Agriculture, Forestry, Fishing and Hunting in the US - IBISWorld
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INDUSTRY REPORT 11 Agriculture, Forestry, Fishing and Hunting in the US Cornucopia of possibility: Sector revenue is expected to recover from major declines due to the pandemic John Madigan | September 2021 IBISWorld.com 1-800-330-3772 info@IBISWorld.com
Agriculture, Forestry, Fishing and Hunting in the US September 2021
Contents
COVID-19 (Coronavirus) Impact Update.............................3 COMPETITIVE LANDSCAPE.......................... 23
ABOUT THIS INDUSTRY.................................. 5 Market Share Concentration............................................. 23
Key Success Factors........................................................23
Industry Definition................................................................5 Cost Structure Benchmarks............................................. 24
Major Players...................................................................... 5 Basis of Competition......................................................... 27
Main Activities..................................................................... 5 Barriers to Entry............................................................... 27
Supply Chain....................................................................... 6 Industry Globalization........................................................ 28
INDUSTRY AT A GLANCE................................ 7 MAJOR COMPANIES...................................... 29
Executive Summary............................................................ 9 Major Players.................................................................... 29
INDUSTRY PERFORMANCE..........................10 OPERATING CONDITIONS............................ 33
Key External Drivers.........................................................10 Capital Intensity................................................................. 33
Current Performance........................................................ 11 Technology & Systems......................................................33
Revenue Volatility..............................................................34
INDUSTRY OUTLOOK.................................... 14 Regulation & Policy........................................................... 34
Industry Assistance........................................................... 35
Outlook.............................................................................. 14
Industry Life Cycle............................................................. 15 KEY STATISTICS............................................ 36
PRODUCTS & MARKETS............................... 16 Industry Data..................................................................... 36
Annual Change..................................................................36
Supply Chain..................................................................... 16 Key Ratios......................................................................... 36
Products & Services.......................................................... 16
Demand Determinants...................................................... 17 ADDITIONAL RESOURCES............................37
Major Markets....................................................................18
International Trade............................................................ 20 Additional Resources........................................................ 37
Business Locations........................................................... 21 Industry Jargon..................................................................37
Glossary............................................................................ 37
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Agriculture, Forestry, Fishing and Hunting in the US September 2021
COVID-19 IBISWorld's analysts constantly monitor the industry impacts of current events in real-time – here is an update of
(Coronavirus) how this industry is likely to be impacted as a result of the global COVID-19 pandemic:
Impact Update · The COVID-19 (coronavirus) pandemic roiled international trade activity, with a general global pullback
compounded by the failure to resolve the trade dispute between the United States and China.
· Inflationary concerns on the horizon may fuel further Agriculture, Forestry, Fishing and Hunting sector growth, but
may also harm sector operators' bottom lines.
· Price distortion in downstream processing markets has weakened returns for sector operators that primarily sell to
processing markets. Fresh markets have performed more strongly due to ease of access to consumers.
Note: The content in this report is currently being updated to reflect the trends outlined above.
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Agriculture, Forestry, Fishing and Hunting in the US September 2021 About IBISWorld IBISWorld specializes in industry research with coverage on thousands of global industries. Our comprehensive data and in-depth analysis help businesses of all types gain quick and actionable insights on industries around the world. Busy professionals can spend less time researching and preparing for meetings, and more time focused on making strategic business decisions that benefit you, your company and your clients. We offer research on industries in the US, Canada, Australia, New Zealand, Germany, the UK, Ireland, China and Mexico, as well as industries that are truly global in nature. 4 IBISWorld.com
Agriculture, Forestry, Fishing and Hunting in the US September 2021
About This Industry
Industry Definition This sector includes farms that primarily grow crops or raise livestock, as well as companies specializing in forestry
and agricultural support services. This sector also includes companies that provide land for hunting and fishing.
Major Players Tyson Foods
Cargill Inc.
Bayer AG
Syngenta
Main Activities The primary activities of this industry are:
Corn farming (except sweet corn), field and seed production
Popcorn farming, field and seed production
The major products and services in this industry are:
Crops
Animals and animal products
Forestry
Hunting and fishing
Agricultural support services
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Agriculture, Forestry, Fishing and Hunting in the US September 2021
Supply Chain
SIMILAR INDUSTRIES
Manufacturing in the US Corn, Wheat & Soybean Fruit & Vegetable Markets in the Agribusiness in the US
Wholesaling in the US US
RELATED INTERNATIONAL INDUSTRIES
Global Fruit & Vegetable Citrus Fruit, Nut and Other Fruit Forestry Support Services in New
Processing Growing in Australia Zealand
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Industry at a Glance
Key Statistics Key External Drivers % = 2016–21 Annual Growth
$465.6bn 0.1% 0.4%
Revenue Trade-weighted index Per capita meat consumption
Annual Growth Annual Growth Annual Growth
0.7% 0.2%
Price of feed Price of fertilizer
2016–2021 2021–2026 2016–2026
0.4%
0.3% 0.5% Agricultural price index
$86.6bn Industry Structure
Profit
POSITIVE IMPACT
Industry Assistance Concentration
High / Steady Low
MIXED IMPACT
18.6% Life Cycle Revenue Volatility
Profit Margin Mature Medium
Annual Growth Annual Growth Technology Change Barriers to Entry
Medium Medium / Steady
2016–2021 2016–2021
Industry Globalization
-0.3pp Medium / Increasing
