Crop Services in The US Industry Report

Crop Services in the USMarch 2016 1
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Small harvest: Crop production is expected to

decrease, loosening industry demand
IBISWorld Industry Report 11511
Crop Services in the US

March 2016
Jack Curran
2 About this Industry
18 International Trade
33 Key Statistics
Industry Definition
19 Business Locations
33 Industry Data
Main Activities
Similar Industries
21 Competitive Landscape
Additional Resources
21 Market Share Concentration
33 Annual Change
21 Key Success Factors
4 Industry at a Glance
33 Key Ratios
34 Jargon & Glossary
22 Cost Structure Benchmarks

24 Basis of Competition
5 Industry Performance
24 Barriers to Entry
Executive Summary
25 Industry Globalization
Key External Drivers
Current Performance
Industry Outlook
11 Industry Life Cycle
26 Major Companies
27 Operating Conditions
27 Capital Intensity
13 Products & Markets
28 Technology & Systems
13 Supply Chains
29 Revenue Volatility
13 Products & Services
30 Regulation & Policy
15 Demand Determinants
31 Industry Assistance
16 Major Markets
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About this Industry

Industry Definition
Establishments in this industry provide

support activities for growing crops.
Some examples of these support activities
include cotton ginning, soil treatment,
Main Activities
The primary activities of this industry are
crop planting and harvesting. Almost all

US farmers, including cotton, wheat, corn
and fruit growers, purchase from this
industry at some level.
Cotton ginning
Soil preparation, planting and cultivating
Postharvest crop activities (except cotton ginning)
Crop harvesting, primarily by machine
Farm labor contractors and crew leaders
Farm management services
The major products and services in this industry are

Cotton ginning
Crop harvesting by machine
Post-harvest crop activities
Similar Industries
11 Agriculture, Forestry, Fishing and Hunting in the US

Establishments primarily engage in agricultural production.
11521 Livestock Production Support Services in the US
Establishments primarily engage in providing support services for livestock production.
11531 Forest Support Services in the US
Establishments primarily engage in providing support services for forestry.
23499 Heavy Infrastructure Construction in the US
Establishments primarily engage in land clearing, land leveling and earth moving for terracing, ponds and
irrigation.
31142 Canned Fruit & Vegetable Processing in the US
Establishments engage in artificially drying and dehydrating fruits and vegetables.
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About this Industry
Additional Resources
For additional information on this industry

www.eia.doe.gov
Energy Information Administration
www.fsa.usda.gov
Farm Service Agency
www.usda.gov
US Department of Agriculture
IBISWorld
writes over 700 US

industry reports, which are updated
up to four times a year. To see all
reports, go towww.ibisworld.com
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Crop Services in the US March 2016
Industry at a Glance
Crop Services in 2016
Key Statistics
Snapshot
Revenue
Annual Growth 11-16
Annual Growth 16-21
Profit
Wages
Businesses
$16.3bn
0.7%
$1.0bn
$2.8bn
Demand from crop production
Revenue vs. employment growth
There are no major

players in this
industry
12
20
% change
10
% change
Market Share
1.5%
64,284
0
-10
-4
-8
Year 08
10
12
14
Revenue
16
18
20
-20
Year
22
09
11
13
15
17
19
21
Employment
SOURCE: WWW.IBISWORLD.COM
p. 26
Products and services segmentation (2016)
4.8%
Demand from crop

production
4.4%
Cotton ginning
8.9%
Agricultural price index
Price of fertilizer
Prime rate
42.6%
11.6%
Farm labor contractors

and crew leaders
p. 5
Industry Structure
27.7%
Life Cycle Stage

Revenue Volatility
SOURCE:
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SOURCE:
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Mature
Medium
Regulation Level
Medium
Technology Change
Medium
Medium
Capital Intensity
Low
Barriers to Entry
Industry Assistance
Low
Industry Globalization
Concentration Level
Low
Competition Level
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 33
Low
Medium
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Industry Performance
Executive Summary | Key External Drivers | Current Performance

Industry Outlook | Life Cycle Stage
Executive
Summary
The Crop Services industry consists of

companies that assist in a variety of
planting, harvesting and treatment
activities for crop producers. The industry
provides services for all types of crops,
including handpicking fruit, crop dusting
and cotton ginning. Therefore, industry
performance is the aggregate result of
many different types of industry operators.
Despite slow growth in the industrys
largest market segment, fruit and vegetable
farming, revenue has increased an
estimated 0.7% per year on average in the
five years to 2016 to $16.3 billion.
The
well-established nature of US farming

guarantees demand for crop services
Grains such as corn and wheat, as well
as oilseed crops such as soybeans, have
become more significant in providing for
an increasing global population. A string
of floods and droughts damaged a large
number of fields in Russia, India and
other large crop-producing countries in
2011, boosting prices for crops like corn,
wheat and cotton. As a result, industry
revenue grew 7.3% in 2011. Corn
production in particular, which requires
industry services such as crop dusting,
has become important as US renewable
energy quotas have pushed for the crops

Industry activity is a function of demand
from downstream crop farming,
including fruit and nut farming, vegetable
farming, grain farming, oilseed farming
and cotton farming. Any increase in
revenue for crop production will result in
an increase in demand for various
support services. Likewise, demand for
industry services decreases when revenue
for crop production decreases. Crop
use in ethanol production, increasing

revenue generated from this segment.
Favorable weather conditions are
expected to produce a strong yield in
most crops in 2016; however, an
oversupply of many US crops has led
prices to fall, as indicated by a drop in the
agricultural price index in 2015 and 2016.
Crop services revenue has fallen in turn,
declining an estimated 5.2% in 2015.
However, revenue is expected to recover
in 2016, increasing 2.4%.
The well-established nature of US
farming guarantees demand for crop
services. Demand for fresh fruit and
vegetables calls for specialized operators
to plant and pick these crops. Similarly,
continued international demand for US
cotton will ensure a place for cotton
ginners, another industry segment. Due
to the specialized nature of most industry
services, profit margins tend to be strong,
weighing in at 6.4% in 2016.
Due to falling crop prices and
decreasing planted acreage, crop
production is expected to decrease in the
five years to 2021, loosening demand for
crop services. However, as interest rates
increase, farmers will be less inclined to
invest in their own machinery, preferring
to outsource to industry operators. As a
result, industry revenue is expected to
rise at an annualized rate of 1.5% to $17.5
billion in the five years to 2021.
production revenue is expected to

decrease in 2016.
The volume of planted acreage for crop
production does not fluctuate much from
year to year. But prices received for that
areas crops can swing wildly based on a
variety of factors, including weather
conditions, global agricultural production
and demand from domestic and foreign
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food manufacturers. Prices received in

turn partially determine farmers
revenue, and increased revenue allows
farmers to pay for crop services. An
increase in the agricultural price index
therefore increases demand for industry
services. In 2016, the agricultural price
index is expected to decline, posing a
threat to the industry.
Price of fertilizer
Fertilizer is a major component of crop
production, and its application is often
handled by operators in the Crop Services
industry. Therefore, its price affects the
input costs of industry operators. When
the price of fertilizer rises, operators
input costs rise, negatively impacting the

industry. The price of fertilizer is
expected to fall in 2016, creating a
potential opportunity for the industry.
Prime rate
Heavy loan-servicing costs can
discourage farmers from purchasing
heavy equipment. This increases
demand for contracted services in
harvesting and other capital-intensive
farming activities. Therefore, rising
interest rates, represented by the prime
rate as a proxy, will encourage crop
farmers to use more of the industrys
support services. The prime rate is
expected to increase in 2016.

