Cotton industry set to soar

If predictions by the team at IBISWorld are anything to go by, cotton farmers are in for an absolute bumper year.

In its latest forecast report, the market research company has listed five industries it forecasted will take off in the 2020-21 financial year, as well as five that will be doing it tough.

According to IBISWorld, the Australian economy has been significantly undermined by the COVID-19 pandemic, with traditionally well-performing sectors such as international travel plummeting to record lows.

But the disruption has also created new top performers such as the cotton industry following well-timed rain, as well as data storage services in light of the pandemic that has forced companies to seek solutions capable of supporting their employees working from home.

The cotton growing industry is one of five sectors forecasted to boom in 2020-21, which is welcome news following years of poor yield as a result of drought.

According to IBISWorld, the cotton growing industry is projected to grow by 128.8 per cent in 2020-21, to $961.8 million.

Rainfall over the Murray Darling Basin was above average over the six months through to June 2020, with some regions reporting their highest rainfall on record.

This was in stark contrast to the horrible conditions experienced by local cotton farmers in the past two years. Severe drought over most of the Murray Darling Basin has meant minimal irrigation water availability, significantly affecting cotton growing considering how water-intensive the crop is.

Therefore, revenue in the sector has fallen to drastic lows in recent years, recording a mere $433.7 million in 2019-20.

Looking ahead, as of July 2020, the Bureau of Meteorology has forecasted above average rainfall across most of the Murray Darling Basin over the four months through November 2020. Therefore, the amount of water available for irrigation is expected to rise strongly in 2020-21, boosting industry output.

Cotton farmers are also anticipated to report strong demand in export markets, IBISWorld added, despite some constraints due to the COVID-19 crisis.

However, the world price of cotton is projected to decline in 2020-21 due to high global supply, partially limiting revenue growth over the year.

Other sectors IBISWorld has predicted to thrive in 2020-21 include debt collection, water freight transport, ‘Buy Now Pay Later’ services, and data storage services.

The sectors expected to underperform this financial year include international airlines; house construction; pubs, bars and nightclubs; coal mining and management consulting.