NEGATIVE IMPACT
Capital Intensity Regulation & Policy
2m High Heavy / Steady
Businesses Competition
High / Steady
Annual Growth Annual Growth Annual Growth
2016–2021 2021–2026 2016–2026
-0.3% 0.1%
Key Trends
Despite the stability of the sector's place in the economy,
revenue and production volumes are historically volatile
4m
Employment While exports have fluctuated, imports have grown over the
past five years
Annual Growth Annual Growth Annual Growth
2016–2021 2021–2026 2016–2026 Despite increased consolidation, demand for labor has
increased during the period
0.1% 0.4%
Price growth will likely run away as production struggles to
catch up
Most farms are family-owned, and therefore, a low
$41.6bn production year can have an effect on annual income
Wages
Farms have increasingly explored mergers and acquisitions
Annual Growth Annual Growth Annual Growth to increase profit
2016–2021 2021–2026 2016–2026 Structural challenges and shifting demand have challenged
-0.6% 0.4% sector revenue growth
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Products & Services Segmentation
Major Players SWOT
STRENGTHS
High Profit vs. Sector Average
Low Customer Class Concentration
WEAKNESSES
High Product/Service Concentration
Low Revenue per Employee
High Capital Requirements
OPPORTUNITIES
High Revenue Growth (2016-2021)
High Performance Drivers
THREATS
Low Revenue Growth (2005-2021)
Low Outlier Growth
Low Revenue Growth (2021-2026)
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Executive Summary Cornucopia of possibility: Sector revenue is expected to recover from
major declines due to the pandemic
As one of the oldest sectors in the United States, the Agriculture, Forestry, Fishing and Hunting sector has a
longstanding place in the economy. However, it is also one of the most historically volatile sectors. Agricultural
production can be affected by many unpredictable and unstoppable factors. Droughts, pests and disease can all
destroy crop and livestock production in a given year, resulting in drastic swings in demand and revenue. Sector
revenue has risen at an annualized rate of 0.3% to $465.6 billion over the five years to 2021. This increase,
however, is somewhat misleading since the majority of growth is expected to occur in 2021, with industry revenue
rising an animated 3.7% in 2021 alone. Additionally, structural challenges and shifting demand conditions brought
on by lingering effects of the COVID-19 (coronavirus) pandemic challenged revenue growth in 2020.
Despite declining revenue over the past five years, the sector remains strong and attractive to new companies.
Corporations have turned to this sector as a means of controlling input costs and vertically integrating. However,
despite the growing presence of large companies, more than 85.0% of farms are still family-owned, making the
sector predominately controlled by nonemployers. To contend with increased competition from corporations, many
farms have turned toward consolidation and resource pooling. In many cases, this takes the form of cooperatives
that do not share revenue, but in some cases, farms have merged to reduce costs and pool income. As a result,
sector consolidation has grown during the period, however, most notably, major vertically integrated beef processors
have begun divesting their cattle and livestock operations due to volatile market conditions and weak prices.
Nonetheless, corporate involvement and the forming of cooperatives has caused downward trend in industry
participation. Due to rising operational efficiencies, profit has risen as a result during the period.
Over the five years to 2026, sector revenue is anticipated to accelerate. Overall, growth over the next five years is
expected to be driven by an uptick in agricultural prices across the sector, however this may actually be an example
of inflationary effects of increased government spending during the pandemic coming home to roost. As a result,
sector revenue is projected to increase at an annualized rate of 0.5% to $477.8 billion over the five years to 2026.
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Industry Performance
Key External Price of feed
Drivers
Feed is one of the largest input costs for livestock industries. As the price of feed increases, livestock producers
pass the increased cost onto consumers, resulting in increased revenue. Additionally, livestock feed is produced by
crop growers, so higher feed prices generate higher revenue for crop growers. In 2021, the price of feed is projected
to rise.
Agricultural price index
The agricultural price index measures the prices received for all agricultural products including crops and livestock.
As prices increase, farms are generating more revenue. The agricultural price index is a strong indicator of sector
performance. In 2021, the agricultural price index is expected to rise, representing a potential opportunity for the
sector.
Price of fertilizer
Fertilizer is a major input cost for crop growers because fertilizer is needed to grow crops. As fertilizer prices
increase, crop growers are likely to pass cost increases onto buyers, resulting in increased revenue. In 2021, the
price of fertilizer is expected to grow.
Per capita meat consumption
While the sector includes both crops and livestock, these products compete with each other. As per capita meat
consumption increases, vegetable consumption declines. Crops represent a greater portion of sector revenue, so as
meat consumption increases, overall revenue declines. In 2021, per capita meat consumption is expected to fall,
posing a potential threat to the industry.
Trade-weighted index
The trade-weighted index (TWI) measures the value of the US dollar relative to United States' largest trade partners.
As the US dollar appreciates, foreign goods become relatively less expensive, creating competition from imports. In
2021, the TWI is expected to decline.
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Current The Agriculture, Forestry, Fishing and Hunting sector has been one of the
Performance most important sectors in the US economy.
Agricultural products serve as inputs for a wide number of other industries, including food production, wood
manufacturing, biofuel production and ethanol production. The United States is also a net exporter of agricultural
goods, making the sector crucial to US GDP.
However, despite the stability of its place in the economy, revenue and production volumes are historically volatile.
Unpredictable challenges, such as droughts and disease outbreaks, can cause massive declines in crop and
livestock production. These shortages cause price fluctuations that can ripple through the sector, causing revenue
volatility. As a result of this volatility, sector revenue has risen an annualized 0.3% to $465.6 billion over the five
years to 2021, including an increase of 3.7% in 2021 alone as the sector recoups losses incurred as a result of the
COVID-19 (coronavirus) pandemic. These losses include major shifts in the markets for agricultural products, the
pinching of the downstream supply chain, and the divergence of retail and farmgate prices for agricultural products,
which caused most farmers to miss out on the growth exhibited by processors and retailers during the pandemic.
Furthermore, United States Department of Agriculture supply, demand and price data suggests trouble may still be
brewing in the sector.