20
130
120
10
110
Index
% change

continued
90
-10
-20
Year
100
80
09
11
13
15
17
19
21
70
Year 06
08
10
12
14
16
18
20
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The Crop Services industry provides

farms with support services, such as crop
dusting, crop harvesting and labor
contracting, making its performance
closely related to changes in domestic
and international crop production
industries. Because the industry provides
a wide variety of services, falling demand
in one segment (e.g. contract labor) may
be offset by positive results in another
(e.g. mechanized harvesting). Overall,
industry performance is the aggregate
result of a number of specialized
operators that service different crops.
IBISWorld expects revenue to grow an
estimated 0.7% per year on average in the
five years to 2016, to $16.3 billion.
Industry revenue
12
8
% change
Current
Performance
4
0
-4
-8
Year 08
10
12
14
16
18
20
22
Global crop prices

influence revenue
Changes in industry revenue are closely

linked to crop price trends. Revenue
increased from recessionary lows in 2011,
following a surge in demand for US
crops. Adverse weather conditions in
Russia, a global supplier of wheat, caused
the country to ban exports of its crops,
which enabled the United States to step
up production to meet world demand.
Similarly, floods in Pakistan and India
during 2011 destroyed most of the
countries cotton production, which left
the United States to satisfy demand from
Chinese apparel manufacturers. These
conditions benefited crop farming
industries, with the Crop Services

industry following closely behind.
Since 2013, however, this trend has
reversed. The prices of a number of
crops, especially grain and oilseed
crops, have fallen due to oversupply.
Decreased revenue in these crop
farming industries has led to decreased
demand for crop services. Indeed, the
agricultural price index fell in 2015,
according to USDA estimates. However,
demand from crop production is
expected to return to growth in 2016,
resulting in industry revenue growth of
2.4% the same year.
Flexible outsourcing
to the industry
The industry consists of several product

lines. Cotton ginning, the process that
separates cotton fibers from seeds and
seed hulls, is one of the most stable
product lines since it supports one of the
oldest industries in the United States: the
cotton industry. The contributions from
soil preparation, planting and cultivating
services have also been stable, but for
different reasons. While cotton ginners
support a singular crop, participants in
the soil preparation, planting and

cultivating market segment are much
more diversified. Their services can be
employed for almost all crops; thus, the
yearly fluctuations in the relative value of
crops hardly affect this subindustry.
Much of the Crop Services industrys
revenue is generated from labor-oriented
services included under the farm labor
contracting and postharvest crop activity
service segments. Farms have struggled
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Flexible outsourcing
to the industry
continued
with hiring labor to meet production

needs because farming activities are
extremely seasonal, which results in labor
shortages at crucial times and high costs
all around. However, outsourcing to
contract laborers in the Crop Services
industry allows farmers to circumvent
this problem by finding trained workers
at reasonable prices, only when farms
need them. Contracting companies can
retain these workers yearlong by applying
them toward different farms and crops,
Labor and company

trends
Farm labor has become less attractive to

non-US nationals in the past five years.
For one, several states have implemented
strict anti-immigrant policies, making
finding and keeping work more difficult.
Also, the majority of immigrants in farm
labor come from Mexico, but
immigration from Mexico has stalled
recently as the countrys manufacturing
sector booms, providing more low-skilled
jobs. As a result, labor-intensive services
of the industry have declined as a share
of revenue and average wages have
increased to help retain workers. Wage
costs have grown at the same pace as
revenue in the past five years, partially as
employment has increased slightly at an
annualized rate of 0.3% to 122,555 in the
five years to 2016.
In addition to product-specific trends,
some larger-scale changes are affecting
the industry more broadly. The most
and at different stages of the farming

process. The postharvest services
segment, which sources a large portion of
its work from fruit, nut and vegetable
growers and provides labor-intensive
services, such as grading and packing,
also flexes its workforce with contract
laborers. However, a large portion of
laborers in these segments are not US
citizens and several factors have made it
difficult for farmers to find immigrant
workhands in the past five years.
Farm
labor has become

less attractive to non-US
nationals in the past five
years
notable of these includes growth in
company numbers. As the immigrant
workforce thins, the value of its skilled
labor has become clearer. Operators that
can offer skilled workers for laborintensive processes command a
premium. This trend has contributed to
keeping profit margins strong, which are
expected to be at an estimated 6.4% in
2016. Strong profit has drawn more
players into the industry; the number of
enterprises is expected to grow at an
annualized rate of 1.7% to 64,284 in the
five years to 2016.
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Industry
Outlook
The Crop Services industry will continue

to depend on domestic crop production
during the five years to 2021. In
particular, future demand for support
services will be closely tied to the
planted acreage of the farm sectors top
crops: corn, wheat, soybeans, upland
cotton, fruits and vegetables. While crop
prices may not remain at the peaks of
2014 and 2015, the long-term increase
in production is projected to boost the
need for services like planting and
harvesting. However, declines in prices
and acreage through 2021 will give the
industry a slow start, leading industry
revenue to increase at an annualized
rate of only 1.5% to $17.5 billion over the
five-year period.
Crop production for food will remain
steady, but the US farming sector has
found markets for crops outside of food
production. Corn and soybeans are
fueling much of the biofuel production
industry. The Energy Independence and
Profitability
Several factors are at play when discussing

the direction of profit margins in the next
five years. First, as the number of acres
dedicated to high-yield crops increases,
farmers will be looking for more help
planting and harvesting. Companies like
Monsanto already control the price of
upland cotton, soybean and corn seeds for
planting, most of which are genetically
modified (GM), but they have yet to extend
their reach to smaller oilseeds and other
farming industries. IBISWorld projects that
GM crops will be used even more widely,
resulting in higher yields and leading to a
greater need for outsourced assistance. In
addition, GM seeds must be purchased new
each planting season as part of these
companies agreements with farmers, which
will increase farmers need to buy seeds
more often. The increased production
meant to hit specific quotas will create
Security Act of 2007, which amended the

Energy Policy Act of 2005, increased
biofuel production quotas from 7.5 billion
gallons by 2012 to 36.0 billion gallons by
2022, with a yearly quota to be set by way
of a Renewable Fuel Standard (RFS). To
meet these standards, an increasing
amount of oil crops will need to go into
the production of alternative energy,
leading to increased plantings and
harvests, which will require more crop
services. Despite this expected long-term
increase in demand, biofuel production
might not grow as quickly as originally
expected. Ethanol production has kept
pace with the gasoline supply, leading the
US Environmental Protection Agency to
abstain from finalizing a 2014 RFS,
setting a precedent for potential future
reductions in biofuel quotas. Decreased
short-term demand for biofuel crops will
lead agricultural prices to slump in the
early part of the next five years, picking
back up shortly after.
Increased
production will
create higher demand for
experienced crop service
providers, boosting profit
higher demand for experienced crop service
providers in the soil preparation segment,
boosting profitability.
Meanwhile, the price of fertilizer is
projected to fall over the next five years. As
a major cost for industry operators, a
decrease in the price of fertilizer represents
falling purchase costs. Paired with stable
profit margins, this will lead to growth in
the number of industry enterprises. The
number of industry operators is projected
to grow at an annualized rate of 1.8% to
70,191 companies in 2021.
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Maintaining a
workforce
Opportunities and
threats
The industrys ability to retain a

knowledgeable and sizeable workforce
will in part determine its performance
during the next five years. Labor makes
up perhaps the most important asset of
the Crop Services industry as a whole.
The two largest business segments, soil
preparation and postharvest activities,
are highly labor-intensive and include
services such as hand-planting and
hand-picking fruits and vegetables.
Further, a large portion of this labor is
done by foreign-born workers, mostly
from Mexico. But crop producers now
stand to lose workers based on higher
wage costs and difficulties with
immigration policy.
The Crop Services industry has been
losing its foreign-born workforce in recent
years as Mexican agriculture and
manufacturing industries have
experienced strong growth. Available jobs
in Mexico have made wages more
competitive in the US agricultural sector,
which competes for much of the same
workforce. As a result, the industrys wage
costs have been increasing, and this trend

is expected to continue. In the five years to
2021, wages are expected to increase an
annualized 1.4% to $3.0 billion.
In addition to dealing with higher
labor costs, the industry could potentially
face an uphill battle regarding
immigration policy. Current legislation
makes applying for nonimmigrant
agricultural visas tedious, deterring many
agricultural workers or leading them to
work on farms illegally. Strict state
legislation in recent years has further
deterred a number of workers. The ability
of the agricultural sector to hire an
adequate amount of skilled workers in
the next five years hinges on legislation to
be decided by Congress.
An opportunity for highly mechanized

services will be the declining cost of
labor relative to the cost of capital. Farm
wage costs are forecast to decrease
modestly during the next five years,
driven by ongoing reductions in farm
employment and tight farm labor
supplies. This will encourage greater
capital investment in new technologies
to improve service efficiencies. As a
result, demand for industry services will
be derived more heavily from capitalintensive services, such as cotton ginning,
rather than from labor-intensive services

such as fruit harvesting.
However, government legislation aimed
at introducing licensing and permits will
likely affect the cotton ginning operators.
Cotton growing has come under attack in
for its impact on the environment and for
its demands on water resources. These
concerns are gaining more attention from
policy makers, and pressure from lobby
groups may lead to more stringent water
controls in the future, hurting cotton
growers and ginners in the next five years.
The
industrys ability to
retain a knowledgeable
and sizeable workforce will
determine its performance
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Life Cycle Stage
The industry has limited potential for market

expansion, as it only serves the mature farm sector
The industrys major markets are well
established and are not expected to fluctuate
% Growth in share of economy
Product innovation is limited
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
High growth in economic

importance; weaker companies
close down; developed
technology and markets
15
Key Features of a Mature Industry

Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands
10
Quantity Growth
Many new companies;

minor growth in economic
importance; substantial
technology change
Crop Services
Lubricant Oil Manufacturing

Livestock Production Support Services
Tractors & Agricultural Machinery Manufacturing
Soybean Farming
-5
Decline
Shrinking economic
importance
-10
-10
-5
Corn Farming
10
15
20
% Growth in number of establishments

SOURCE: WWW.IBISWORLD.COM.AU
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Industry Life Cycle

This
industry
is M
ature
The agricultural sector is well-established

within the US economy. Consequently,
crop service providers are in the same
position. The Crop Services industry is
mature, contributing a steady value to
overall US economy growth. During the 10
years to 2021, IBISWorld forecasts that
industry value added (IVA), a measure of
an industrys contribution to the economy,
will grow at an average annual rate of 0.8%.
Meanwhile, GDP is expected to grow 2.2%
per year on average during the same
period. Although the industrys IVA is
projected to have a slow growth rate in
comparison with GDP, crop farming and,
therefore, the need for crop services, is
consistently growing to meet global needs.
Because the farming sector provides a
staple to American consumers, its
relevance is expected to remain steady

over time. Some farmers have accepted
the idea of outsourcing as a way to cut
costs and improve efficiency, but have
been slow to adopt it in practice. Due to
the sluggish pace of structural change in
the agriculture sector, demand for
support services is unlikely to change
drastically over any short period of time.
Also, pressure on legislators from
environmental lobby groups is leading
to tighter environmental restrictions and
will have an adverse impact on industry
segments like aerial spraying that are
heavy users of chemicals. In a
fragmented industry, innovation and
breakthroughs will be slower and the
industry is unlikely to enter a phase of
rapid growth.
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Products & Markets
Supply Chain | Products & Services | Demand Determinants

Major Markets | International Trade | Business Locations
Supply Chain
KEY BUYING INDUSTRIES

11111
Soybean Farming in the US

Soybean farmers engaged in large scale crop production are major purchasers of support
services such as crop dusting, mechanical harvesting, crop planting and contract laboring.
11115
Corn Farming in the US

Corn farmers engaged in large scale crop production are major purchasers of support services
such as crop dusting, mechanical harvesting, crop planting and contract laboring.
11117
Wheat, Barley & Sorghum Farming in the US

Grain farmers engaged in large scale crop production are major purchasers of support services
such as crop dusting, mechanical harvesting, crop planting and contract laboring.
11120
Vegetable Farming in the US

Vegetable farmers are major purchasers of support services like vegetable grading and sorting,
machine harvesting and pest control spraying.
11134
Orange & Citrus Groves in the US

Citrus farmers purchase services related to the sorting, grading and packaging of fruit. They
also use contract labor heavily.
11135
Fruit & Nut Farming in the US

Fruit and nut farmers use services such as nut shelling, vineyard cultivation activities, and fruit
packing and grading.
11192
Cotton Farming in the US

Farmers engaged in cotton production are major purchasers of support services provided by
cotton gins.
KEY SELLING INDUSTRIES
Products & Services
32419
Lubricant Oil Manufacturing in the US

Industry players purchase fuels for use in farm equipment and machinery
33311
Tractors & Agricultural Machinery Manufacturing in the US

Industry players use agricultural equipment to perform a variety of services.
33641a
Aircraft, Engine & Parts Manufacturing in the US

Aircraft manufacturers provide maintenance and sales service to companies engaged in
providing aerial spraying services to farmers.
42382
Farm, Lawn & Garden Equipment Wholesaling in the US

Industry players purchase combines, tractors and a wide range of other farm machinery and
equipment from wholesalers.
42469
Chemical Wholesaling in the US

Industry players purchase pesticides, herbicides and other farm chemicals from wholesalers.
The Crop Services industry provides a

wide range of services to the farm sector.
Although segmentation is based on
revenue, the number of companies and
employees within each service segment
paints a different picture.
Postharvest activities
Although postharvest activities dominate
the industry in terms of revenue share
and number of employees, the number of

operators is much smaller. Companies in
this segment tend to be substantially
larger than the average service provider,
with an average of 33 employees, more
than twice the industry average of 13.
This is because many of the activities
included in this industry are performed
manually and are very labor-intensive.
Examples include almond hulling and
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Products & Markets
Products & Services

continued
Products and services segmentation (2016)
4.4%
Cotton ginning
8.9%
4.8%
11.6%
42.6%

and crew leaders
27.7%
Total $16.3bn
shelling; fruit sorting, grading and

packing; hulling and shelling of nuts;
sun-drying of fruits and vegetables;
vegetable sorting, grading and packing;
tobacco grading; and sun-drying of fruits
and vegetables.
Grading services are provided and
regulated by the Department of
Agriculture in each state and by the US
Department of Agriculture. Fruit and
vegetable sorting and packing is usually
undertaken by large-scale providers, such
as vertically integrated farms, which
provide these services to smaller growers
and fresh produce wholesalers. This
segment fluctuates slightly each year,
depending on weather conditions.
However, the long-term demand for
higher quality produce has helped
postharvest services expand slowly as a
share of industry revenue in the past five
years. In 2016, this segment is expected
to account for 42.6% of industry revenue.
Soil preparation
services are the second-largest service
segment at 27.7% of revenue. This
segment accounts for the largest share of
industry operators, at 45.2%, but each
operator employs only about 6 people on
average. This service segment is

characterized by small companies that
service their local counties, and most of
the activities included are capital
intensive. Contractors offer services such
as pest control, crop planting, crop
dusting and tree or vine surgery.
IBISWorld estimates that soil preparation
services have grown slightly during the
past five years as a segment of revenue as
global demand for staple crops like wheat
and soybeans has strengthened and
boosted land usage domestically.
make up 11.6% of revenue and are
predominantly used by fruit and
vegetable growers. These groups employ
casual workers during peak periods such
as harvest. As a result, their share of
industry employment is fairly small.
Contractors are especially important in
citrus groves or fruit orchards where
almost all fruit harvested for the fresh
fruit market is handpicked by trained
harvest crews. Mechanical harvesters are
slowly replacing labor in fruit harvesting.
This trend will be hastened by future
refinements in machinery that reduce
fruit damage.
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Products & Markets
Products & Services

continued
Cotton ginning
Cotton gins that separate the cotton fiber
from its husk account for a small portion
of industry revenue at 4.4%. Once
ginned, the cotton is sold to spinning
mills and later used to produce fabric.
Typically, cotton gins will enter into
purchase agreements with cotton farmers
for their harvests, although in some
cases, cotton gins will simply gin cotton
on a contract basis for farmers. In 2011,
ignited by poor global weather
conditions, demand for US cotton grew
substantially. As a result, so did demand
for cotton ginning. However, as world
supplies get replenished over the next
five years, this segments share of revenue
is likely to recede.
Farm management services are one of the
smaller segments in this industry at 8.9%
Demand
Determinants
The following factors influence the

domestic demand for support services
supplied by this industry:
Activity in cropping industries
Crop production harvest volumes
determine the volume of support services
required. For example, the amount of
cotton harvested determines the level of
need for cotton gin services, and the
output of fruit orchards will influence
farmers decisions to use contract labor.
The level of activity in crop growing
industries is a function of many factors
but depends largely on the expected
profitability of various agricultural
activities. An increase in the viability of
crop production relative to livestock
production typically encourages farmers
to increase planted acreage. Once
planted, crop volumes are affected by
weather conditions, the availability of
water and the presence of pests or plant
of revenue. Farm managers usually

oversee citrus groves, orchards and
vineyards on a contract or fee basis on
behalf of owners. Operational activities
carried out by managers include
harvesting, cultivating and other
agricultural support activities.
Machine-based crop harvesting
Crop harvesting, primarily done by
machine, is usually implemented when
crops are grown under contract with
downstream processors or wholesalers.
Companies in this segment harvest a
wide range of field, nut, fruit and
vegetable crops. Activities falling under
this service segment include threshing
services, hay mowing, raking, and baling;
chopping and silo filling; and mechanical
harvesting in groves, grains, sugarcane
and sugar beets. IBISWorld estimates
this segment to make up 4.8%.
disease. In addition, demand for services

is dependent on changes within cropping
industries. For example, the increasing
use of genetically modified seeds has
reduced the need for spraying services.
On-farm services, equipment and labor
Typically, farmers will outsource
activities that cannot be efficiently
conducted on-site. The demand for
support services, therefore, is influenced
by the existing labor force, equipment
and technological capabilities of a
farming operation. Often, larger farms
will outsource fewer mechanized
activities because their large scale of
production justifies the costs of buying
their own machines. However, these
same farms are more likely to hire
part-time laborers during labor-intensive
seasons because they cannot rely on
friends and family like many of their
smaller counterparts.
WWW.IBISWORLD.COM
Products & Markets
Demand
Determinants
continued
Major Markets
Cost of support services

