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Colombia Agribusiness Report Q2 2010
Business Monitor International, March 2010, Pages: 70
Colombia Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Colombia's agribusiness service.
The Colombian agricultural industry continues to suffer from the trade restrictions implemented by Venezuelan President Hugo Chávez, which have seen Colombia's exports to Venezuela fall by 77% between January 2009 and January 2010. The livestock and dairy sectors have been particularly hard hit, with the value of exports of live animals and animal products falling from US$95.6mn in January 2009 to US$0.2mn in January 2010. The Colombian livestock industry has been forced to explore new potential markets for the country's excess supplies of beef. The agriculture minister, Andrés Fernández, has visited Chile, Brazil, Peru, Mexico and Trinidad and Tobago in search of alternative destinations. Following months of negotiations, in February 2010, Colombia granted approval to export live cattle to Lebanon. Egypt is slated as another potential destination for Colombian livestock.
However, the agricultural sector may receive a boost from developments on the political front in Colombia. In February 2010, the Colombian constitutional court rejected a proposal to hold a referendum to modify the constitution to allow President Uribe to stand for a third term. The decision reflects positively on the strength of democratic foundations in Colombia and may encourage investor confidence. The strong showing in March 2010's Congressional elections of the Party of the U puts its leader, the former defence minister Juan Manuel Santos, in a strong position prior to May's presidential elections. Santos has openly pledged his commitment to Uribe's security-focused policies, and the election results are seen as public support for his approach, which bodes well for the future stability of the agricultural industry.
Elsewhere, in a statement released on March 2 2010, the National Cocoa Federation, Fedecacao, announced ambitious plans to revitalise Colombia's flagging cocoa producing industry, to turn it into a major player on the international market. The plans envisage increasing the area dedicated to cocoa production to 300,000 hectares by 2019 from the current levels of 125,000 hectares. It is hoped that production will reach 360,000 tonnes by 2019, with yield increasing from current levels of around 500kg per hectare to 1,200kg per hectare. The plans were drawn up by Fedecacao, along with the Comité Especial de Confitería y Chocolatería de la Andi, and received the approval of Colombia's Ministry of Agriculture and Rural Development and Commerce, as well as the industry and tourism ministry. Sugar production in Colombia is forecast to recover strongly in 2009/10, following four successive years of decline in production output. In 2009/10, production should bounce back strongly as mills increase the area planted to sugar cane to take advantage of the current high sugar price. Indeed, the Colombian Cane Sugar Producers Association (Asocaña) is expecting a bumper sugar crop for the year and we have revised up our growth forecast accordingly. We now forecast sugar production to grow 19.8% year-onyear (y-o-y) in 2009/10 to 2.46mn tonnes.
2010 is also set to see a strong recovery in exports of Colombian sugar, buoyed by record-high sugar prices on the world market and restricted global supplies. Strong growth is forecast for exports of both raw and refined sugar, which are projected to increase by 42.9% and 70.4% y-o-y respectively, according to statistics from the USDA.
Exports may be further buoyed by the signing of an foreign trade agreement with the EU in March 2010, which will come into effect in 2011. The move was met with support from Colombia's sugar industry. Up until now, sugar exporters have been unable to take advantage of the large EU market, which in 2008 imported more than 3mn tonnes of sugar, due to prohibitive import tariffs. Negotiations surrounding the conditions placed on sugar imports, with the sugar industry hoping that the EU would raise its initial offer of a quota of 62,000 tonnes.
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