New Market Report Now Available: Central America Agribusiness Report Q1 2012

2012-02-18 09:13:45 - Fast Market Research recommends "Central America Agribusiness Report Q1 2012" from Business Monitor International, now available

BMI View: Widespread flooding across the Central America region in October 2011 affected an estimated 1.2mn people and caused significant crop damage, particularly in El Salvador. 10 days of torrential rainfall caused by a tropical depression led the United Nations to launch an emergency appeal for assistance. Corn and bean crops in El Salvador have been hit particularly hard, with

an estimated 988,000 quintals of corn and 340,000 quintals of beans thought to be lost. Fruit and vegetables, including apples, bananas and papaya, were also lost in the floods. It is thought that sugar and coffee crops have not been significantly damaged. The price of basic food stuffs is reported to have increased significantly as a result of the flooding. In response, the agriculture minister Guillermo Lopez Suarez announced plans to invest US$11mn to support the sector. Measures include importing 50,000 tonnes of white corn dutyfree and 25,000 tonnes of red beans to avoid supply shortages. The Ministry also plans to distribute more than 8,000 packets of seeds and fertilisers to producers.


Full Report Details at
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The flooding highlights once again the vulnerability of the Central American agricultural sector to extreme and unpredictable weather patterns. Unstable climatic conditions are set to continue to represent a significant downside to our forecasts for our forecast period.

Key Forecasts

* Demand for sugar in Central America is estimated to have increased by 2.4% y-o-y in 2011 to 1.93mn tonnes. Growth was strongest in Honduras at 5.8% y-o-y. In 2012, we see demand growing by a further 1.5% y-o-y to 1.96mn tonnes, with Honduras again seeing the fastest expansion. Over our forecast period to 2016, we see regional demand growth increasing by 9.1% on 2011 levels to 2.11mn tonnes. Growth is forecast to be strongest in Costa Rica and Nicaragua, at 13.8% and 13.3% respectively. To 2016, production growth for sugar will far outpace consumption demand in Central America, meaning that the area will remain an important exporter for sugar.
* Heavy rains and flooding in October 2011 damaged prospects for the 2011/12 corn harvest. Crop damage has been particularly severe in El Salvador, where an estimated 34% of corn-growing areas have been affected by the rainfall. We currently forecast production in El Salvador to decline by 7.6% y-o-y to 785,000 tonnes, although damage could be more severe than we currently anticipate. Guatemala is forecast to register moderate growth of 1.3% y-o-y to 1.22mn tonnes, still lower than the 2009 harvest. For the region as a whole, we see corn production declining by 1.3% on the 2010/11 harvest to reach 3.15mn tonnes, as a result of the flood damage.
* Beef output for the region is forecast to grow by 0.7% y-o-y in 2011/12 to 382,500 tonnes, with production slowing in Nicaragua. To 2016, BMI forecasts beef production growth in Central America of 15.7% on 2011 levels. Nicaragua again is forecast to show the largest gain in beef production, with a 22.1% growth on 2011 levels.
* Pork consumption is forecast to grow by 3.4% y-o-y in 2012, with Panama continuing to post strong growth of 8.2%. Out to 2016, consumption is forecast to continue growing rapidly at 24.6% on the 2011 level for the region as a whole. Growth is forecast to be strongest in Honduras and Panama, at 34.7% and 47.8% respectively, while in Guatemala increase in demand is expected to be much slower at 6.1% on the 2011 level.
* For 2011/12, the region's coffee output is forecast to grow by a further 3.1% y-o-y to 13.09mn bags. Nicaraguan production is forecast to bounce back by 23.0% y-o-y, while we currently see output in El Salvador declining by 9.2% y-o-y owing in part to damage caused by floods in October 2011. To 2016, BMI forecasts coffee production growth in Central America of 15.9% on 2011 levels to reach 14.71mn bags. Output will be boosted by work to rejuvenate and replant ageing coffee plantations and modernise production techniques. With global coffee prices remaining high, there will be a strong incentive for producers to increase the area planted to coffee and to make the necessary investments to boost yields.

Key Trends And Developments

* The governments of Guatemala and Peru have concluded negotiations over a free trade agreement (FTA) between the two nations. The bilateral agreement, which was signed into law on December 6 2011, will grant 81.4% of Guatemalan exports tariff-free access to the Peruvian market for a five-year period. 94.7% of Peruvian exports will be exempt from tariffs for the same period. It is hoped that the agreement will boost trade between the two countries, which is currently relatively low: Guatemalan exports to Peru were worth US$79.9mn in 2010.
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