If a farming establishment has the
capability to perform a task in-house,
then its decision to outsource will depend
on cost considerations. Farmers will
outsource activities only if it is more cost
efficient to do so. Besides the direct costs
of the service provided, farmers also
consider the capital costs. Activities that
are highly capital intensive (e.g. largescale harvesting and cotton ginning)
require substantial investment in
machinery which cannot be undertaken
without securing financing from banks.
The use of contractors allows smaller
farms to circumvent this issue and lowers
farm leverage levels.
Seasonality
Demand for many support services is
seasonal. Demand peaks at planting and
harvesting periods when time constraints
are tightest and the workload is heaviest.
These periods vary depending on the
crop planted. Demand for ginning
services, for example, is highest in the
United States between October and
December. Ginning begins with the
maturing of the cotton crop and ends
when the crop is finished. Meanwhile, the
peak period for fruit dryers is in
November and December, although
dryers can usually obtain fruit yearround by importing produce when US
fruit is not in season.
Major market segmentation (2016)
13.2%
2.1%
Cotton growers
Other field crop growers
42.9%
Fruit and vegetable growers
41.8%
Grain and oilseed growers
Total $16.3bn
Fruit and vegetable growers
Fruit and vegetable growing industries
are the largest market for crop support
services, making up about the majority
of revenue. Farmers within these
downstream industries mainly supply
the fresh market, where there is an
increasing emphasis on quality and
presentation. As a result, large crews
of specially trained workers pick most
fruit and vegetables by hand. The
produce is then processed at a packing
shed, which includes cooling, grading

and packing. These services are often
fully outsourced by farmers because they
generally lack the scale and resources to
set up their own packing sheds.
Outsourcing also allows farmers to
minimize their labor expenses and avoid
having to compete for seasonal workers.
Relative to other major markets, this
segment has declined. As global
demand for commodities like cotton
and grains increased due to
WWW.IBISWORLD.COM
Products & Markets
Major Markets
continued
unfavorable weather conditions in

other parts of the world, US farmers
had to increase their plantings to meet
the demand. Therefore, resources have
been shifted toward these in-demand
crops and away from fruit and
vegetable farming. Despite this
decline, fruit and vegetable farming
requires an enormous amount of labor
outsourced to the Crop Services
industry and, as a result, is expected to
retain its dominance. In 2016, this
segment is expected to account for
42.9% of industry revenue.
Grain and oilseed growers
The second-largest market for the
industry at about one-quarter of
revenue is oilseed and grain growers,
which require mainly machinery-based
services such as soil preparation, crop
spraying and harvesting. This market
consists of growers of corn (38.7% of
the market segment), general cash
grains (31.7%), wheat (13.9%) and
soybeans (15.7%). Over the past five
years, corn and soybean farmers in the
United States have been increasingly
using genetically modified seeds,
which are resistant to pesticides and
herbicides, causing demand for these
services in particular to grow. Corn
especially has increased as a share of
revenue because demand for the grain
for ethanol production has caused corn
production to skyrocket. Further, with
ongoing global demand for staple
crops, this segment has increased its
share of industry revenue in the past
five years. In 2016, this segment is
expected to account for 41.8% of
industry revenue.
Cotton growers
A smaller, but significant, market
segment in this industry is cotton
growers, who pass on their entire
harvest to gins. This is generally a stable
market, which has experienced positive
growth in the past five years due to
ongoing demand for cotton products. In
2011, domestic cotton growers felt
increased global demand for their crop
as floods in Pakistan and India limited
world supplies, while demand from
manufacturers in China continued to
grow. As a result, cotton farmers
increased their share of the Crop
Services industry market. The long-term
trend has been a large increase in
exports; US-grown cotton is ginned and
then exported to mills overseas
(particularly in China and India). The
final products made at these mills are
then sent back to the United States and
other developed countries that benefit
from inexpensive apparel manufacturing
in emerging economies. In 2016, this
segment is expected to account for 2.1%
of industry revenue.
Other field crop growers
Other market segments make up the
remaining portion of revenue and include
nuts, peanuts and tobacco growers, in
addition to sugarcane, sugar beet and hay
farmers. Peanut farmers have reduced their
demand for services dramatically over the
past decade, as deregulation in 2002 has
led to a large number of farms closing
down. Sugarcane and sugar beet farm
numbers have also been declining due to a
lack of competitiveness against foreign
farmers, leading to diminished demand for
support services.
WWW.IBISWORLD.COM
Products & Markets
International Trade
The overwhelming majority of crop

support activity is provided by
domestic players to local growers.
Natural geographic barriers restrict
the viability of cross-border activity for
most operators in this industry. Even
so, a small number of companies

located near the borders with Canada
and Mexico have been able to
overcome this barrier, but their
operations form a minimal part of
industry activity.
WWW.IBISWORLD.COM
Products & Markets

Business Locations 2016
West
New
England
AK
0.1
Great
Lakes
WA
ND
MT
3.4
Rocky
Mountains
ID
OR
2.8
West NV
0.1
3.6
SD
1.6
WY
2.2
MN
2.2
1.3
Plains
CO
0.4
KY
3.1
OK
1.3
NC
1.9
TN
AZ
NM
1.8
0.6
Southwest
TX
8.7
HI
0.1
Additional States (as marked on map)

1 VT
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.3
0.1
0.1
0.5
0.2
0.2
SC
Southeast
4.0
MS
AL
0.7
0.9
GA
3.1
2.3
LA
2.1
FL
4.9
Establishments (%)
0.1
0.4
AR
0.1
0.7
18.6
WV VA
0.8
0.4
2.0
CA
West
1.1
MO
KS
1.8
OH
1.7
3.0
1.2
IN
IL
2.8
UT
PA
1.5
5.1
0.2
1 2
3
NY
1.3
5 4
MI
1.7
IA
NE
0.4
WI
ME
MidAtlantic
9 DC
0.0
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
WWW.IBISWORLD.COM
Products & Markets
Distribution of establishments vs. population

30
20
10
Southwest
Southeast
Plains
New England
Rocky Mountains
Establishments
Mid-Atlantic
Great Lakes
0
West
Establishments that provide support

services for crop production are spread
throughout the United States, with the
majority of industry participants
situated in rural areas. Businesses that
carry out on-farm services locate
themselves close to the farms they
service. As a result, the industrys
geographic spread does not change
considerably from year to year.
Cotton ginning is concentrated
primarily in the West, the Southeast and
the Plains. Farm labor contractors and
post-harvest crop activities are mainly
located in the West, with California alone
accounting for 18.6% of all industry
establishments. California is responsible
for a large proportion of fresh market
fruit and vegetables grown in the United
States. Fruit and nut farmers (IBISWorld
report 11135) are highly concentrated in
the state, with more than half of the
industrys revenue derived from farms in
California. Similarly, more than one-third
of vegetable farming revenue (IBISWorld
report 11120) comes from California.
Therefore, the state is also a major center
of demand for labor during the harvest
Business Locations
Population
period. Likewise, post-harvest activities

such as fruit and vegetable packing and
grading are also located primarily in the
West region. In contrast, a large share of
establishments participating in the soil
preparation segment operates in the
Plains region, which is the most
important area for grain growers.
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21
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks

Basis of Competition | Barriers to Entry | Industry Globalization
Market Share
Concentration
Level
Concentration
in
this industry is L ow
Key Success Factors

IBISWorld
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
The Crop Services industry is highly

fragmented and characterized by the
presence of many small companies in terms
of revenue and employment. Therefore, the
top four participants in this industry
account for about 5.0% of revenue,
combined. Nonemployer companies make
up about 90.0% of industry enterprises.
Furthermore, more than four-fifths of
employer companies in this industry have
fewer than 20 employees.
Consolidation has been concentrated in
specific segments of the industry where
economies of scale can be realized. Cotton
ginners and fruit and vegetable packing
houses are among those industry players
most likely to take advantage of increased
size to generate cost savings through
large-scale production. Elsewhere in the
industry, IBISWorld expects the level of
concentration to remain low in the future.
In particular, businesses engaged in

contracted harvesting are unlikely to
consolidate activities because there are
limited efficiency savings to be achieved
from doing so.
The average operator in this industry
has only 1.8 employees. Service providers
usually only supplement their own labor
with hired contract labor during busy
periods, allowing them to maximize
profitability by keeping wage costs low.
Due to the limited scope for additional
mechanization, any future industry
consolidation will only translate into a
small drop in employment. This is
especially the case in segments such as
harvesting and soil preparation, where
many services are already exclusively
performed with machinery and
consolidation cannot be used to generate
significant labor savings.
Provision of superior after-sales service

