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Food demand set to boost agricultural equipment industry over the next five years

feature-bulldozer-200The farm and construction machinery wholesaling industry has recorded mixed results during the five years to 2012-13. During the mid-2000s, there was a long run of growth driven by a boom in construction activity.

Then revenue declined steeply following the financial crisis as construction activity came to a stop, while ongoing drought conditions weighed on farm production. Since then, revenue growth has strengthened as surging investment in the resources sector and improved agricultural conditions stimulated sales of equipment and machinery.

Severe floods in 2010-11 hurt demand for agricultural equipment but reconstruction efforts boosted sales of construction machinery during 2011-12. Moderate growth of 2.9% is forecast for the current year as the uncertain economic environment weighs on construction activity and demand for related machinery.

IBISWorld estimates industry revenue over the five years through 2012-13 will contract at an annualised 1.0% to reach $18.8 billion.

Growth in the farm and construction machinery wholesaling industry is expected to strengthen over the five years to 2017-18, underpinned by an upturn in construction activity and rising farm production. High population growth, a continuing inflow of capital into the resources sector and strong underlying demand for housing will stoke demand for construction and earth-moving equipment.

Rising global demand for food and strengthening investment into Australia's agricultural sector is also expected to stimulate agricultural production and demand for tractors, harvesters and agricultural implements.

Industry at a Glance

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Over the five years through 2017-18, IBISWorld estimates revenue in the industry will increase at an annualised 3.6% to reach $22.4 billion. Industry profitability is forecast to grow moderately due to rising prices and, early in the period, the strong dollar.

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