Dairy industry set for a stellar 2018
Dairy cattle farming one of five industries predicted to soar in 2018After a tumultuous few years of low prices and depressed milk production, dairy farmers can expect much stronger conditions in the following year, according to IBISWorld’s latest findings.
Today, the market research company released its list of top five industries set to take off in the coming year, as well as the top five expected to fall. Dairy cattle farming sits at number three in the list of top sectors predicted to grow in 2018.
According to IBISWorld, conditions for the dairy industry have begun to stabilise and will continue to improve over the next 12 months while demand for domestic dairy products is rising.
“With the Australian dollar projected to depreciate this year, we anticipate local dairy products will become more competitive in export markets, boosting returns to domestic milk processors, which will then flow through to dairy cattle farmers,” says IBISWorld Senior Industry Analyst, William McGregor.
“We’re also expecting an increase in the size of the national dairy cattle herd, which will drive up milk volumes, and contribute to an expected eight per cent increase in revenue in 2017-18.”
The reported revenue for dairy cattle farming for the 2016-17 period is $3.9 billion, and the figure is expected to hit $4.3 billion this financial year.
However, there are some not-so-good news for other sectors of the agricultural industry, including outdoor vegetable and pulse growing and sugar manufacturing.
IBISWorld is projecting a revenue drop of 13.5 per cent for the outdoor vegetable growing sector, despite an expected increase in the value of vegetables grown this year due to strong potato and onion output. This is because a drop in domestic pulse (chickpeas, peas, lentils, broad beans, lupins and mung beans) production is anticipated, which will hurt the industry’s overall performance.
An expected oversupply in global sugar markets is tipped to drive sugar prices down this year, with IBISWorld forecasting revenue for sugar manufacturers to decline by 12.5 per cent.
“Domestic sugar output is projected to decline this year following the bumper crops of 2016-17, and with two-thirds of Australian sugar destined for export markets, global conditions – including consumption not matching production growth – will contribute to revenue declines for local sugar millers,” McGregor says.
The industry expected to grow the most this year is ‘Wind and Other Electricity Generation’, in line with the government’s focus on renewable energy and the recent closure of several ageing coal-fired power stations.
The electricity service price is projected to increase significantly this financial year – especially in South Australia and Victoria, the country’s two largest producers of wind power.
“We’re predicting massive growth of over 35 per cent for this industry, with renewable energy operators in Victoria and South Australia likely to take advantage of rising prices to boost their revenue,” McGregor says.
Top 5 industries set to fly in 2018:
| Industries to fly | Revenue 2016-17 ($ million) | Revenue 2017-18 ($ million) | Growth (%) |
|---|---|---|---|
| Wind and Other Electricity Generation | 1,770.0 | 2,394.8 | 35.3% |
| Sports and Recreation Facilities Operation | 1,453.6 | 1,588.2 | 9.3% |
| Dairy Cattle Farming | 3,982.5 | 4,301.3 | 8.0% |
| Petroleum Exploration | 1,399.1 | 1,499.3 | 7.2% |
| Nature Reserves and Conservation Parks | 1,554.2 | 1,650.9 | 6.2% |
Top 5 industries set to fall in 2018:
| Industries to fall | Revenue 2016-17 ($ million) | Revenue 2017-18 ($ million) | Growth (%) |
|---|---|---|---|
| Motor Vehicle Manufacturing | 7,959.7 | 4,532.0 | -43.1% |
| Intellectual Property Leasing | 4,117.0 | 2,825.7 | -31.4% |
| Outdoor Vegetable Growing | 6,032.9 | 5,216.1 | -13.5% |
| Sugar Manufacturing | 3,411.5 | 2,985.7 | -12.5% |
| Concreting Services | 8,755.3 | 8,195.0 | -6.4% |
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