PRODUCTION VOLATILITY
Overall, the sector has been affected by various exogenous and
endogenous shocks over the past five years.
Perhaps most importantly, prior to the current period, agricultural production had risen to new highs as a burgeoning
Chinese economy demanded more and more agricultural commodities, driving prices up and incurring
overproduction. As demand from China slowed, industry products began to pile up on the domestic market, causing
prices to fall due to rising supply availability. In 2016, the industry experienced declines in the wake of much larger
decreases in 2015. Since then, the industry has been volatile as supply and demand realigned. After this, the trade
war with China began, as well as the renegotiation of the North American Free Trade Agreement, which was
replaced by the United States-Mexico-Canada Agreement, which experienced further disruption regarding industry
export markets, causing domestic supplies to rise further and prices to slide as products flooded the domestic
market. Then, in 2020, the coronavirus pandemic further disrupted the sector due a pinching in the downstream
supply chain and due to a rapid increase in consumer demand. Overall, industry farmers were shut out of the rapid
price appreciation of food items because they were left holding the proverbial bag. As processing and wholesale
capacity declined as a result of the pandemic, agricultural commodities piled up at the farm gate, causing prices at
the farm gate to diverge from those at the retail out. Overall, this is expected to still weigh on the industry over the
five years to 2026, and supply and demand must engage in a continued balancing act over the next five years.
INPUT COSTS
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The performance of the subsectors within the sector can largely be
determined by the costs of inputs.
For example, when feed prices increase, livestock producers raise prices and generate higher revenue. Meanwhile,
when fertilizer costs increase, crop growers pass the increased price on to upstream buyers, resulting in greater
revenue. However, input costs fluctuations have a smaller effect on the overall sector because feed is produced by
crop growers and fertilizer is partially produced by livestock farms. Therefore, when crop prices rise, so does the
cost of feed, and when meat and livestock prices rise, so do fertilizer costs. However, the seasonality of sector
products causes a delayed effect in downstream price changes.
More recently, operating costs have increased due to the coronavirus pandemic. Across the economy, businesses
have been forced to limit production or shut down due to the spread of the virus. For example, restaurants in cities
and states most affected by the pandemic were required to close in early 2020, causing demand from restaurants to
plummet. Meanwhile, demand from grocery stores and other retail food sellers has grown significantly as consumers
started cooking at home more. Overall, this has resulted in minimal change in demand for agricultural products, but
the markets have shifted. This has created an obstacle for many farms because they had previously only provided
products for restaurants or other large buyers. Now, these operators must invest in new equipment and new
processes to be able to sell to grocery stores or directly to consumers. However, in 2021, profit, measured as
earnings before interest and taxes, has risen from lows observed in 2020 as a result of the pandemic, accounting for
as 18.6% of revenue in 2021. Profit in 2021 is still below peaks observed prior to current period, indicating the
industry is still contending with difficulty.
While natural challenges can affect domestic production of crops and livestock, production fluctuations in other
countries can affect the value of exports. Shortages in other countries in 2016 enabled the United States to increase
exports. However, the value of sector exports has remained largely static, increasing an annualized 0.7% $83.7
billion over the five years to 2021. Exports are expected to rebound in 2021 from lows in 2020 due to China placing
significant tariffs on US agricultural goods. These tariffs have been in retaliation to the United States placing tariffs
on Chinese steel; China is the largest buyer of US agricultural goods, so Chinese tariffs have had a significant effect
on the sector. While a trade deal between the United States and China is expected in 2021, trade is expected to
remain low due to the coronavirus pandemic, limiting international trade in nearly all sectors.
While exports have fluctuated, imports have grown over the past five years. Imports typically experience less
volatility because the United States imports products from a variety of countries, primarily importing crops that
cannot be grown domestically. The value of sector imports has grown an annualized 0.7% to $65.5 billion over the
five years to 2021.
FAMILY FARMS
Despite revenue and profit declines, the sector remains attractive due to
its stable position.
Corporations seeking to vertically integrate and control supplies have attempted to enter the sector over the past five
years. However, despite this trend, more than 85.0% of industry farms are family-owned. However, while most farms
are small independent operations, some farms have turned to consolidation as a means of competing with
corporation and limiting production costs. In many cases, this takes the form of cooperatives and resource pooling.
However, in some cases, farms have merged and combined their income. As a result, the number of sector
enterprises has declined an annualized 0.3% to 2.3 million companies over the five years to 2021.
Meanwhile, despite increased consolidation, demand for labor has increased during the period. Historically, the
agriculture sector has had low average wages, but increased demand for organic and specialty products has
created a need for skilled labor. While these products receive higher prices, they also require greater inputs,
including hands-on labor. However, in 2021, industry employment is expected to flounder due to increased
limitations on immigration and international travel. Sector employment is anticipated to rise a meager, annualized
0.1% to reach 3.5 million employees.
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Historical Performance Data
Domestic Agricultural
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Price Index
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) (Index)
2012 502,932 209,001 2,371,403 2,367,454 3,464,629 90,288 58,444 38,950 471,088 105
2013 507,050 206,151 2,360,241 2,356,153 3,472,488 86,749 61,245 39,404 481,546 107
2014 532,282 196,857 2,349,132 2,344,847 3,479,965 89,507 65,208 42,088 507,982 111
2015 478,325 165,322 2,338,075 2,333,614 3,485,139 77,067 62,201 39,640 463,459 100
2016 458,151 158,268 2,327,070 2,322,472 3,483,130 80,880 63,371 42,818 440,641 89.6
2017 473,527 167,139 2,316,120 2,311,410 3,472,987 81,399 66,902 45,205 459,030 93.0
2018 463,670 151,383 2,301,785 2,296,905 3,459,480 77,871 66,365 41,818 452,165 90.0
2019 452,958 149,475 2,287,539 2,282,534 3,443,701 72,527 65,643 40,852 446,074 90.5
2020 449,088 136,797 2,273,381 2,268,153 3,418,579 79,369 64,716 40,503 434,436 90.0
2021 465,568 159,089 2,299,466 2,290,346 3,500,175 83,711 65,481 41,574 447,337 91.3
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Industry Outlook
Outlook After a volatile five years to 2021, the Agriculture, Forestry, Fishing and
Hunting sector is anticipated to accelerate over the five years to 2026.
