Jun 06 2016
Against the backdrop of free trade agreements, IBISWorld has compiled a list of the nation’s top 20 industries by growth in exports over the five years through 2015-16.
According to IBISWorld, the top 20 exporting industries by growth in merchandise exports, excluding services, are estimated to be worth $22.3 billion in 2015-16. Merchandise trade, which excludes services, across all industries has been calculated by IBISWorld to be worth $260.6 billion to the Australian economy, or 15.7% of GDP.
“Analysis conducted by IBISWorld shows that the top 20 fastest-growing exports will rise between 10.6% and 36.3% annualised over the five years through 2015-16,” said Ms Jem Anning, IBISWorld Senior Industry Analyst.
Five of the notable industries in the top 20 list include Rice Growing, Seafood Processing,Grape Growing, Cider Production, and Vitamin and Supplement Manufacturing.
Rice bowl of Asia
Accounting for 61.5% of industry revenue in 2015-16, Australian rice exports are an incredibly important part of the Rice Growing industry. The industry is estimated to generate revenue of more than $619 million in 2015-16, which has increased at an annualised 29.5% over the past five years. By 2020-21, the value of rice exports is anticipated to be $468.1 million, up from $380.7 million in 2015-16.
“Rice exports have been volatile over the past five years due to mixed demand, price movements and the reliance on water. However, Australian rice growers have benefitted from rising demand from Japan since 2011-12, when the Fukushima nuclear disaster occurred. Many of the paddocks near the nuclear power plants are contaminated, and soil in the path of the tsunami that caused the nuclear disaster is too salty for growing rice, notwithstanding the absence of adequately functioning irrigation systems,” said Ms Anning.
As rice is a water-intensive crop, many parts of the continent cannot grow it, including parched Western Australia and the Northern Territory. The majority of domestic rice production occurs in the Murray and Murrumbidgee valleys of southern New South Wales. The state’s share of all rice growing establishments is estimated at 96.7%.
Overseas markets hooked
Exports in the Seafood Processing industry are forecast to have grown by an annualised 27.3% over the five years through 2015-16 to account for 75.4% of industry revenue in 2015-16.
“International trade has become increasingly important for the Seafood Processing industry over the past five years. Imports accounted for the majority of domestic demand and exports made up an increasingly large proportion of total revenue over the past five years,” said Ms Anning.
IBISWorld found rising imports have encouraged domestic seafood producers to focus on exports by capitalising on growing economic prosperity and rising disposable incomes in many Asian nations.
“Australian produce is perceived to be of higher quality and many Asian markets are prepared to pay a premium for produce such as Bluefin tuna and rock lobster, increasing revenue over the period,” added Ms Anning.
Most significantly, Vietnam is the main destination for Australian seafood exports, representing 62.6% of total exports. IBISWorld found that exports to Vietnam, particularly rock lobster and abalone, have grown rapidly over the four years through 2014-15.
Low hanging fruit
The Grape Growing industry has enjoyed substantial growth in exports over the past five years. In 2010-11, grape exports represented 8.4% of revenue, a figure that IBISWorld anticipates will more than triple to 26.8% by 2020-21.
“Stringent requirements for pre-production wine grapes mean that only a relatively small number of wine grapes are available for cross-border trade. The overwhelming majority of exports consist of dried grapes and fresh grapes, also known as table grapes,” said Ms Anning.
“The majority of fresh grapes grown in Australia are exported, mainly to markets in Asia. Local grape producers have experienced a notable upturn in exports due to trade agreements signed in 2014 and 2015. The free trade agreement with South Korea lifted tariffs on imported Australian fresh grapes and the Japanese and Chinese agreements will gradually remove tariffs over the next seven and four years, respectively,” added Ms Anning.
IBISWorld highlighted that overall industry performance is not reflective of the strong performance of table grapes, as wine grapes make up the vast majority of industry revenue at 67.6%.
Australia’s historic cider producers have enjoyed buoyant export growth over the last five years. Exports made up an estimated 2.9% share of revenue in 2010-11, and are anticipated to reach 5.5% by 2020-21. In the years 2010-11 to 2015-16, IBISWorld calculated export growth to be 25.8% annualised and valued exports at $16.5 million in 2015-16.
“Exports have grown rapidly over the past five years, in part because of the signing of a free trade agreement with Korea in April 2014 that has led to a surge in cider exports to that country. Over the next five years, IBISWorld expects free trade agreements with China and Japan to encourage more Australian cider to be exported, most notably premium products,” said Ms Anning.
Crowded markets in Europe and North America were identified as constraining further export growth, but the weaker Australian dollar, coupled with increasing interested in cider, assisted in boosting demand by reducing prices for Australian cider.
Supplementing domestic demand
Exports in the Vitamin and Supplement Manufacturing industry are high and increasing, totalling an estimated $365.0 million in 2015-16. IBISWorld found 26.6% of industry revenue was derived from exports in 2010-11 and anticipates this to reach 42.1% by 2020-21. This growth in exports is likely to be the result of the two major manufacturers, Swisse and Blackmores, continuing to expand into Asia, encouraged by healthy overseas demand.
“Over the next five years, exports are forecast to gain a larger proportion of industry revenue as the lower Australian dollar makes it cheaper to export products made here,” said Ms Anning.
“Asian markets, particularly China, are expected to offer significant growth opportunities for Australian products, valued for their quality, as the burgeoning middle class consumes more imported goods and focuses on greater health awareness,” added Ms Anning.
IBISWorld also identified the close proximity and several free trade agreements between Asian economies and Australia as decisive growth drivers for the industry.
For a full list of the top 20 industries by export growth over the last five years, please refer to appendix A. For more information on these, or any of Australia’s 500 industries, log on to www.ibisworld.com.au, or follow IBISWorldAU on Twitter
For more information, to obtain industry reports or to speak with an analyst, please contact:
Strategic Media Advisor – IBISWorld Pty Ltd
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