2012-09-04 08:47:56 - Recently published research from Business Monitor International, "France Agribusiness Report Q4 2012", is now available at Fast Market Research

BMI View: We maintain our subdued outlook for France's grain production in 2012/13, as cold snaps have destroyed part of the crop, and recent rains were not sufficient to push yields higher. In the dairy segment, producers are being hit by weak economic growth in Europe, where French dairy companies, such as Danone, sell a lot of their products. Livestock producers are being hit by weak margins; recent pressure faced by French poultry group Doux exemplifies the difficulties faced by the poultry sector.

Key Forecasts

* Wheat production growth to 2015/16: 3.8% to 39.6mn tonnes. We expect modest growth in output over our forecast period owing to possible cuts to farmers' subsidies. In addition, French agricultural exports face increasing competition from

the Black Sea region.
* Poultry consumption growth to 2015/16: 5.8% to 1.7mn tonnes. Poultry's perception as a healthy alternative to red meat, as well as its affordability in the sluggish economic environment, will encourage demand growth.
* Milk production growth to 2015/16: 8.0% to 25.9mn tonnes. Consolidation in the dairy industry will allow producers to take advantage of rising quotas and export demand, helping to support growth.
* 2012 real GDP growth: -0.2% (down from 1.8% in 2011; forecast to average 1.3% over 2011- 2016).
* Consumer price inflation: 2.2% annual average in 2012 (slightly up from 2.1% in 2011).
* BMI universe agribusiness market value: 10.5% year-on-year (y-o-y) decline to US$47.4bn in 2011/12, forecast to decline 1.1% annually between 2010/11 and 2015/16.


Full Report Details at
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Industry Outlook

After a nearly 8% y-o-y dip in France's wheat output in 2011/12 due to unfavourable weather conditions, we expect production to remain subdued in 2012/13 and to grow by only 2.3% y-o-y to 36.0mn tonnes. We revised down our 2012/13 production forecast in early April but remain optimistic that the crop will expand, as the long stretches of exceptionally dry weather have given way to rains in key growing regions in recent weeks. That said, as a result of the subdued production levels, French wheat exports are expected to decline by 18% y-o-y in 2011/12, to 16.8mn tonnes, according to the French farm body, France Agrimer. We expect French exports to rebound in 2012/13 on the back of growing output and higher-than-expected stocks.

Recent pressure faced by French poultry group Doux exemplifies the difficulties faced by the poultry sector, especially in Europe. The company's margins are continuously suffering from high feed prices as well as subdued demand in a context of sluggish economic growth. The poultry group has been unable to increase retail prices for its products because of pressure from distribution chains. Also, even though Doux has increased market share in higher growth markets such as the Middle East and South America, 29.5% of the company's revenue still depended on France as of 2010. Indeed, high unemployment in France as well as moderate income growth in recent years are cutting profit growth opportunities for the poultry producer in one of its main markets.

After Danone published its results for the first quarter of 2012, BMI suggested that the firm was struggling to meet expectations and could be in for a difficult year. This sentiment has been borne out, with the firm announcing a lower-margin outlook for 2012 - a revelation that took a heavy toll on the firm's share price (down 7% in early trading) and will result in unease among investors. This fall has been attributed to deteriorating conditions in southern Europe, where the firm has said it will have to invest in brand support and pricing to support its market share.

Partial Table of Contents:

SWOT Analysis
- France Agriculture SWOT
- France Business Environment SWOT
Supply Demand Analysis
- France Dairy Outlook
- Table: France Milk Production & Consumption, 2011-2016
- Table: France Butter Production & Consumption, 2011-2016
- Table: France Cheese Production & Consumption, 2011-2016
- Table: France Milk Production & Consumption, 2008-2012
- Table: France Butter Production & Consumption, 2008-2012
- Table: France Cheese Production & Consumption, 2008-2012
- France Livestock Outlook
- Table: France Poultry Production & Consumption, 2011-2016
- Table: France Pork Production & Consumption, 2011-2016
- Table: France Beef & Veal Production & Consumption, 2011-2016
- Table: France Poultry Production & Consumption, 2008-2012
- Table: France Pork Production & Consumption, 2008-2012
- Table: France Beef & Veal Production & Consumption, 2008-2012
- France Grains Outlook
- Table: France Wheat Production & Consumption, 2011-2016
- Table: France Corn Production & Consumption, 2011-2016
- Table: France Barley Production & Consumption, 2011-2016
- Table: France Wheat Production & Consumption, 2008-2012
- Table: France Corn Production & Consumption, 2008-2012
- Table: France Barley Production & Consumption, 2008-2012
Commodity Price Analysis
- Monthly Softs Update
- Cocoa: 2012 Outperformance To Continue
- Coffee: Next Support At USc130.0/lb
- Palm Oil: False Break?
- Sugar: More Fears Over Brazilian Crop
- Cotton: Technical Bounce Over?
- Select Commodities: Performance & BMI Forecasts
- Monthly Grains Update
- Wheat - Deteriorating Supply Prospects
- Corn - Anticipating US Supply Downgrades
- Soybean - Range Trading Ahead
- Rice - Ample Supply To Keep Prices In Check
- Select Commodities: Performance & BMI Forecasts
Upstream Analysis
- Europe GM Outlook
- Brazil, United States Corn Production, Consumption & Trade
- Europe Fertiliser Outlook
- EMEA Machinery Outlook
Downstream Analysis
- Food
- Food Consumption
- Table: Food Consumption Indicators
- Prepared Food/Canned Food
- Table: Canned Food Value/Volume Sales - Historical Data & Forecasts
- Confectionery
- Table: Confectionery Value/Volume Sales - Historical Data & Forecasts
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Full Table of Contents is available at:
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