INDUSTRY FOCUS
AGRICULTURE, FORESTRY & FISHING
OVERVIEW
The US agriculture, forestry, and fishing industry comprise 2.3 million businesses providing employment to over 3.1 million Americans and generating a combined annual revenue of $440 billion. Sectors within the industry include crops, livestock, agricultural services, veterinary, landscape services, forestry, fishing, hunting, agricultural chemicals, machinery, and farming equipment.
The companies holding the largest market share in the US industry include Cargill Incorporated, Bayer AG, Syngenta AG, and Tyson Foods Inc.
Following several years of depressed commodity prices, trade wars, and challenging financial conditions, 2020 was setting up to be a critical year for the US agricultural economy. The Pandemic pushed commodity prices down an additional 10-25% by 2020-Q2, but the US Congress responded quickly with $46.5 billion in economic stimulus, providing much-needed relief for the industry.
TRENDS & CHALLENGES
Demand in the agricultural and forestry industry is driven by government agricultural policy programs, food consumption trends, and lumber demand. Profitability depends on efficient operations. Large companies have advantages in vertically integrated operations and economies of scale in purchasing and marketing. Small operations can compete effectively by supplying local markets, specializing in heirloom or organic crops or those that have not been genetically modified (GM), or raising animals in less restrictive environments on hormone-free diets.
FUTURE FORECAST
USDA is forecasting that 2020 Net Farm Income will total $119.6 billion, 43.1% above 2019 levels. Adjusted for inflation, U.S. net farm income will be at its highest level since 2014 and well above the 20-year average. Most of the trade optimism for U.S. ag early this year focused on the U.S./China Phase One trade agreement given their commitment to import $36.5 billion of U.S. ag products in 2020.
Agility is key to the resilience of the agriculture and forestry industry. Opportunities lie in its transformation: digital investment, supply chain resilience, agility in its operations, and adaptation to international markets.
INDUSTRY PERFORMANCE
14X
EBITDA MULTIPLE
7X
SALES MULTIPLE
Disclosure: These key performance indicators are based on industry averages for a company with $10 million in revenue. The KPIs are not specific to the operational performance of your company or your sub-sector.
The information contained has been obtained from different sources deemed reliable, including DealStats, Deloitte, Dun & Bradstreet, and Business Reference Guide. Pacifica Advisors does not make any representation or warranty as to the accuracy of the data. PA is a mergers and acquisitions (M&A) advisor and business broker.