Effective procedures need to be
established for responding to inquiries
made by farmers. Ongoing support helps
companies establish loyal customers. For
instance, crop dusters may offer to
inspect crops to ensure that spraying has
been successful.
Controlling the cost of inputs and

production also helps companies protect
profit margins.
Access to the latest available and most

efficient technology and techniques
Reliable and up-to-date equipment
improves the quality of service provided
by this industry. It also raises
productivity and efficiency. This is a
particularly important success factor for
companies providing mechanical
harvesting services.
Superior financial management
and debt management
Effective control of debt and sound cash
flow management are important for
companies that provide management
services to farms on a contract or fee basis.
Production of premium goods and services

The provision of high quality services
depends on the use of competent labor and
effective technology. The ability of
companies to supply services of a high
standard is critical in building a positive
reputation in the marketplace.
Ability to accommodate
environmental requirements
Some providers use chemicals during their
service, which is under strict regulation.
Compliance with the Environmental
Protection Agency (EPA) is especially
important for companies providing aerial
spraying services.
Having a good reputation
A good reputation is important for any
company engaged in providing services
because they often rely on referrals for
new business.
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22
Cost Structure
Benchmarks
The diversity of support services for crop

production means that cost structures vary
among different industry products. In some
segments, operating costs for service
providers are partly a function of size. For
example, in cotton ginning, large gins have
the greatest total costs but tend to have the
lowest average unit costs. These
establishments benefit from cost savings
created through economies of scale in
production. Because the size of gins is
generally increasing, the average production
cost is declining over time. Other factors,
such as the introduction of new technology,
are also contributing to falling production
costs for service providers.
Profit
Measured as earnings before interest and
taxes, profit in this industry is estimated
to be 6.4% in 2016. However, profitability
can vary widely between different
production segments. Generally, service
providers such as those engaged in
consulting and advanced soil testing tend
to be most profitable because they can
charge a premium for their specialist
skills. In contrast, contractors engaged in
basic harvesting activities are among the
lowest paid service providers given their
generic skills. Profitability increased
slightly during much of the five years to
2016 as large farms corporatized, which
has increased demand for service
outsourcing. However, crop price drops
in 2013 and 2014 led farmers to cut back
spending, including on crop services,
which shrunk industry margins.
Wages
Wages are a crucial cost for industry
operators and account for 16.2% of
revenue in 2016. This is especially the
case for establishments engaged in
providing labor contractors and crew
leaders. Workers in this segment plant
and harvest crops by hand, a process
whose costs are almost entirely labor.
Labor costs for service providers fluctuate
throughout the year, peaking during busy

periods like harvest. The earnings of
nonemployers, who make up about
90.0% of establishments but account for
only about 15.0% of revenue, are also
counted in the wage cost segment. Wage
costs have risen slightly as farms seek to
draw experienced migrant workers, often
from Mexico and Central America, who
might otherwise seek employment in
burgeoning manufacturing industries in
those countries.
Purchases
Purchases associated with providing
services to farmers include seed, fertilizer
and chemicals. These costs vary
depending on the size of the service
provider, generally declining as a share of
production for larger operations, because
larger operations benefit from cost
savings generated by economies of scale
and the ability to negotiate lower prices
from key suppliers. Currently, this cost
segment accounts for just over onequarter of industry revenue. This
segments share has increased during the
past five years as the price of fertilizer has
gone up. In 2016, purchase costs account
for 47.5% of industry revenue.
Depreciation
Depreciation and maintenance costs are
high for service providers engaged in
capital-intensive processes (e.g. ginning,
aerial spraying, broad acre crop
harvesting). These costs are especially
high for companies providing aerial
spraying services. The large number of
takeoffs and landings in aerial spraying
speed up wear and tear and contribute to
fast depreciation of aircraft. By contrast,
other industry activities like postharvest
drying and curing crops as well as farm
management services require very little
capital investment. Depreciations share
of revenue can fluctuate greatly from year
to year depending on the demand from
agricultural segments that require
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23
capital-intensive services. When a years

cotton crop has a high yield, for example,
cotton ginning will account for a larger
share of industry revenue, bringing up
average industry depreciation costs for that
year. In 2016, depreciation is expected to
account for 2.0% of industry revenue.
Other costs
Other costs, like interest, insurance and
overhead, depend on the nature of the
service provided. Insurance premiums
are greater for some segments of the
industry like aerial agricultural services.
The risks associated with aerial
agriculture mean that most insurance
companies demand more in premiums.
Operators with high capital costs often

borrow funds to finance equipment
purchases, meaning interest repayment
costs can be high. Rent and utilities also
depend on the nature of the service
provided. Generally, companies require
storage units for their equipment, which
are powered by gasoline. Marketing costs
account for a very small amount of
revenue. Most companies are smaller and
serve the farms in its immediate
surrounding area so they rely on referrals
for new business, but some larger
companies have a national or
international presence. Larger companies
tend to operate a website and engage in
other small promotional activities.
Sector vs. Industry Costs

Average Costs of
all Industries in
sector (2016)
100
Industry Costs
(2016)
n Profit
n Wages
n Purchases
n Depreciation
n Marketing
n Rent & Utilities
n Other
6.3
6.6
10.2
16.9
61.1
47.5
80
Percentage of revenue
Cost Structure
Benchmarks
continued
60
40
20
3.4 0.9
4.1
13.7
2.0
5.0
0.6
21.7
0
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24
Basis of Competition
Level & Trend
ompetition
C
in
this industry is
Mediumand the
trend is S
teady
Barriers to Entry
Level & Trend
arriers to Entry
B
in this industry are

Mediumand S
teady
Overall, competition within this industry

is low, since each segment offers a
unique service that cannot directly
compete with others. Within the
particular segments, competition levels
are medium and increasing as
contractors aim to convince farmers to
outsource more activities. However, due
to the local nature of businesses in this
industry, operators are considerably
sheltered from nonregional competitors.
Within each segment, service providers
compete principally on price, quality and
reputation. The price of support services is
a key competitive factor because many
farmers operate on tight profit margins. In
some cases, intense industry rivalry will
encourage price-cutting among service
providers, especially if there is an
oversupply or a new entrant seeking to
establish a client base.
The barriers to entering in this industry

vary by segment for new participants.
While inputs are readily available for
purchase for all of the activities, the high
capital investment requirements and
technology costs can be prohibitive. This
is particularly true for cotton ginning, soil
preparation, machine-based harvesting
and processing, but is not applicable to
labor contracting or management
services. Capital expenditures for
harvesters, silos and other machinery can
range in the millions of dollars,
necessitating debt financing, which can
be difficult to find.
Like many agricultural service
industries, the profitability of this
industry is volatile. It depends on a range
of external factors that are beyond the
control of service providers. These
include the world supply and demand
forces in agricultural markets, weather
conditions and plant disease that
combine to determine production in
upstream crop farming. Given this,
In addition to pricing, service

providers compete against one another
on the basis of reputation and the
quality of service provided. The
reputation of a service provider is
largely based on its record of providing
services in an efficient and reliable
manner. Service providers regularly
rely on the testimonials of past
customers and word of mouth to create
a positive reputation in the farming
community. Criteria for judging service
quality varies depending on the nature
of the service provided but commonly
include the level of presale and postsale
service, the timeliness of the service
provided and the outcome of the
service. Companies that provide high
quality services exhibit extensive
knowledge and experience in the
agricultural sector.
Barriers to Entry checklist

Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance
Medium
Low
Mature
Low
Medium
Medium
Low
traditional financing companies and

banking institutions may be reluctant to
approve loans for establishment costs. In
particular, businesses engaged in cotton
ginning face additional hurdles in
securing finance because the ginning
subsegment is characterized by
overcapacity in production.
In some industry segments, new
entrants can face strong competition
from industry incumbents. In many cases
the seasonal nature of many activities
intensifies competition since
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25
Barriers to Entry
continued
establishments have a limited time in

which to generate revenue. In other
segments (e.g. farm management),
farmers may have long-term agreements
with existing industry operators, which
will make it difficult for new entrants to
establish market share.
Another problem for this industry,
but particularly in the labor-intensive
services, is the persistence of labor
shortages. In the past few years, fruit
growers have been affected by a lack of

trained picking crews, which resulted
in delayed harvests and hurt the
reputation of service providers. While
this opened the door for new entrants
in this instance, the importance of
reputation and referral-based business
generally makes it harder for new
entrants who may find it difficult to
establish a foothold without prior
name recognition.
Industry
Globalization
Like many service industries, the Crop