Steadily rising agricultural prices and growing demand for healthy and organic food will be the main drivers of
demand. However, the sector also experiences threats from the uncertainty of weather and a potential for a
continued trade war with China. Furthermore, supply and demand indicators suggest that not all is well within the
sector and it could be poised for an inflationary spike as a result of the Federal Reserve's monetary stimulus efforts.
Furthermore, international trade is expected to have minimal effect on domestic prices, since industry exports are
anticipated to rise an annualized 0.7% to reach $86.8 billion, while being offset by an annualized 0.2% increase in
industry imports to reach $66.2 billion in 2026. Assuming the sector does not contend with any unmatched
production swings, sector revenue will likely increase, rising an annualized 0.5% to $477.8 billion over the five years
to 2026.
A SECTOR DIVIDED AGAINST ITSELF CANNOT STAND
While industry revenue is anticipated to rise at an accelerated rate over
the next five years, this does not bode well for the sector nor the economy
at large and presents an example of the inflationary effects of increased
government spending coming home to roost.
Put simply, as a result of the tightening in the supply chain during the height of the pandemic and the Federal
Reserve's massive expansion if its balance sheet, the efficient market pricing mechanism appears to be failing, at
least in regard to agricultural commodities.
One need only look at the latest (April 2021) United States Department of Agriculture (USDA) global supply, demand
and price data to see that something is amiss. According to this data, in 2020, small increases in production of no
more than 2.5% yielded significant double-digit declines in prices to farmers, since a tightened supply chain caused
flooding of agricultural commodities at the farm gate as processing capacity was taken offline. Such small increases
in production yielding such outsized impacts on price is the first indicator that not all is well within the sector,
especially considering the fact that retail prices and farm gate prices for processed agricultural commodities have
diverged, with processing and retail prices rising as farm gate prices decline.
Secondly, USDA projections through April of 2021 suggest a more startling trend. Production in 2021 of almost all
agricultural commodities is expected to rise in line with previous increases exhibited in 2020, however, output prices
for farmers in nearly every commodity are expected to rise. Considering this data has such a low margin of error,
this is a disturbing outlook; by all accounts, as agricultural commodity supplies rise, due to falling scarcity their price
should decline on the open market if levels of demand hold constant.
Considering the spikes in demand which occurred in 2020 due to panic buying, it is unlikely demand will grow at
such a pace to justify upward price momentum of this magnitude in line with rising levels of production. Furthermore,
due to a tightened supply chain amid lowered operating capacity during the pandemic, particularly in the
downstream meat processing facilities, prices for finished goods have already been on the rise for consumers. Now,
with expectations that farm gate prices will rise in line with rising levels of production suggests that these price
increases will likely ripple down the supply chain to the consumer. Overall, this suggests inflation or perhaps the
brewing of a new commodities super cycle, which sources such as the Wall Street Journal and Bloomberg have
suggested may be the case. If so, price growth will likely run away as production struggles to catch up, with the
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expectation that performance will be similar to that of the last commodities run up which burst in 2016. To be blunt,
none of this bodes well for the macroeconomic health of the economy and much remains uncertain for the
performance of the sector.
SAFETY IN THE HERD
Most farms are family-owned, and therefore, a low production year can
have an effect on annual income.
If a farm does not have significant assets, then a low production year could mean financial disaster. To combat
these situations, many farms have turned to consolidation through either mergers or cooperatives. More often, farms
create cooperative structures that enable them to pool resources and keep operating costs low. However, farms
have increasingly explored mergers and acquisitions to increase profit. As a result of this trend, the number of
enterprises is projected to continue stagnating near 2.3 million companies, exhibiting an annualized 0.1% increase
over the five years to 2026. Despite sluggishness in participation growth, demand for employment is likely to rise
due to growing demand for labor-intensive products. For example, organic crops require staff to monitor crops more
closely than traditional crops. As this trend continues, sector employment is projected to increase an annualized
0.4% to 3.6 million employees over the five years to 2026.
Performance Outlook Data
Domestic Agricultural
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Price Index
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) (Index)
2021 465,568 159,089 2,299,466 2,290,346 3,500,175 83,711 65,481 41,574 447,337 91.3
2022 468,217 159,406 2,300,520 2,290,525 3,513,059 84,646 65,355 41,744 448,925 92.2
2023 471,008 159,671 2,302,841 2,292,000 3,527,168 84,949 65,961 41,927 452,020 93.7
2024 473,292 160,494 2,305,268 2,293,745 3,539,473 85,563 66,063 42,085 453,791 94.3
2025 474,721 161,331 2,307,149 2,295,182 3,548,417 86,027 66,042 42,196 454,737 94.5
2026 477,808 162,449 2,313,630 2,300,963 3,566,862 86,794 66,249 42,426 457,263 95.4
2027 479,685 162,895 2,319,534 2,306,514 3,580,708 87,347 66,285 42,591 458,624 95.8
Industry Life Cycle The life cycle stage of this industry is Mature
LIFE CYCLE REASONS
Sector IVA is well below that of US GDP
Sector establishments are concentrating
Sector end markets are well-established
The Agriculture, Forestry, Fishing and Hunting sector is in the mature stage of its life cycle. Sector value added
(SVA), which measures a sector's contribution to the overall economy, is projected to rise at an annualized rate of
0.3% over the 10 years to 2026. Meanwhile, US GDP is projected to grow an annualized 2.3% during the same
period. SVA growth that is slower than GDP is typically a sign of a mature industry. Additionally, a sector's life cycle
stage is mainly illustrated by the fact that it holds a stable place in the US economy. Agricultural goods are a major
input for a wide variety of industries, so demand for this sector is consistently strong.
