stronger economic environment in the US and elsewhere will likely see leisure spending increase, driving demand in the gardening and outdoor living market.



Leading Industry Associations



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