Services industry is insulated from the
effects of globalization. Many crop
support providers are generally small
companies that can only service one or
two nearby regions. This creates a
two-way barrier where operators are
largely unable to expand their business
across borders but are also free from
foreign competition. However, there are
some companies that operate near the
Canadian and Mexican borders that are
exposed to international opportunities
and threats. These companies are few

and are expected to make up less than
1.0% of industry revenue. To a limited
extent, crop service providers are
indirectly affected by international forces
that affect the US farm sector. Because
the United States is a significant player in
many international commodity markets,
farmers are sensitive to global supply and
demand conditions. Favorable export
conditions that encourage farmers to
expand production generally result in
greater demand for related services.
Level & Trend

lobalization
G
in this
industry is L owand
the trend is S
teady
WWW.IBISWORLD.COM
Major Companies
There are no Major Players in this industry | Other Companies
Other Companies
The Crop Services industry in the United

States is extremely fragmented and
composed almost entirely of small,
privately owned companies. Currently,
almost 90.0% of all employer companies
have fewer than 20 employees. Each of
these businesses undertakes projects for
farmers and growers that are located
within a small geographic area. There are
almost 50,000 businesses participating in
this industry, but this number is dwarfed
by the number of total farms in the United
States, which is over 2.0 million. This
suggests that there may be untapped
opportunities for a few companies to
amass significant market share, but it has
not happened to date due to the
fragmented nature of farms themselves.
While the majority of market share is
dispersed among the hundreds of
participants, there are a handful of
companies that are larger or offer multiple
products. For example, cotton gins are
typically vertically integrated. They
commonly provide a range of
complementary services, including gin
processing, bale warehousing and marketing
services. Also, almost all larger companies
perform manual labor-based activities, such
as fruit picking, sorting and produce
cleaning; their employment figures are not
indicative of their market share.
Agrium Inc.
Estimated market share: 2.2%

Agrium Inc. is a major producer and
distributor of fertilizers and other farm
chemicals, employing over 14,000
workers in total. The company operates
globally in three segments: Retail, which
supplies agriculture products and
services; Wholesale, which produces,
distributes and markets fertilizer
products; and Advanced Technologies,
which develops and sells Enhanced
Efficiency Fertilizer products designed to
release nutrients slowly and efficiently

throughout a crops growth phases.
Founded in 1992, Agrium is
headquartered in Calgary, Canada. Its
total operations generated annual sales of
$14.8 billion in 2015. However, only a
small portion of this can be attributed to
the Crop Services industry.
In the United States, Agrium
participates in the Crop Services industry
through its Retail segment, more
specifically in the Services and Other
subsegment. Carrying the Crop
Production Services (CPS) brand name,
this subsegment offers services like
product application, soil and leaf testing,
crop scouting and seed treatment. A large
goal of the services CPS provides is to add
value to the fertilizer, pesticide, seed and
other products the Retail business sells.
The business has more than 1,200 retail
centers across North America (with the
majority in the United States) as well as
58 retail facilities in South America and
more than 230 in Australia. IBISWorld
estimates that Agrium will generate
$352.1 million in US industry-related
revenue in 2016.
J.G. Boswell Co.
Estimated market share: Less than 1.0%

J.G. Boswell is a diversified company
with interests in agriculture, real estate
and manufacturing. Founded in 1927,
J.G. Boswell Company produces and
processes cotton and cottonseed
products in Californias San Joaquin
Valley. It also has interests in cotton
growing and ginning in Australia.
Boswell is one of the largest domestic
producers of Pima Cotton; it also
engages in growing tomatoes and other
crops. IBISWorld estimates that the
company will bring in about $73.8
million in industry-relevant revenue in
2016 through cotton ginning operations.
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility

Regulation & Policy | Industry Assistance
Capital Intensity
Level
The level
of capital
intensity is L ow
The level of capital intensity varies

among industry service segments. Some
services, such as picking fruit and
vegetables for the fresh market, are very
labor intensive, while others, such as soil
testing, rely on advanced technology.
Overall, the level of capital intensity in
the industry has been rising during the
past decade. New technology and the
ongoing automation of production
processes are reducing the number of
workers necessary to perform tasks. In
addition, the market segments that
demand services for which machinery is
required have been growing.
Ginning is a capital-intensive process.
Because much of the ginning process is
automated, workers predominately
perform a monitoring function, ensuring
Capital intensity
Capital units per labor unit

0.5
0.4
0.3
0.2
0.1
0.0
Economy
Agriculture,
Crop Services
Forestry, Fishing
and Hunting
Dotted line shows a high level of capital intensity

that problems in machinery are identified

and repaired. Similarly, harvesting and
aerial spraying employ significant
Tools of the Trade: Growth Strategies for Success

Investment Economy
Recreation, Personal Services,

Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labor skills are key to
product differentiation.
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Livestock Production
Support Services
Traditional Service Economy

Wholesale and Retail. Reliant
on labor rather than capital to
sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
Crop
Services
Capital Intensive
Labor Intensive
New Age Economy
Forest Support Services

Lubricant Oil Manufacturing
Tractors & Agricultural
Machinery Manufacturing
Change in Share of the Economy
Old Economy
Agriculture and Manufacturing.
Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others
to exploit
Corn
Farming
economies of scale, or specialize
in niche, high-value products.
WWW.IBISWORLD.COM
Capital Intensity
continued
amounts of capital equipment. The

purchase costs of machines like
combines, tractors, storage modules and
aircrafts easily exceed the cost of labor
necessary to operate them. The number
of takeoffs and landing necessary in
aerial spraying speed up wear and tear,
contributing to fast depreciation of
aircraft. The near-capacity usage of
machines to maximize economies of scale
is also present in other functions
performed by this industry. The intense
usage raises the depreciation costs
relative to wages through most segments
of this industry.
On the other hand, the provision of
farm labor contractors and crew leaders
is labor intensive. Contractors are
employed where labor remains a key
Technology & Systems The industry occupies a leadership

Level
The level
of
Technology Change
is M
edium
position in the world market from a

technological viewpoint. Service
providers have benefited from research
and development carried out by local
manufacturers of farm machinery that
have the critical mass necessary to fund
product development. The nations
substantial agricultural sector has also
driven research into improving farm
practices and farm chemical usage.
Together, these technological advances
have improved the productivity and
efficiency of businesses providing support
services for crop production.
Cotton ginning
Cotton ginning has modernized
considerably over the past decade, with
greater mechanization and several
improvements in existing technologies.
Notable examples include computerized
gin process controls that help to
maximize grower returns while
improving mill fiber quality; the coupled
lint cleaner, which streamlines the stages
involved in cleaning cotton with fewer
component of the production process,

most commonly in the harvesting of
fruit and vegetables. Wages account for
the largest share of industry revenue.
However, the introduction of highdensity cultivation is tipping the
balance away from labor in fruit and
vegetable harvesting. Furthermore,
beyond growing and picking, even fruit
and vegetable production is dominated
by machinery and automation. Unlike
most fruit and vegetable orchards that
can be operated on small parcels of
land with minimal amounts of capital,
fruit and vegetable drying requires
large amounts of capital for plant and
equipment. For every dollar spent on
wages, companies spend on average
$0.12 on depreciation costs.
short fibers; and the belt conveyor dryer,

a slow-speed, perforated conveying belt
that efficiently dries cotton while
preserving the fiber quality.
Advancements have also been made in
the packaging and storage of cotton
throughout the ginning process. The
implementation of pneumatic systems,
collators, conveyor lines and automated
packaging equipment are standard in
most gins across the United States today
and have greatly improved the speed and
accuracy of American gins.
Soil preparation, planting
and cultivating
Service providers engaged in the
installation of irrigation systems have
participated in the development of more
technology that improves water efficiency
in irrigation. Advances in irrigation
include the introduction of microirrigation. This includes trickle or drip,
micro-spray and mini-sprinkler systems
that are designed to target water at the
root zone of fruit trees rather than
traditional watering systems that wet a
WWW.IBISWORLD.COM
Technology & Systems whole orchard. This has reduced water

waste and has become increasingly
continued
important in regions impacted by

droughts such as California and Texas.
One of the major developments in this
area has been the introduction of
intensive, or high-density, orchard
production. This process has become
possible only through recent
modifications in machinery (e.g.
narrower tractors and movers) that
maximize the amount of cultivation area.
While intensive orchard production has
reduced average growing costs and
improved returns to farmers, it has been
criticized as shortsighted and
unsustainable. High-density production
requires intensive use of fertilizers and is
more taxing on the land, especially
compared with socially championed
organic farming and practices oriented
devoted to environmental soundness.
Revenue Volatility
Level
The level
of
Volatility is M
edium
a modern combine has the capacity to

harvest up to 1,000 bushels of cereal
grains every hour. In aerial spraying,
research has focused on spray technology
to improve drift management and on GPS
systems to improve targeting. This has
included development in nozzles and the
configuration of the spray booms aimed
at reducing spray drift. Aerial spraying
companies are also working with
pesticide and herbicide manufacturers to
improve mist control and limit negative
environmental impacts.
Crop harvesting
The introduction of mechanical
harvesters signaled a major development
in harvesting technology. Ongoing
refinements have dramatically reduced
labor requirements in harvesting. Today,