Additionally, the sector has experienced a moderate level of technological change. While agriculture is not typically
considered a highly advancing field, innovation in the form of genetically modified seeds and crops has significantly
changed the sector over the five years to 2021. Additionally, the sector has experienced a mild amount of
consolidation, as farms have turned to mergers as a means of cutting costs and reducing risk. As a result, the
number of enterprises is projected to decline at an annualized rate of 0.1% over the 10 years to 2026. Consolidation
is typically a sign of a sector in its mature stage.
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Products & Markets
Supply Chain Key Buying Industries Key Selling Industries
1st Tier 1st Tier
Manufacturing in the US Manufacturing in the US
Wholesale Trade in the US Wholesale Trade in the US
Retail Trade in the US 2nd Tier
2nd Tier Utilities in the US
Consumers in the US Construction in the US
Public Administration in the US
Products & Services
CROPS
Crop growing industries account for the largest subsector in the
Agriculture, Forestry, Fishing and Hunting sector.
The crop growing subsector includes farms that grow field crops, fruits and vegetables. The largest industries within
this subsector include Corn Farming (IBISWorld report 11115); Soybean Farming (11111); Hay and Crop Farming
(11199); and Fruit and Nut Farming (11135). Collectively, this subsector is expected to account for 42.9% of sector
revenue in 2021. However, over the five years to 2021, this segment has declined as a share of revenue. This
decline has mainly been driven by falling crop prices, represented by the agricultural price index.
Over the five years to 2026, crop growing is projected to rise slightly as a share of revenue, as crop prices begin to
recover and crop growers are able to increase their revenue. The agricultural price index is expected to rise an
annualized 0.9% over the five years to 2026. This growth will likely be driven by rising demand for crops and
increased use of biofuel. Additionally, as demand for meat begins to rise, livestock farmers will likely increase their
production, and therefore, increase their demand for feed.
ANIMALS AND ANIMAL PRODUCTS
Farms that produce livestock and animal products make up the second-
largest portion of revenue.
This subsector includes farms that raise livestock for sale or consumption and farms that produce animal products,
such as milk, eggs and honey. The largest industries within this subsector are the Beef Cattle Production industry
(IBISWorld report 11211), the Dairy Farms industry (11212) and the Chicken and Turkey Meat Production industry
(11235). These industries have particularly high demand because beef and chicken are the two most popular meats,
while milk is used as an input for hundreds of products. In 2021, this subsector is expected to account for 45.2% of
sector revenue.
AGRICULTURAL SUPPORT SERVICES
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The agricultural support services subsector includes companies that
provide services directly to other operators in the sector.
Companies in this sector offer crop support services, livestock production services and forest support services.
These services are the miscellaneous services that farms cannot often provide themselves, such as crop spraying,
livestock breeding and pest control. Revenue for this subsector has experienced steady growth over the past five
years as demand for these services are mainly stable. If farms are experiencing challenges, support service
providers can be brought in to cut costs and increase production. Meanwhile, if farms are experiencing growth, they
can hire support service providers to further increase production. As a result, over the past five years, agricultural
support services have grown as a share of sector revenue, accounting for 7.2% of revenue in 2021.
FORESTRY
Forestry is a relatively small subsector that includes logging and timber
services.
In 2021, forestry is expected to account for 3.3% of sector revenue. Despite its small size, this subsector is crucial to
the economy, as it provides resources to the construction and manufacturing sectors. This subsector has grown as a
share of revenue over the past five years because businesses have placed a greater emphasis on using domestic
supplies. However, imported lumber from Canada has threatened this subsector and has kept revenue low.
HUNTING AND FISHING
The hunting and fishing subsector is the smallest portion of the sector,
accounting for 1.4% of sector revenue in 2021.
This subsector includes hunting and trapping preserves, commercial trappers and commercial fishers. This
subsector does not include aquaculture, as that is included in livestock production. Revenue is this subsector has
increased slightly over the past five years as demand for fresh fish has grown.
Demand Demand for Agriculture, Forestry, Fishing and Hunting sector products
Determinants and services is determined by many factors, including consumer
preferences, legislation and weather.
The healthy eating index, which measures the degree to which people's diets comply with a standard diet set by the
US Department of Agriculture (USDA), typically serves as a proxy for demand for vegetables and fresh crops.
However, the USDA's target diet favors lean meat over red meat and contains limited amounts of meat, so as the
healthy eating index rises, demand for meat falls. As a result, the healthy eating index has both a positive and
negative affect on the sector. However, aside from the healthy eating index, other consumer health trends affect
demand for sector products. For example, the current trend toward organic and natural products has increased
demand for most of the sector because farms are able to sell natural products directly to consumers and at a higher
price.
Meanwhile, sector demand has been affected by biofuel production, as oilseeds, soybeans, corn and sugarcane are
all inputs to biofuel. Demand for biofuel has been volatile over the five years to 2021, as emphasis on biofuel has
declined in response to low natural gas prices. While regulation, such as the Renewable Fuel Standard Program,
which aims to increase the amount of renewable fuel used domestically by 2022, remains in place, many businesses
are less determined to use biofuel now that the price of gas is lower. However, as the price of natural gas rises over
the five years to 2026, demand for biofuel will likely rise.
Severe weather can also affect demand for agricultural products because weather largely determines prices for
crops.
