The controlled growing environment, as in the case of greenhouses, generates greater yield output and faster growth, which has contributed to the growth of the industry in Australia over the past five years. The use of closed systems provides water efficiencies and energy savings, which has also benefited the industry in light of water shortages and restrictions over the past five years. The Under Cover Vegetable Growing industry is forecast to expand by an annualised 3.8% in the five years through 2013-14. IBISWorld industry analyst Nick Flores states “protected growing enables growers to produce a constant stream of supply while using less inputs and reducing the environmental footprint, which has helped boost industry performance.” Industry revenue is forecast to increase by 5.1% in 2013-14 to reach $987.8 million.
According to Flores, “the dominance of supermarket giants Coles and Woolworths has favoured the larger industry players that are able to provide a constant stream of supply, and exhibit a sufficient level of scale.” Production volumes generally dictate profitability, which favours larger, more integrated and technically advanced growers. Small firms have benefited from grower-run cooperatives that aid in meeting demand quotas for large orders. Benefits have also come from using alternative distribution channels, such as fresh food markets, and by providing produce directly to food service providers. The industry has several non-employing, owner-operated enterprises, and exhibits a moderate level of consolidation as smaller firms operating at a loss gradually exit the industry.
The Under Cover Vegetable Growing industry has a low level of market share concentration. Costa dominates mushroom production in Australia, while the Moraitis Group has a major stake in under-cover tomato production. These two companies are highly integrated with their own packing, logistics, storage and wholesale operations. They produce large volumes of produce, which also helps them attain the appropriate economies of scale to remain profitable. Despite this, the industry has a multitude of small owner-operated or family-run businesses that occupy less than 50 hectares and earn less than $50,000 per annum. A decline in enterprise numbers over the past five years highlights the dominance of the larger players, and points to the need to increase production as a key success factor for growers. Costa Group Holdings is the only major player in the industry. For more information, visit IBISWorld’s Under Cover Vegetable Growing report in Australia industry page.