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Cameroon Agribusiness Report Q3 2011
Business Monitor International, June 2011, Pages: 41
Business Monitor International's Cameroon 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 Cameroon's agribusiness service.
Market Outlook:
With the exception of sugar, this report anticipates strong production growth to 2015 for most of Cameroon's key agricultural sectors. Growth is expected to be particularly high in the case of cocoa and coffee; both sectors are benefiting from increased investment, improved industry fundamentals and better macroeconomic conditions. On the downside, disease and corruption are identified as key risks to the advancement of Cameroon's cocoa and coffee industries.
Meanwhile, the report also envisages positive consumption growth for all of Cameroon's agricultural sectors, with the exception of coffee for which demand will remain limited throughout the forecast period. Staple grains such as corn and sorghum will experience steady demand growth as Cameroon's population continues to expand. Demand growth will be supported by an economy that is predicted to expand at an average annual rate of 4.5% to 2015. Growing domestic demand for cocoa will be fuelled by rising disposable incomes and by the increased consumption of value-added processed products.
Key Industry Forecasts:
- The report retains a core view that cocoa production will expand by 3.6% in the 2010/11 agricultural year; this will raise total output to over 205,000 tonnes. Over the long term, Cameroon's cocoa industry is expected to benefit from better crop management techniques, as well as from increased private and public sector investment. In the five years to 2014/15, BMI predicts that cocoa production will grow by 35% to surpass 267,000 tonnes.
- Coffee production is predicted to grow by 1.9% in 2010/11 to surpass 750,000 60kg bags. Over the forecast period the report anticipates robust growth for coffee, with output expected to rise by 24% to 2014/15. BMI’s strong growth expectations for coffee reflect the considerable support that the industry is receiving from the government and other sources.
- Slightly revised forecasts for corn and sorghum envisage steady production growth in the five years to 2014/15. In the case of corn annual average growth will amount to 3.1%, while in sorghum's case annual growth will average 3.8%. Over the forecast period, total corn output will increase by 16.4% to 1.05mn tonnes. Meanwhile, sorghum output will expand by 18.2% to reach 621,000 tonnes.
- The production forecast for sugar is unchanged this quarter. The report expects output to decrease by 11% in 2010/11, before returning to positive, albeit limited growth of 2.7% the following year. In the five years to 2014/15, BMI now predicts that sugar output will rise by just 4%. Increased competition could yet lead to stronger rates of sugar production growth, especially in the latter part of the forecast. Growth could end up being significantly stronger if new entrant Forzi Sugar began commercial operations.
Key Macroeconomic Forecasts:
- Cameroon Real GDP Growth 2011 Forecast: 3.7% (up from 3.2% in 2010).
- Cameroon Unemployment Rate 2011: 7.8% (down from 8.0% in 2010).
- Consumer Price Inflation: Expected to average at 4.2% in 2011, up from a 1.2% average in 2010.
Industry Developments Greater productivity within Cameroon's agribusiness industries could be achieved by introducing new higher-yielding seeds. In May 2011, it was announced that the government of Cameroon, in partnership with the Food and Agriculture Organisation (FAO), were finalising studies on the implementation of a viable seed system which could boost agricultural production and ensure food sufficiency in the country. In addition to adopting higher-yielding seeds variants, BMI maintains that the cultivation of crops which are more suited to local weather conditions and topography would help to improve the potential for stronger yield growth over the long-term.
Cameroon has reported a significant increase in cocoa exports in recent months, a development which has partly been attributed to the mixed fortunes affecting major exporter Côte d'Ivoire. BMI has an upbeat long-term view of Cameroon's cocoa sector, expecting it to benefit from better crop management techniques and support from both the government and multinational corporate backers. The report believes that improved production techniques will give Cameroonian cocoa farmers an opportunity to sell more of their beans on international markets. Over the forecast period, the report predicts that cocoa exports will rise by 29%.
Leasing agricultural land to foreign investors could provide Cameroon's government with an important source of income for reinvesting in agribusiness. However, in order to be successful, the government will need to reassure Cameroonians that selling or leasing large parcels of arable land to foreign investors will not result in subsistence farmers losing their lands without being offered adequate compensation. In recent months, initiatives to lease farmland to a range of foreign investors, including Italian NGOs and Chinese agro-industry companies, have faced opposition from groups criticising the lack of transparency which typically surrounds land lease deals.
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