17 IBISWorld.comAgriculture, Forestry, Fishing and Hunting in the US September 2021
Major Markets
FOOD PROCESSORS AND WHOLESALERS
The majority of products from the Agriculture, Forestry, Fishing and
Hunting sector are sold to food processors.
This market includes a wide variety of food processors, including dairy product producers, meat processors, fruit and
vegetable canning companies and any other food producers that use crops, vegetables, animal products or meat as
inputs. Demand from this market is high because most industry products have short shelf lives, making it difficult to
distribute products and sell them directly to consumers. For example, raw milk is rarely sold directly from farmers to
consumers because unpasteurized milk does not stay fresh for more than a few days. In 2021, food processors are
expected to account for 35.8% of sector revenue. However, over the five years to 2026, demand from this market is
likely to fall, as more consumers embrace local food sources and begin purchasing produce directly from farm
stands and farmers markets. Wholesalers account for a minimal share of revenue, accounting for 1.0% of sector
revenue in 2021.
FARMS
Sales to farms account for a significant portion of sector revenue.
While not all farms sell directly to other farms, the sale of seeds and livestock is a crucial market for some
agricultural industries. For example, wheat, barley and sorghum farms often sell crops directly to livestock farms to
use as animal feed, while chicken and turkey meat producers sell female hens to chicken egg farms. Over the five
years to 2021, the market for seeds has been increasingly dominated by genetically modified organism (GMO)
companies. For example, the Monsanto Company distributes GMO seeds for corn, soybeans, wheat and sorghum.
While GMOs have been controversial, demand for these seeds has been strong. In 2021, sales to farms are
expected to account for 21.2% of sector revenue.
EXPORTS
The market for exports within the Agriculture, Forestry, Fishing and
Hunting sector is relatively strong for certain parts of the sector.
As a whole, exports are expected to account for 17.9% of revenue in 2021. However, exports mainly come from
crop growing industries. Many crops are able to be exported in large quantities because they have long shelf lives.
For example, nearly half of all wheat, barley and sorghum grown in the United States is exported, while more than
half of US soybeans are exported. Exports also come from livestock industries, however, to a much lesser extent.
Meat is not often traded because shipping often takes too long, but livestock can be exported. For example, less
than 1.0% of Beef Cattle Production industry (IBISWorld report 11211) revenue is accounted for by exports.
GROCERY STORES, MARKETS, CONSTRUCTION, MANUFACTURING AND OTHER
Markets, grocery stores and restaurants represent a strong market for
farms that produce ready-to-eat products.
Industries with strong food service markets include the Vegetable Farming industry, the Orange and Citrus Groves
industry and the Fruit and Nut Farming industry. Sales to this market are expected to account for 9.9% of sector
18 IBISWorld.comAgriculture, Forestry, Fishing and Hunting in the US September 2021
revenue in 2021. However, this market is likely to grow over the next five years, as the trend toward farm-to-table
restaurants grows. Additionally, as consumers continue to buy produce from farmers markets and farm stands, this
market's share of the sector will continue to grow. Construction and manufacturing markets account for a minimal
share of sector revenue, accounting for 3.4% of revenue in 2021. All other markets account for 10.8% of revenue in
2021.
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International Trade Exports in this industry are Medium and Steady
Imports in this industry are Medium and Steady
Imports
Over the five years to 2021, imports have been satisfying a growing portion of domestic demand for agricultural
goods produced within the Agriculture, Forestry, Fishing and Hunting sector. Demand for imported goods is
determined by several factors, including the value of the US dollar, production levels in other countries and weather
conditions in the United States. Imports typically serve as a fallback for sector industries that have low production in
a given year. For example, the Orange and Citrus Groves industry (IBISWorld report 11134) has been plagued by
citrus greening, a plant disease that causes trees to produce sour and inedible fruits. As a result, citrus imports have
increased as domestic groves have not been able to keep up with demand. While diseases rarely affect the entire
sector at once, severe weather conditions can result in lower-than-average crop yields and increased import
penetration. The value of imports has risen at an annualized rate of 0.7% to $65.5 billion over the five years to 2021.
As a result, imports are expected to account for 14.6% of domestic demand in 2021, up from 14.4% in 2016.
Sector imports mainly come from Mexico and Canada because many sector products cannot survive long trips from
other countries. As a result, Mexico accounts for 26.2% of imports and Canada accounts for 14.3% of imports in
2021. Additionally, the United States-Mexico-Canada Agreement enables the United States to import Mexican and
Canadian agricultural products without tariffs, making goods from these countries relatively less expensive. The
United States also imports from countries that specialize in products that cannot be produced domestically. For
example, there are few places in the United States that can grow tropical fruits, such as bananas, avocados and
mangos. As a result, in 2021, Chile accounts for 5.9% of imports, while India accounts for 5.1% of imports.
Exports
Despite import growth over the past five years, the United States continues to be a net exporter of agricultural
goods. The value of exports is mainly driven by overseas demand for US cash crops, such as corn, wheat and
sorghum. These crops are mainly exported to China, due to the country's growing economy. As a result, China
typically accounts for 20.6% of sector exports in 2021, with Mexico and Canada accounting for a respective 11.1%
and 10.0% of exports in 2021. However, in 2018, the United States and China began a trade war when the United
States imposed tariffs on Chinese steel and China retaliated with tariffs on US agricultural products. As a result,
Chinese demand for sector goods declined drastically in 2019 and 2020. Exports to China have declined sharply
over the five years to 2021 due to these tariffs. As China is an important destination for sector goods, the value of
industry exports has floundered over the five years to 2021, rising an annualized 0.7% to reach an estimated $83.7
billion in 2021. While the two countries were expected to sign a trade deal in 2020, the COVID-19 (coronavirus)
pandemic has put a hold on the deal. International trade has been limited in nearly all sectors by the pandemic, so
the trade deal has not been a priority.