E-commerce, the internet and
supporting telecommunications
infrastructure are improving
productivity in farm management
services. Like other businesses, service
providers are increasingly adopting
computerization to assist in tracking
production processes. Today, yield
benchmarking and irrigation planning
software help service providers engaged
in providing farm management services
to calculate water budgets, crop status
and yields from weather, soil, irrigation
and crop data.
Industry revenue is closely tied to

demand from crop producers, which is a
function of planting area, yields, value of
production and the presence of crop
pests and disease. An increase in any of
these will lift demand for support
activities, while a decline would have the
opposite effect. In 2011, the effect of
supply shocks in major crop producing
countries from adverse weather
conditions rippled throughout the world.
As a result, these crops commanded a
significantly higher price, and when US
producers stepped in to meet demand,
they recorded higher revenue for those
years. Part of farmers revenue was
passed on to the Crop Services industry
for its contribution to increased

production for those years.
On the other hand, when crop
producers perform poorly, they have less
demand for industry services and less
money to pay for these services as well.
In 2015 demand for all crops was down:
The agricultural price index, which
records the price of a basket of
agricultural products, dropped 7.4%. In
the same year, industry revenue also
recorded a 5.2 loss, which demonstrates
the Crop Services industrys dependence
on the performance of the agricultural
sector as a whole.
Volatility is partially stabilized by the
variety of services offered by this
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industry; a drop in the revenue from one

segment can be offset by an increase in
another. When demand for fresh produce
requiring handpicking increases, for
example, companies that handle machine
picking of other fruits and vegetables
could suffer decreased demand and
therefore decreased revenue. Because
most of the services can be performed for
A higher level of revenue
volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.
an array of crops, changes in revenue

vary only slightly within each individual
product segments. Cotton ginning is an
exception to this rule of thumb, because
ginners are entirely dependent on the
yield volume of one specific crop.
Overall, in the five years to 2016
revenue has fluctuated an average 4.0%
each year.
Volatility vs Growth
1000
Revenue volatility* (%)
Revenue Volatility
continued
Hazardous
Rollercoaster
100
10
Crop Services
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
Five year annualized revenue growth (%)

* Axis is in logarithmic scale
Regulation & Policy

Level & Trend
he level of
T
Regulation is
Mediumand the
trend is S
teady
Regulation for the Crop Services

industry is generally carried out at the
state level. Most states operate
agricultural departments that act as
regulatory agencies. At the national
level, regulatory agencies like the US
Department of Agriculture (USDA), the
Environmental Protection Agency (EPA)
and the Food and Drug Administration
(FDA) also impact the activities of
service providers. The extent to which
the industry is regulated varies between
geographic regions.
Failure to comply with regulations,
laws and other rules governing support
services for crop production can subject
industry players to civil remedies and
administrative penalties. It can also
result in considerable negative publicity
that can damage the reputation and
public image of service providers. As a

result, noncompliance can potentially
have a material effect on the earnings and
competitive position of companies
operating in this industry.
US Department of Agriculture (USDA)
The USDA is chiefly responsible for the
enforcement and operation of the Farm
Bill, an overarching piece of agricultural
legislation passed about every five years,
most recently in February 2014.
However, the USDA also oversees several
other pieces of regulation. It is
responsible for operating the Federal
Grain Inspection Service (FGIS), whose
services include sampling, inspection,
process verification, weighing and
stowage examination services that
describe the quality and quantity of the
WWW.IBISWORLD.COM
Regulation & Policy

continued
Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is L owand the
trend is S
teady
Environmental Protection Agency (EPA)

Many industry services, including aerial
sprayers, use farm chemicals. Service
providers are subject to conditions
relating to the use of fertilizers and
pesticides in production. The Federal
Insecticide, Fungicide and Rodenticide
Act (FIFRA) gave the EPA authority to
determine which pesticides are allowed
to be used on farm crops and how they
can be used. This government agency is
also responsible for ensuring that
pesticide residues in food crops stay
within safety standards. Furthermore,
certain EPA programs certify pesticide
applicators to ensure that the operator
can perform the job correctly and safely.
Food and Drug Administration (FDA)

A number of service providers must
comply with regulations enforced by
the FDA. This public health agency is
part of the Public Health Services and
operates within the Department of
Human Health and Services. Its chief
responsibility is the enforcement of the
Federal Food, Drug and Cosmetic Act,
although it also implements several
other public health laws. The FDAs
main functions can be divided into
three main areas: the provision of
scientific expertise to the food sector,
the maintenance of food safety for the
American public and the enforcement
of food laws through site inspections
and legal sanctions. Food safety laws
are particularly pertinent to companies
engaged in providing post-harvest crop
activities (except cotton ginning).
Companies that carry out fruit and
vegetable sorting, grading and packing,
for example, need to ensure they
provide safe produce to consumers.
Industry players receive no direct

government assistance in the form of
subsidies or tariffs. However, the
industry is protected from foreign
competition due to natural trade
barriers. Because most industry services
must be carried out on-site, competition
from importers is severely restricted.
Service providers operating in this
industry do benefit indirectly from the
substantial assistance given to the farm
sector by the US government. Examples
of these subsidies include direct
payments and marketing loans, which
raise returns to crop growers and thus
encourage producers to maintain
planted acreage. This assists support
service providers since their livelihood
depends on the health of the
downstream crop production industries.
The creation of international free

trade agreements boosts the support
service industry in a similar way. By
knocking down trade barriers through
treaties such as the North American
Free Trade Agreement (NAFTA), the
US government has improved the
ability of farmers to access new
markets and sustain domestic
production. It also directly enhances
the prospects of crop support service
providers located in border regions, as
they can attempt to win over nearby
foreign customers. However, this also
exposes them to competition from their
Canadian and Mexican counterparts.
Indirectly, service providers also
benefit from the lobbying and
marketing efforts of peak industry
associations. Membership
commodities produced by US farms.

FGIS is part of the Grain Inspection,
Packers and Stockyards Administration,
which, among other activities, enforces
the official grains standards set out in the
United States Grain Standards Act and
the Agricultural Marketing Act.
WWW.IBISWORLD.COM
Industry Assistance
continued
organizations like the Kansas Grain

Sorghum Commission (KGSC) and the
American Soybean Association
represent the interests of farmers
engaged in crop production. Through
their efforts in market development,

