IBISWorld: Good revenue growth expected for cotton, sheep, beef, honey

Agriculture is likely to outperform the general business economy during the next year or two, largely driven by favourable weather, according to IBISWorld. See the expected revenue rises.

A NUMBER of agricultural industries are expected to progressively rise in revenue during the next few years, according to analysis by business research company IBISWorld.

Cotton, pig meat, sheep and beef cattle, and nuts and other horticultural crops are expected to have steady revenue rises over the next five years if good weather conditions prevail.

IBISWorld has looked at 750 industries covering all aspects of Australian business post-COVID-19 and divided them into those expected to fly in the next five years and those forecast to plummet in revenue.

International airlines, coal mining, housing construction and operation of bars, hotels and nightclubs are expected to suffer downturns this financial year.

But many rural sector industries are forecast to forge ahead while some will decline in revenue due to factors other than COVID-19.

IBISWorld analyst Tom Youl said agriculture was likely to outperform the general Australian business sector because it wasn’t tied to current recessionary economic trends but weather conditions.

“If you look at the Murray Darling Basin, it recently had the highest rainfall ever recorded in a single month, so we are seeing an easing of drought conditions,” Mr Youl said.

“Over the short term, agriculture is likely to perform quite well relative to the general economy.

“We are heading towards a La Nina event as well, which makes those forecasts somewhat likely.”

IBISWorld’s forecast revenue growth over the next five years assuming average seasonal conditions.

Revenue from cotton farming is expected to increase during the next five years if weather patterns switch from drought to more normal seasons, according to IBISWorld.

Mr Youl said cotton revenue was expected to rise 36.2 per cent a year in that time, albeit off a relatively low base in 2019-20 due to irrigation water shortages as a result of two years of below-average rain in eastern Australia.

IBISWorld believes cotton revenue will rise to $2 billion in 2025, much higher than the $434 million it fell to last season.

Nuts and fruit crops are also expected to rise in revenue year on year up to 2025, from $4 billion in 2019-20 to $4.68 billion in 2024-25.

Pig meat sales jumped from $1.25 billion in 2018-19 to $1.47 billion in 2019-20.

It was forecast by IBISWorld to peak at $1.53 billion this year before gradually declining as a result of competition from expected rising imports.

National revenue from sheep and beef cattle farming is tipped to increase about $220-$300 million annually over the next five years to rise from $6.22 billion in 2019-20 to $7.49 billion in 2024-25.

But that is still less than the $8.81 billion recorded in 2018-19.

Mr Youl said sheep and beef producers were likely to be rebuilding their herds in the short term.

“So that will constrain revenue across the sector in the short term,” he said.

Beekeepers are expected to overcome the loss of hives from bushfires last summer to post steady growth.

IBISWorld said that was due to rising demand for honey, as consumers sought healthier options to sugar.

Beekeeping was forecast to become a $231 million industry by 2024-25, rising 3.8 per cent annually from today’s revenue of $192 million.

IBISWorld said one of the drivers of that rise in revenue was consumer per capita honey consumption as they looked for healthier alternatives to sugar.

Trevor Monson, of Monson’s Honey and Pollination, at Mildura, said he expected beekeeping revenue to grow at a faster rate than 3.8 per cent a year.

Mr Monson said beekeepers traditionally earned most of their income from honey production but now pollination services had become more prevalent.

“As pollination becomes more profitable, beekeepers produce less honey,” he said.

“In California, beekeepers get more money from pollination than honey and we are just following that trend.

“If consumers are willing to pay not a lot more for honey, particularly if they know it is Australian honey, I think honey sales will increase.”

Grain was one of the few exceptions to steady and consistent growth, with revenue forecast to fluctuate between $11.5 billion and $12.9 billion over the next five years.

Sadly, one industry expected to soar in the coming few years is debt collection.

“That’s an unfortunate result of recession,” Mr Youl said.

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