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Business
Locations
The distribution of establishments in the Agriculture, Forestry, Fishing and Hunting sector is largely determined by the land and
resources available in a region. Most industries within the sector require large amounts of land and access to natural resources.
For example, crop growing industries require large areas with fertile soil, making the Plains and Southeast regions two of the most
popular areas for crops. Meanwhile, New England (0.8%), which has several major urban areas and has many areas with rocky
and coastal soil, accounts for a disproportionately small portion of sector establishments. Meanwhile, certain crops, such as
oranges and citrus, can only grow in warm climates, such as Florida and California, supporting concentration in the Southeast and
West regions.
Overall, the Plains region is the most concentrated region in the sector, accounting 29.8% of sector establishments in 2021. This
region is mainly driven by cash crops such as corn, wheat, grain and tobacco. This also supports livestock production in the region
because feed lots need access to animal feed. Additionally, Iowa and Nebraska account for 7.5% and 6.0% of sector
establishments, respectively, in 2021. As a result, this region accounts for a disproportionally large amount of the sector relative to
the region's portion of the US population.
Following the Plains, the Southeast and West regions are the next largest regions in the sector, accounting for 17.8% and 17.3%
of establishments, respectively, in 2021. The Southeast's share of sector establishments is mainly supported by the region's warm
21 IBISWorld.comAgriculture, Forestry, Fishing and Hunting in the US September 2021
climate and large population. Meanwhile, the West's share is based on population and wide variety of climates. California is the
main driver of the West, accounting for 12.8% of establishments in 2021. While California lacks the open spaces for corn and
other crops that the Plains have, the state has large areas of timber for forestry and a variety of climates to support fruit growing.
22 IBISWorld.comAgriculture, Forestry, Fishing and Hunting in the US September 2021
Competitive Landscape
Market Share
Concentration
Concentration in this industry is Low
The Agriculture, Forestry, Fishing and Hunting sector is characterized by a low level of market share concentration,
with few companies accounting for more than 5.0% of sector revenue in 2021. The agriculture sector is highly
dominated by small family-owned farms with few farms having corporate ownership. According to the 2017
Agricultural Census, more than 85.0% of farms are family-owned (latest data available). While a growing number of
farms have formed cooperatives to increase their negotiating power, only a small portion of farms have included
revenue pooling as an aspect of their cooperative structure. Consolidation in the agriculture sector mainly takes the
form of supplier contracts. This trend is most prominent in the Chicken and Turkey Meat Production industry
(IBISWorld report 11235), where large companies, such as Tyson Foods Inc., supply farms with livestock to raise
and sell back to them. This structure keeps the supplier out of the sector, but gives them control over the operations
of farms in the sector. Additionally, there is higher concentration within the forestry subsector, however, this
subsector accounts for only a small portion of total sector revenue.
Key Success IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
Factors
Ability to alter goods and services produced in favor of market conditions:
Farms are able to limit volatility by diversifying their crops.
Appropriate climatic conditions:
Some crops cannot be grown in the United States due to the country's climate.
Proximity to key suppliers:
Farms must limit production costs by establishing close to seed, fertilizer and feed producers.
Must comply with government regulations:
Farms must comply with US Department of Agriculture standards to sell crops in the United States.
23 IBISWorld.comAgriculture, Forestry, Fishing and Hunting in the US September 2021
Cost Structure
Benchmarks
Profit
Profit is relatively high for the sector. In 2021, profit, measured as
earnings before interest and taxes, is expected to account for 18.6% of
sector revenue, elevated over 2016 levels, but still below the peak
levels exhibited before then during the commodities bubble run-up.
However, profit varies between subsectors and between individual
industries within the sector. Additionally, profit is highly volatile because
it is largely determined by production volumes and commodity prices. In
this sector, production volumes are difficult to forecast because they
can be hindered by severe weather conditions, disease outbreaks and
animal population changes.
As a whole, the sector has struggled since 2018 when the United
States entered into a trade war with China. The United States placed
tariffs on many Chinese products, and in retaliation, China placed tariffs
on US agricultural products. This resulted in a surplus of crops in the
United States, which caused prices and profit to fall. Just as the trade
war seemed to be coming to an end in early 2020, the sector was hit by
the COVID-19 (coronavirus) pandemic. The pandemic has forced cities
and states to close schools and nonessential businesses, causing
demand for food to shift. Many farms mainly supply restaurants and
other large buyers of food, as opposed to grocery stores and other
retail buyers. While overall demand for agricultural products remains
high, farms have had to shift where they sell their products. This has
come with additional costs, which, in 2020, led to lower profit. With
expected return to growth in sector revenue, profitability is anticipated
to rise in 2021 as conditions and end markets normalize.
24 IBISWorld.comAgriculture, Forestry, Fishing and Hunting in the US September 2021
Wages
Wages are a relatively low cost for the agriculture sector. Wage costs
are expected to account for 8.9% of sector revenue in 2021, down
marginally from 9.3% in 2016. However, this cost is dragged down by
labor costs for crop growers and livestock producers. These industries
are mainly made up of family farms that rely on unpaid family labor and
temporary workers. As a result, the average wage for the sector low.
However, over the five years to 2021, wages have fallen as farms have
implemented more advanced equipment and automation. While
automation had resulted in less demand for labor, it has also created
demand for skilled labor, as more advanced machinery requires
workers with the skills to operate it. However due to the overwhelming
presence of owner operators, technically no wages are paid and
increases in more productive labor should be apparent in sector
profitability, since owner-operators will pay themselves.
Purchases
While the inputs purchased vary widely between industries within the
sector, purchase costs are consistently high throughout the sector. In
2021, purchase costs are expected to account for 30.9% of revenue.
