2013-12-08 18:16:27 - New Food market report from Business Monitor International: "India Agribusiness Report Q1 2014"
We hold a positive view on India's agribusiness sector, as the country will remain an agricultural powerhouse and is likely to maintain high levels of self-sufficiency for major food crops. Production growth of various commodities will be driven by strong government support and robust demand for manufactured foodstuffs. We see significant growth opportunities in sub-sectors such as dairy, coffee and livestock. However, India will be increasingly vulnerable to exceptional weather phenomena owing to climate change effects and serious water shortages. Moreover, the country will remain prone to erratic government intervention, which seriously hampers its reputation as an international provider. As such, we see the partial liberalisation of the sugar industry as a first positive step that will incentivise production growth
and investment in the sector.
Full Report Details at
- www.fastmr.com/prod/723587_india_agribusiness_report_q1_2014.asp ..
* Coffee production growth to 2016/17: 7.5% to 5.6mn 60kg bags. Strong growth will be driven by major export potential, government support, the expansion of cultivated area and India's robust coffee consumption growth.
* Palm oil consumption growth to 2017: 33.5% to 9.9mn tonnes. Domestic palm oil consumption will be propelled by strong demand for its use in domestic food, which makes up about 80% of total domestic palm oil demand.
* Milk production to 2016/17: 18.4% to 151.4mn tonnes. Growth will be driven by improvements in breeding techniques, robust expansion of domestic consumption and increasing dairy prices, which will renew interest in dairy production as a commercial activity.
* BMI universe agribusiness market value: US$232.8bn in 2014 (up from an expected US$231.0bn in 2013; forecast to grow annually by 2.9% on average from 2013 to 2017).
* 2014 real GDP growth: 5.6% (up from 5.0% in 2012 and 2013; forecast to average 6.0% from 2013 to 2017).
* 2014 consumer price inflation: 5.8% (down from 8.1% in 2012 and an expected 7.0% in 2013; forecast to average 5.1% from 2013 to 2017).
* 2014 central bank policy rate: 7.00% average (down from 7.50% in 2012 and an expected 7.25% in 2013; forecast to average 7.05% from 2013 to 2017).
Key Revisions To Forecasts
* Sugar production in 2013/14 revised up, to 27.0mn tonnes (compared with a previous forecast of 25.5mn tonnes). The strong 2013 summer monsoon in India has supported sugar cane plantings and improved the outlook for final production.
* Coffee production in 2013/14 revised up, to 5.4mn 60kg bags (compared with a previous forecast of 5.2mn bags). The summer monsoon in 2013 led to an adequate and timely flower blossoming period. However, heavy rains damaged beans and increased pest attacks, limiting the production growth stemming from the favourable monsoon.
The 2013 summer monsoon in India during June to August continues to bode well overall for Indian agriculture. Export restrictions are unlikely in 2013/14, as we expect India to record favourable grains and oilseeds harvests. In fact, the country is on track to maintain high exports of rice and wheat this season. For rice, most of the overall increase in production over our forecast period will come from the secondary winter (rabi) crop, which will be favoured by high levels of irrigation. The kharif crop, for which the harvest was under way at the time of writing, is likely to disappoint despite ample rains, as the monsoon was below average in some rice producing regions.
We forecast strong palm oil demand growth in India in 2014 in line with low international prices, a mild improvement in economic activity in 2014 and the ongoing appreciation of the rupee after the sharp drop in value in August and September. The government decided to reduce the benchmark import price of crude palm oil, from US$827/tonne to US$809/tonne, which is likely to reduce retail prices and encourage demand growth. Strong palm oil consumption from India underpins our view for international palm oil prices to improve after 2013's lacklustre performance.
India's bovine herd is expected to continue to grow in 2013 and 2014, and we forecast beef production in the country to grow by a healthy 9.8% and 4.0% in those years to 3.8mn and 4.0mn tonnes respectively. Demand for dairy products is mainly driving the herd expansion. In addition, new laws concerning buffalo slaughtering is helping to encourage production. As a result of sustained growth in production and export capacity, India is on track to become the world's largest beef meat exporter in 2013. India is likely to continue to make inroads into the South Asia, North Africa and Middle East markets, which will pose a growing threat to Brazil.
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