Cotton, organic ag set to fly

21 Jan, 2016 01:00 AM
Organic agricultural production in Australia is tipped to have revenue of about $734 million in 2015-16.
Organic agricultural production in Australia is tipped to have revenue of about $734 million in 2015-16.

Organic agriculture and cotton growing have been singled out as industries with potential to make their mark in 2016, according to reports by international market research and business intelligence firm IBISWorld.

Other industries on the list of sectors set to boom include internet publishing and broadcasting, houseware retailing, and universities and other higher education providers.

Although global market pressures and dry seasonal conditions are key hurdles not to be underestimated, IBISWorld has tipped cotton growing "will fly" with revenue worth about $879 million - well up from 2014-15.

The organic farming sector is forecast to see revenue grow by 5.6 per cent to reach $733.8m as demand domestically and overseas encourages new production and more retailers make space for organic lines.

Rising consumer health consciousness about pesticides and environmental awareness, plus the fact major supermarket chains Woolworths and Coles now stock wider ranges of organic lines, were making organic product choices more mainstream.

These trends were contributing to the industry's strong business performance said IBISWorld senior industry analyst Spencer Little.

"Organic beef has been a major growth product in the past five years," he said.

"Farmgate revenue for organic beef cattle grew almost 127pc in the four years through 2013-14.

"Australian organic farmers also produce poultry and pigs, but due to shortages of certified organic grain for livestock feed, imported grain accounts for the largest share of imported organic produce into Australia."

Mr Little said Australia was able to take advantage of a vast 22m hectares of potential organic farmland area for organic meat production, where animals were certified under strict assessment rules for organic grazing.

He said while cotton growing had been expected to be more favourable in 2015-16 than last season, cotton was subject to significant volatility, with revenue movements ranging between 136.1pc growth and a 62.7pc decline in the past five years.

Cotton industry market analyst, Pete Johnson, agreed cotton production was indeed set to soar, pushing well beyond the industry's traditional crop peak of about 4m bales to around 5m.

But not this year.

The 2016 autumn cotton pick was estimated to deliver similar volumes to last year - about 2.3m or 2.4m bales.

Scattered areas of additional dryland crop had been planted to take advantage of available soil moisture in parts of southern Queensland and northern NSW, but most mainstream irrigation areas continued to have restricted cotton planting choices because of low water availability.

The burgeoning southern NSW crop was compensating for much-reduced areas further north, but despite strong grower interest and confidence, restricted water availability and high water prices in the Murrumbidgee and Lower Lachlan valleys still constrained the south's potential.

Among the industries destined for a "less than exciting year" according to IBISWorld are petroleum processing, because falling global oil prices are pushing down revenue options, diamond and gemstone mining, printing, and nightclubs.

Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media


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