Recently released market study: Mozambique Agribusiness Report Q2 2012

2012-04-24 05:37:31 - Recently published research from Business Monitor International, "Mozambique Agribusiness Report Q2 2012", is now available at Fast Market Research

BMI View: Three weather systems - tropical storm Chandra, subtropical depression Dando and, most recently, tropical cyclone Funso - are estimated to have destroyed 100,000 hectares of agricultural land in Maputo, Gaza, Inhambane, Sofala and Zambezia provinces. Given that this is slightly less than 2% of the country's total agricultural area, we believe that this poses only a minor risk

to production forecasts. However, it will serve to aggravate the food security problem in many rural parts of the country, such as Chigubo and Massangena in Gaza province, which were already identified as areas requiring urgent humanitarian assistance according to the Food and Agriculture Organization of the United Nations.


Full Report Details at
- www.fastmr.com/prod/359535_mozambique_agribusiness_report_q2_201 ..


Key Forecasts

* Corn production growth to 2016: 14.8% to 2.4mn tonnes. Strong corn output growth will occur on the back of a rapidly expanding population, as well as a steady increase in the use of corn as a feed for livestock and poultry.
* Sugar production growth to 2015/16: 34.8% to 445,000 tonnes. As one of Mozambique's key cash crops, long-term production growth will reflect an increase in export-driven demand and the opening up of new markets; sugar production is also expected to benefit from investment in biofuels.
* Poultry production growth to 2015/16: 28.4% to 55,000 tonnes. Although production growth will experience steady gains, Mozambique is expected to develop a growing reliance on imported poultry meat. This reflects a widening shortfall in the supply of edible poultry meat relative to rising consumption demand.

Key Macroeconomic Forecasts

* Real GDP growth 2012: 7.4% (down from 7.4% in 2011); predicted to average 7.5% in the five years to 2016.
* Consumer price inflation 2012: 5.9% (down from an average of 11.2% in 2011; predicted to average 7.7% to 2016). As an importer of significant quantities of wheat, sugar, milk and rice, Mozambique is vulnerable to rising international commodity prices. High prices for these staples inevitably feed inflation, sapping consumer purchasing power.

Key Views

Mozambique's agribusiness will continue to benefit from a relatively new wave of 'South-South' investment, which has seen a number of rapidly growing emerging markets - particularly from Asia but also from countries such as Brazil - invest in industries with strong growth potential. In addition, like elsewhere in Africa, Mozambique has begun exploring land leasing opportunities. In August 2011, Brazilian newspaper Folha de Sao Paulo reported that Mozambique was preparing to provide large tracts of land at a symbolic price to Brazilian farmers to produce corn, soy and cotton. It is understood that Brazilian farmers will be provided with 6mn hectares (60,000 square kilometres) in four provinces of northern Mozambique to be farmed under concession for a period of 50 years, renewable for a further 50 years against payment of an annual rent of MZN37.50 (US$1.37) per hectare.

Numerous risks and challenges will remain for the foreseeable future, not least in the form of variable weather conditions. Mozambique ranks among the African countries most exposed to risks from multiple weather-related hazards such as floods and droughts. In order to improve the productivity of existing land and bring new land under cultivation, Mozambique's agribusiness companies will need to place an increasing emphasis on new irrigation techniques. Investment in irrigation is expected to result in strong productivity growth for a number of Mozambique's agribusiness sectors over the next few years.

Investment in Mozambique's sugar sector will remain strong in the foreseeable future. As a case in point, Coca-Cola Sabco, the African Coca-Cola bottler, has announced initial plans to build a US$50mn new facility in the country. We believe this is testament to the strong demand prospects for the sweetener in the country. Our Food & Drink team also expects consumer spending to grow considerably over the next few years, with Mozambique's economy forecast to be among the fastest growing in the world. Owing to a combination of prudent policy, plentiful harvests and a steadily improving business environment, the Mozambican economy has outperformed many of its regional peers.

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