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Zimbabwe Agribusiness Report Q1 2012
Business Monitor International, Nov 2011, Pages: 33
Business Monitor International's Zimbabwe 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 Zimbabwe's agribusiness service.
BMI View: In this report, we debut our newly created forecasts for grains and sugar in Zimbabwe. We hold a positive outlook for corn production because of greater availability of fertilisers and corn seeds, as well as high global prices. Also, we are positive about the sugar sector thanks to increased investment from the government, the private sector and the EU, as well as from higher import demand, mainly from the US and the EU. By contrast, we are negative on the wheat sector as farmer profit margins have been extremely poor and finance has been hard to come by, which should result in production stagnating over our forecast period
Key Views
- Sugar production growth to 2015/16: 31.8% to 441,500mn tonnes. This will be due to export demand, as well as increased investment in the sector both by the Zimbabwean government and the EU.
- Corn consumption growth to 2016: 31.6% to 1.6mn tonnes. This will mainly come from population growth, but will also be a function of greater corn availability of corn on domestic markets.
- 2012 real GDP growth: 7.4% (up from 7.1% in 2011; predicted to average 7.1% from 2011 until 2016).
- Consumer price inflation: 5.3% y-o-y in 2012 (up from 3.5% y-o-y in 2011).
Industry Developments
Zimbabwe's two main grain sectors appear to be moving in opposite directions. BMI sees growth ahead for the country's corn sector, as farmer education, high prices and improved seed availability enhance output. This should take the country back into a domestic surplus in the coming years (having previously run several consecutive deficits up to 2010/11). For the country's wheat sector, which was largely selfsufficient for decades, a lack of government support and land reforms have seen production plunge, forcing the country to import large quantities of wheat. Until farmers are able to access loans to improve their crops, we see the country being a net wheat importer over the medium term.
Increased private and public sector investment in Zimbabwe's sugar sector will help the country to increase production in the long term. Also, the EU has provided Zimbabwe with EUR45mn under the Zimbabwe Sugar Adaptation Strategy Funding in order to rehabilitate and increase efficiency of sugar cane production. This includes the rehabilitation of 1,200 hectares (ha) of land and flood irrigation canals to be completed by October 2011. A further EUR13.7mn will be provided by the EU under another of its programs (the Program of Accompanying Measures for Sugar Protocol Countries) to support vulnerable small holder sugar producers in the 2011/12 growing season.
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