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Central America Agribusiness Report Q2 2011
Business Monitor International, April 2011, Pages: 70
The 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.
Concerns about food security in the Central American region have continued into Q211. The Central American region has benefited from high global prices for sugar and coffee with exports of coffee performing particularly well during the first five months of the new harvest year. However, the region relies heavily on imports of grains and is struggling to guarantee supplies. Escalating international prices are seeing the cost of staple foods rise in local markets, with food price inflation compounded by losses resulting from the devastating floods during Q410.
The weak harvests have led to shortages of beans and corn staple foods for poorer families throughout the region. Governments are turning to price freezes, subsidies and reductions in import tariffs to avoid pushing families further into poverty. However, such measures risk compromising the region's fragile recovery from the global economic slowdown.
Key Forecasts:
- In 2010/11, Central American sugar production is forecast to shrink by 3.2% year-on-year (y-oy) to 4.44mn tonnes. This is primarily due to storm damage across the region in September 2010, most notably in Guatemala, by far the region's largest producer. Despite the slight decline in production in 2010/11, over the longer term we see the region's sugar production rising, as production techniques become more efficient. To 2014/15, BMI forecasts sugar production growth in Central America of 12.3% on 2009/10 levels, with growth linked to improving sugar prices.
- Demand for pork is forecast to continue growing rapidly throughout our forecast period to 2015, with an increase in consumption of 24.7% on the 2010 level for the region as a whole. Growth is forecast to be strongest in El Salvador and Honduras, at 43.4% and 36.9% respectively, while in Guatemala any increase in demand is expected to be much slower, at 11.2% on the 2010 level.
- Adverse weather conditions during Q410 hit Guatemalan coffee growers. Heavy rains led to losses of an estimated 230,000 bags of coffee in the Pacific Coast region, where coffee is harvested earlier than in the highlands. Increases in production elsewhere in Guatemala are, however, expected to compensate for the damage to harvests on the coast. Production for the 2010/11 harvest is currently forecast to come in at 4.08mn bags, up by 4.3% year-on-year (y-oy). To 2015, Guatemalan coffee production is forecast to reach 4.56mn bags, up by 16.7% on the 2010 level.
- Coffee exports have performed strongly throughout much of the region during the early months of the 2010/11 harvest year. During the first five months the value of Nicaraguan exports increased by 79.4% on the same period in 2009/10 to reach US$153.8mn. In volume terms, exports were up by 22.7% on the 2009/10 total in the first five months, reaching 753,574 quintals (45.45kg bags). In El Salvador, exports for January 2011 increased by 76.8% in value terms y-o-y to reach US$48.67mn. In volume terms, exports were up by 44.1% to 273,587 quintals.
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