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Central America Agribusiness Report Q3 2010
Business Monitor International, July 2010, Pages: 59
Central America 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 Central America's agribusiness service.
Central America's recent adverse weather conditions have led to major problems with agricultural output. The region was hit a major blow in 2009 as droughts caused extensive problems in the area's largest corn producing country Guatemala. Coffee production in the region also fell due to abnormal climatic conditions which included an extended summer and a drought which occurred in what is normally the rainy season. Erratic and worsening weather conditions now pose a major threat to the region's agricultural potential.
Key Views
- Central American corn production expected to grow 13.97% to 2014. However, the largest corn producing country, Guatemala, is expected to see corn output continue falling, with production growth of -2.19%.
- Central American coffee production to grow 13.2% to 2014, although there will be wide regional variations. For Costa Rica we forecast growth of 51.8% on 2009 levels. In contrast, in El Salvador, coffee output to 2014 is forecast to decrease by 15%.
- Central American beef production expected to grow 17.8% to 2014, due to an emphasis on organic production from the region's largest producing country Nicaragua. Pork production will increase by 13.5% owing to ongoing modernisation of hog farms.
- Central American sugar production growth to 2014: 16.39%, due to an increase in land being cultivated and modernisation of plantations.
Key Trends And Developments
Rising temperature levels mean that Central America could lose around a third of land suitable to grow coffee by 2050, as global warming impacts conditions for best quality beans such as arabica. Changing weather could mean that growers farming coffee at low altitudes will lose crops as lower-lying coffee producing areas become unviable, forcing farmers to move to higher altitudes. Central America is gradually reducing its reliance on its US trade ties, exemplified by the signing of a liberal trade agreement with the EU in late May 2010. However, the US remains the region's major trade partner, absorbing 41% of its total exports. With Central America also highly reliant on remittances from the US, a secondary slowdown in the world's largest economy would put significant downwards pressure on economic growth in the region.
A low economic base means that GDP per capita in Central America is expected to increase at a significant rate, with very positive implications for private consumption. Over the longer term, regional GDP per capita (in US dollar terms) is expected to increase by more than 100% over the next 10 years, with regional real GDP growth set to average 3.2%. This means that consumption of food products, particularly for the likes of sugar and coffee, has substantial potential to rise.
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