2013-11-02 13:24:40 - New Food research report from Business Monitor International is now available from Fast Market Research
Colombia's agricultural sector faces a number of challenges in the medium term. Key export crops - such as coffee and cocoa - have underperformed in recent years, owing to a lack of investment in infrastructure and serious outbreaks of disease. Although regeneration work is under way, it will take time to bear fruit. The strength of the Colombian peso against the US dollar is also posing challenges for the agribusiness sector, as the competitiveness of Colombia's exports is being eroded. Finally, there is still unrest among dairy, livestock and grain producers who fear that the entry into force of the Colombia-EU free trade agreement will further erode their profitability. The Ministry of Agriculture has taken steps to support these sectors
to adapt to the arrival of inexpensive imports; however, ongoing efforts to improve infrastructure and modernise production techniques will be required.
* Sugar consumption growth to 2017: 7.2% to 1.89mn tonnes. This will mainly be driven by increases in the consumption of confectionery products as per capita incomes and young population rise.
* Poultry production growth to 2016/17: 10.2% to 1.16mn tonnes. The consolidation of the sector will accelerate in the coming years after the difficult conditions for poultry producers over recent years, including soaring feed prices and sluggish demand.
* Coffee production growth to 2016/17: 36.5% to 10.45mn tonnes. Production will be aided by programmes to replace aging plantations and improve resistance to disease. However, we remain cautious about the long-term trajectory of Colombian coffee production, especially with prices currently low and the Colombian peso strong.
* BMI universe agribusiness market value: US$15.16bn in 2013; down from US$15.25bn in 2012; growth expected to average 2.7% annually between 2013 and 2017.
* 2013 real GDP growth: 4.1%; up from 4.0% in 2012. Forecast to average 4.5% from 2013 to 2017.
* 2013 consumer price index: 2.6%; down from 3.2% in 2012. Forecast to average 3.3% from 2013 to 2017.
* 2013 central bank policy rate (average): 3.00%; down from 4.25% in 2012. Forecast to average 4.15% from 2013 to 2017.
Full Report Details at
- www.fastmr.com/prod/698070_colombia_agribusiness_report_q4_2013. ..
Key Revisions To Forecasts
* 2012/13 cocoa production forecast revised up, to 49,000 tonnes (compared with a previous forecast of 38,800 tonnes), due to favourable weather and a higher-than-expected increase in harvested area.
Our view for a rebound in Colombian coffee production is playing out, as the disease concerns that have hampered the crop in recent years have dissipated. However, the sector continues to face concerns due to low coffee prices, which have fallen by more than half in two years. Colombian producers now have to face steep maintenance costs and falling revenues. The Colombian coffee sector had been stagnating in recent years, due to both a replanting programme begun in 2007, and the combination of diseases and bad weather.
The expected opening of the first Starbucks coffee shop in Bogota in 2014 highlights the success of Fedecafe's goal of increasing coffee consumption in Colombia. The company plans on opening six shops in 2014 and mentioned in August 2013 that it could have as many as 50 shops in five years. Starbucks is also forming a pact with the US Agency for International Development to invest US$3mn to secure coffee quality and supply in certain regions of Colombia.
The long-stalled US-Colombia Trade Promotion Agreement - which came into force in May 2012 - has had mixed results for US grain exports to Colombia so far. The US continued to lose market share to Canada, which signed the Canada-Colombia FTA a year in advance. This free trade 'head-start' for Canada provided Canadian exporters with an opportunity to strengthen trade relationships with Colombian millers at the expense of US wheat. In 2012, the US only provided 30% of Colombia's wheat imports and 12% of its corn imports. We continue to believe that the FTA will eventually halt the US export decline to Colombia.
However, it may take time to regain commercial links lost to Canada and the Mercosur countries. To capitalise on the world's growing desire for chocolate, the Colombian government released an ambitious 10-year plan to transform Colombia from a cacao importer to a major cacao exporter. According to the 'Plan Decenal,' Colombia will increase production of cacao from the 42,000 tonnes produced in 2010 to 246,000 tonnes by 2021. We see this goal as overly optimistic, as our own forecast calls for a mild increase, to 51,500 tonnes, by 2017.
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