For crop growing industries, the largest purchase costs are seeds and
fertilizer, while purchase costs for livestock production industries are
mainly made up of animal feed and livestock. Purchase costs fluctuate
year to year in response to commodity price volatility. However, price
volatility typically balances out at the sector level because livestock
industries purchase from crop growing industries. Purchase costs have
declined recently, as Chinese tariffs have reduced overseas demand
for many crops, resulting in a surplus of seeds. As a result, the price of
seeds has plummeted, causing purchase costs to decline.
Marketing
Marketing is the smallest cost for the Agriculture, Forestry, Fishing and
Hunting sector because industry operators typically sell based on
contracts. In 2021, marketing costs are expected to account for 0.6% of
sector revenue.
Depreciation
Compared with other sectors, the agriculture sector has high
depreciation costs. Depreciation serves as a proxy for capital
expenses, and operators in this sector have high capital costs because
many of the industries within the sector must invest heavily in
equipment for crop growing and livestock production. Additionally,
forestry and agricultural support services are both highly capital
intense. In 2021, depreciation costs are expected to account for 6.6%
of revenue.
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Rent
Land is a crucial cost for the Agriculture, Forestry, Fishing and Hunting
sector, as crop growers and livestock farms need large amounts of
space. As a result, rent costs are expected to account for 7.9% of
sector revenue in 2021.
Utilities
Utilities represent a moderate cost for sector companies. This expense
includes the cost of operating equipment, watering crops, powering
facilities and all other energy needs. In 2021, utility costs are expected
to account for 6.9% of sector revenue.
Other Costs
Other costs for the sector include administrative costs, legal fees and
other general expenses. Other costs account for 19.6% of revenue in
2021.
26 IBISWorld.comAgriculture, Forestry, Fishing and Hunting in the US September 2021
Basis of Competition in this industry is High and the trend is Steady
Competition
INTERNAL COMPETITION
Competition in the Agriculture, Forestry, Fishing and Hunting sector is
moderate, with operators competing based on price and product
specialty.
Prices are highly volatile in the agriculture sector, particularly with crops and livestock because production yields can
change quickly creating shortages and surpluses. Crop farmers and livestock producers are limited in their abilities
to change prices because competition forces them to keep prices in line with the industry average. However, some
operators are able to charge higher prices for specialty products. Over the five years to 2021, demand for organic
and natural products has increased rapidly as people have become more concerned with the health and
sustainability of their food. As a result, many farms have sought out organic certification to better compete. This
pattern has been present with other food trends, such as grass-fed beef and free-range chicken and eggs. However,
while farms are able to charge higher prices for these specialty products, these products also typically carry higher
production costs. For example, organic crops require more labor than regular crops because organic farms need
labor to protect crops from pests and disease. As a result of these higher input costs, some farms will likely be
deterred from entering the market for organic and specialty products.
Additionally, consumer tastes and changing prices can lead to competition between industries within the sector. For
example, pork, chicken and beef are all substitutes for one another. Therefore, when the price of one meat
increases, demand increases for the others. This trend is present across the sector, with shifts in production and
prices of certain crops resulting in demand shifts for other crops.
EXTERNAL COMPETITION
The main source of external competition for the sector is from imports.
Severe weather conditions and production shifts in the United States cause downstream industries to purchase
goods from overseas instead of domestically. However, unlike most other sectors, the United States is a net
exporter of crops and agricultural goods, so import competition is not a threat. Aside from imports, the sector
contends with little competition from other sectors because agricultural goods are the basis of most foods and
cannot be replaced.
Barriers to Barriers to Entry in this industry are Medium and the trend is Steady
Entry
The Agriculture, Forestry, Fishing and Hunting sector has Barriers to Entry Checklist
moderate barriers to entry. While barriers vary between
subsectors, most companies seeking to enter the sector Competition High
need a high level of initial capital. For agricultural
industries, the most significant barrier is the need for large Concentration Low
amounts of land. For example, crop growers need vast
quantities of land to produce large enough crop yields to
Life Cycle Stage Mature
be financially stable. Meanwhile, livestock producers need
land for their livestock to graze or exercise. Other
subsectors also have large capital expenses. For Technology Change Medium
example, forestry industries need logging equipment,
while agricultural service industries need large equipment, Regulation & Policy Heavy
such as crop dusters and harvesters.
Industry Assistance High
Aside from the large costs of entering the sector, crop and
livestock industries also present the challenges
associated with seasonal businesses. In the simplest
terms, crops need to grow before they can be sold. In
other words, if a new farm wants to enter a crop industry,
they must have the assets to stay in business without
income until their first harvest. A bad harvest during a
farm's first year can be enough to put it out of business if
it does not have strong enough assets.
Other barriers new companies experience in this sector
include meeting the regulations set by the US Department
of Agriculture, competing with longstanding farms and
finding a staff with expertise in the field.
27 IBISWorld.comAgriculture, Forestry, Fishing and Hunting in the US September 2021
Industry Globalization in this industry is Medium and the trend is Increasing
Globalization
The Agriculture, Forestry, Fishing and Hunting sector has a moderate level of globalization. Most companies in the
sector are based in the United States. Of the largest companies participating in the sector, only Syngenta AG is
based in another country. While some large seed companies, such as the Monsanto Company and Cargill Inc., have
operations in other countries, these companies do not represent the average sector operator. Typical companies in
this sector are small independent businesses that operate in only one location. However, the sector does experience
globalization in the form of international trade. Trade does not represent a significant portion of sector operations,
but some agricultural goods are entirely imported because they cannot be produced domestically. Additionally, some
industries within the sector, including corn growers and soybean growers, derive a significant portion of revenue
from exports.
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