these organizations help maintain the
health of major client industries,
ensuring a viable market for crop
service providers.
WWW.IBISWORLD.COM
33
Key Statistics
Industry Data
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Sector Rank
Economy Rank
Industry
Value Added
($m)
3,891.5
4,015.3
3,789.4
3,936.6
4,125.0
4,482.4
4,379.6
3,972.1
4,000.7
4,107.5
4,222.0
4,318.4
4,367.8
4,416.5
4,474.4
8/29
383/1370
Establishments
50,918
51,886
54,370
57,653
59,352
61,636
63,223
64,681
65,070
66,761
69,242
70,948
73,225
74,747
76,374
12/29
163/1370
Enterprises Employment
50,577
112,596
51,546
113,431
54,044
112,664
57,301
117,937
59,005
120,870
61,289
125,892
62,395
121,282
63,286
122,832
63,271
119,618
64,284
122,555
66,050
125,929
67,009
128,763
68,573
130,706
69,356
132,245
70,191
133,593
12/29
12/29
144/1370
314/1370
Exports
---------------N/A
N/A
Imports
---------------N/A
N/A
Wages
($m)
2,624.8
2,756.5
2,582.6
2,585.9
2,660.2
2,852.7
2,643.6
2,697.3
2,679.6
2,756.8
2,817.4
2,871.1
2,904.4
2,923.1
2,957.6
4/29
376/1370
Domestic
Demand
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Industry
Revenue Value Added
(%)
(%)
-2.6
3.2
-2.9
-5.6
9.3
3.9
7.3
4.8
4.5
8.7
1.4
-2.3
0.5
-9.3
-5.2
0.7
2.4
2.7
2.9
2.8
2.2
2.3
0.8
1.1
0.4
1.1
1.0
1.3
25/29
21/29
1303/1370 1140/1370
Establishments
(%)
1.9
4.8
6.0
2.9
3.8
2.6
2.3
0.6
2.6
3.7
2.5
3.2
2.1
2.2
25/29
1282/1370
Enterprises Employment
(%)
(%)
1.9
0.7
4.8
-0.7
6.0
4.7
3.0
2.5
3.9
4.2
1.8
-3.7
1.4
1.3
0.0
-2.6
1.6
2.5
2.7
2.8
1.5
2.3
2.3
1.5
1.1
1.2
1.2
1.0
25/29
2/29
1271/1370
369/1370
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages
(%)
5.0
-6.3
0.1
2.9
7.2
-7.3
2.0
-0.7
2.9
2.2
1.9
1.2
0.6
1.2
23/29
1200/1370
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Revenue
($m)
14,204.9
13,829.4
13,434.6
14,681.2
15,749.9
16,461.8
16,692.9
16,775.1
15,907.1
16,288.0
16,766.8
17,132.6
17,268.7
17,338.8
17,509.5
11/29
560/1370
Annual Change
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Sector Rank
Economy Rank
Key Ratios
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Sector Rank
Economy Rank
IVA/Revenue
(%)
27.40
29.03
28.21
26.81
26.19
27.23
26.24
23.68
25.15
25.22
25.18
25.21
25.29
25.47
25.55
4/29
178/1370
Imports/
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Exports/
Revenue
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Figures are in inflation-adjusted 2016 dollars. Rank refers to 2016 data.
Revenue per
Employee
($000)
126.16
121.92
119.24
124.48
130.30
130.76
137.64
136.57
132.98
132.90
133.14
133.06
132.12
131.11
131.07
15/29
1126/1370
Wages/Revenue
(%)
18.48
19.93
19.22
17.61
16.89
17.33
15.84
16.08
16.85
16.93
16.80
16.76
16.82
16.86
16.89
3/29
280/1370
Employees
per Est.
2.21
2.19
2.07
2.05
2.04
2.04
1.92
1.90
1.84
1.84
1.82
1.81
1.78
1.77
1.75
13/29
1206/1370
Average Wage
($)
23,311.66
24,301.12
22,923.03
21,926.11
22,008.77
22,659.90
21,797.13
21,959.26
22,401.31
22,494.39
22,372.92
22,297.55
22,220.86
22,103.67
22,138.88
4/29
997/1370
Planted
Acres
(Mils)
320.4
324.8
320.9
318.9
316.7
315.0
325.8
324.9
326.8
325.7
326.3
326.5
327.1
328.1
329.4
N/A
N/A
Planted
Acres
(%)
1.4
-1.2
-0.6
-0.7
-0.5
3.4
-0.3
0.6
-0.3
0.2
0.1
0.2
0.3
0.4
N/A
N/A
Share of the
Economy
(%)
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
8/29
383/1370
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Jargon & Glossary
Industry Jargon
BIOFUELAlso called agri-fuel or bio-diesel. A fuel

consisting of or derived from dead biological material,
usually plants.
COOPERATIVEA jointly owned, vertically integrated
organization, also referred to as a co-op, that produces and
distributes goods for the benefit of the owners.
IBISWorld Glossary
BARRIERS TO ENTRYHigh barriers to entry mean that

new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
CAPITAL INTENSITY Compares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labor. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity. High
capital intensity is more than $0.333 of capital to $1 of
labor; medium is $0.125 to $0.333 of capital to $1 of labor;
low is less than $0.125 of capital for every $1 of labor.
CONSTANT PRICESThe dollar figures in the Key Statistics
table, including forecasts, are adjusted for inflation using
the current year (i.e. year published) as the base year. This
removes the impact of changes in the purchasing power of
the dollar, leaving only the real growth or decline in
industry metrics. The inflation adjustments in IBISWorlds
reports are made using the US Bureau of Economic
Analysis implicit GDP price deflator.
DOMESTIC DEMANDSpending on industry goods and
services within the United States, regardless of their
country of origin. It is derived by adding imports to industry
revenue, and then subtracting exports.
EMPLOYMENTThe number of permanent, part-time,
temporary and seasonal employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISE A division that is separately managed and
keeps management accounts. Each enterprise consists of
one or more establishments that are under common
ownership or control.
ESTABLISHMENTThe smallest type of accounting unit
within an enterprise, an establishment is a single physical
location where business is conducted or where services or
industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
EXPORTSTotal value of industry goods and services sold
by US companies to customers abroad.
IMPORTS Total value of industry goods and services
brought in from foreign countries to be sold in the United
States.
INDUSTRY CONCENTRATIONAn indicator of the
dominance of the top four players in an industry.
Concentration is considered high if the top players account
for more than 70% of industry revenue. Medium is 40% to
70% of industry revenue. Low is less than 40%.
GENETICALLY MODIFIED (GM)Plants and animals that

have had their genome modified through geneticengineering techniques involving the transfer of genetic
material from one organism to another.
INDUSTRY REVENUEThe total sales of industry goods

and services (exclusive of excise and sales tax); subsidies on
production; all other operating income from outside the
firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and capital
work done by rental or lease. Receipts from interest
royalties, dividends and the sale of fixed tangible assets are
excluded.
INDUSTRY VALUE ADDED (IVA)The market value of
goods and services produced by the industry minus the
cost of goods and services used in production. IVA is also
described as the industrys contribution to GDP, or profit
plus wages and depreciation.
INTERNATIONAL TRADEThe level of international trade
is determined by ratios of exports to revenue and imports
to domestic demand. For exports/revenue: low is less than
5%, medium is 5% to 20%, and high is more than 20%.
Imports/domestic demand: low is less than 5%, medium is
5% to 35%, and high is more than 35%.
LIFE CYCLEAll industries go through periods of growth,
maturity and decline. IBISWorld determines an industrys
life cycle by considering its growth rate (measured by IVA)
compared with GDP; the growth rate of the number of
establishments; the amount of change the industrys
products are undergoing; the rate of technological change;
and the level of customer acceptance of industry products
and services.
NONEMPLOYING ESTABLISHMENT Businesses with no
paid employment or payroll, also known as nonemployers.
These are mostly set up by self-employed individuals.
PROFITIBISWorld uses earnings before interest and tax
(EBIT) as an indicator of a companys profitability. It is
calculated as revenue minus expenses, excluding interest
and tax.
VOLATILITYThe level of volatility is determined by
averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
20%; high volatility is 10% to 20%; moderate volatility
is 3% to 10%; and low volatility is less than 3%.
WAGESThe gross total wages and salaries of all
employees in the industry. The cost of benefits is also
included in this figure.
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Crop Services in the USMarch 2016 1

Small harvest: Crop production is expected to

IBISWorld Industry Report 11511

Crop Services in the US

2 About this Industry

21 Market Share Concentration

21 Key Success Factors

34 Jargon & Glossary

22 Cost Structure Benchmarks

Key External Drivers

11 Industry Life Cycle

13 Products & Markets

28 Technology & Systems

13 Products & Services

30 Regulation & Policy

www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

Crop Services in the USMarch 2016 2

About this Industry

Establishments in this industry provide

The primary activities of this industry are

crop planting and harvesting. Almost all

The major products and services in this industry are

11 Agriculture, Forestry, Fishing and Hunting in the US

Crop Services in the USMarch 2016 3

About this Industry

For additional information on this industry

writes over 700 US

Crop Services in the US March 2016

Annual Growth 11-16

Annual Growth 16-21

Demand from crop production

Revenue vs. employment growth

There are no major

Products and services segmentation (2016)

Key External Drivers

Demand from crop

Crop harvesting by machine

Agricultural price index

Farm management services

Post-harvest crop activities

Farm labor contractors

Soil preparation, planting and cultivating

Life Cycle Stage

Crop Services in the USMarch 2016 5

Executive Summary | Key External Drivers | Current Performance

The Crop Services industry consists of

well-established nature of US farming

Key External Drivers

Demand from crop production

use in ethanol production, increasing

production revenue is expected to

Crop Services in the USMarch 2016 6

food manufacturers. Prices received in

input costs rise, negatively impacting the

Demand from crop production

Key External Drivers

Crop Services in the USMarch 2016 7

The Crop Services industry provides

Global crop prices

Changes in industry revenue are closely

industries, with the Crop Services

The industry consists of several product

the soil preparation, planting and