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AU: Citrus, banana and other fruit expected to flourish

The Citrus, Banana and Other Fruit Growing industry in Australia has struggled to cope with adverse weather conditions over the past five years. Industry revenue has grown at an annualised 0.7% over the past five years due to the devastating consequences of the millennium drought, Tropical Cyclones Larry (2006) and Yasi (2011), and record flooding across Australia's eastern states (2010-11). Fortunately, the industry's diverse product range, Australia's geographic position and counter-seasonal advantage were able to prevent the industry from an overall decline over the five years through 2011-12. The industry rebounded quickly after the spate of natural disasters in 2010-11. According to IBISWorld industry analyst Suzannah Rowley, "Many farmers were able to replant crops shortly after the wet weather, and bananas from cyclone hit areas began to trickle back onto supermarket shelves just six months after the industry was hit by Cyclone Yasi". The industry also benefited from the rise in overall fruit consumption in Australia over the past five years. These factors, combined with improved growing conditions, greater water availability and increased production, are expected to boost revenue by 10.0% in 2011-12 to total $2.12 billion.

The industry is expected to flourish over the next five years to 2016-17. Forecast factors contributing to growth are stable demand for industry products on domestic and global markets, an increase in fruit consumption expenditure, greater water availability, increasing production and growth opportunities stemming from the increasing popularity of premium organic produce. Rowley adds, "The major impediments to growth over the next five years are projected to be the risk of competing with low cost foreign imports given Australia's obligations under World Trade Organization rules and the possibility of further extreme weather patterns given the possible onset of climate change".

The Citrus, Banana and Other Fruit Growing industry has a low level of market share concentration compared with other sectors of the Australian economy. Like most horticultural industries, fruit growing comprises many small-size participants although concentration does vary. Chiquita dominates the blueberry segment and is also one of Australia's largest banana growers. The almond segment is dominated by Select Harvests. However, most segments comprise a large number of small operators. The presence of many low-value establishments is partly explained by the small tracts of land required for fruit growing. Average farm and orchard sizes are increasing as rising input costs and lower returns erode profitability for small operators. The move towards large-scale production should see more corporate players enter the industry in future years.

Source: sfgate.com

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