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Mozambique Agribusiness Report Q1 2012
Business Monitor International, January 2012, Pages: 45
Business Monitor International's Mozambique 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 Mozambique's agribusiness service.
BMI View: This quarter BMI has extended its supply and demand forecasts for Mozambique's agricultural industries through to the end of 2016. Positive production growth is envisaged for all of Mozambique's agricultural sectors over the next few years. Growth will be particularly strong in the case of poultry and sugar. Both of these sectors are benefiting from new investments and rising consumption demand. In the five years to 2016, BMI also envisages a steady expansion in output for Mozambique's main grain, corn. These and other agribusiness subsectors are currently benefitting from increased investment by both the government and private companies. One development expected to help drive production growth in the sugar and corn sectors is a growing commitment by the Mozambican government to developing biofuels. The main downside risks to BMI's grain production forecasts include the subsector's continued vulnerability to variable rainfall and associated problems such as drought and flooding. With regard to poultry, the greatest downside risks for production include rising feed costs and disease. BMI's five-year forecasts also envisage positive demand growth for the consumption of all agribusiness produce; growth will be underpinned by rising incomes and by population expansion.
- Corn Consumption Growth to 2016: 27% to 2.54mn tonnes. Strong consumption growth will occur on the back of a rapidly expanding population, as well as a steady increase in the use of corn as a feed for livestock and poultry.
- Corn Production Growth to 2015/16: 16% to 2.17mn tonnes. Weaker production growth reflects the influence of base effects and a 2.8% contraction in output in 2010/11. The fall in output in 2010/11 was due to excessively dry weather followed by rains and floods in southern and central Mozambique. Despite the weaker forecast, corn will remain Mozambique's most widely produced and consumed grain.
- Sugar Production Growth to 2015/16: 35% to 445,000 tonnes. The latest data from Mozambique's sugar producers and the USDA suggests that the country's sugar industry was expected to produce around 330,000 tonnes of centrifugal sugar in the 2010/11 agricultural year (ending December 2011); this was up by an impressive 32% compared to the previous year. As one of Mozambique's key cash crops, long-term production growth will reflect an increase in export-driven demand and the opening-up of new markets; sugar production is also expected to benefit from investment in biofuels.
- Sugar Consumption Growth to 2016: 20% to 240,000 tonnes. BMI has downwardly revised its demand forecast to reflect a more moderate rate of consumption growth through to 2015. Although rising demand for sugar will be driven by rising incomes and by an expanding population, sugar will nevertheless remain a luxury food for many Mozambicans.
- Poultry Production Growth to 2015/16: 28% to 55,000 tonnes. BMI maintains its view that poultry production increased by a modest 0.2% in 2010/11 to 42,700 tonnes. However, stronger production growth from 2011/12 will be fuelled by rising domestic demand and ongoing investments in improved production techniques. However, poultry consumption will increase by 32% over the same period, reflecting improved living standards and an expanding population.
Key Macroeconomic Forecasts:
- Mozambique Real GDP Growth 2012: 7.6% (up from 7.5% in 2011); predicted to average 7.5% in the five years to 2016. GDP per capita expected to rise to US$1,931 in 2020 (from an estimated US$518 in 2011.
- Mozambique Consumer Price Inflation 2012: 8.4%, down from an average of 11.4% in 2011; as an importer of significant quantities of wheat, sugar, milk and rice, Mozambique is vulnerable to rising international commodity prices. High prices for these staples inevitably feed inflation, sapping consumer purchasing power.
According to Mozambique's second agricultural and livestock census, published in November, the total area under cultivation in 2009/10 was 5.6mn hectares; this was up by 47% since 1999/00. However, there is still plenty of unused land that could be cultivated. Mozambique has 36mn hectares of potentially arable land. 5.6mn hectares represents only 15.6% of this figure. As global food security becomes increasingly pertinent over the coming years, Mozambique's natural endowment of underutilised fertile land will become a much more attractive investment proposition. Mozambique currently has some of the lowest cereal yields in southern Africa. BMI expects higher food prices, together with rising domestic demand, to result in new efforts to bring additional land under cultivation. Rising domestic demand will be driven by a young, growing, increasingly wealthy population which will demand ever more goods and services.
Mozambique's agribusiness will continue to benefit from a relatively new wave of 'South-South' investment, which has seen a number of rapidly growing emerging markets - particularly from Asia but also from countries such as Brazil - invest in industries with strong growth potential. In addition, like elsewhere in Africa, Mozambique has begun exploring land leasing opportunities. In August 2011, Brazilian newspaper Folha de Sao Paulo reported that Mozambique was preparing to provide large tracts of land at a symbolic price to Brazilian farmers to produce corn, soy and cotton. It is understood that Brazilian farmers will be provided with 6mn hectares (60,000 square kilometres) in four provinces of northern Mozambique to be farmed under concession for a period of 50 years, renewable for a further 50 years against payment of an annual rent of MZN37.50 (US$1.37) per hectare.
Numerous risks and challenges will remain for the foreseeable future, not least in the form of variable weather conditions. Mozambique ranks among the African countries most exposed to risks from multiple weather-related hazards such as floods and droughts. In order to improve the productivity of existing land and bring new land under cultivation, Mozambique's agribusiness companies will need to place an increasing emphasis on new irrigation techniques. Investments in irrigation are expected to result in strong productivity growth for a number of Mozambique's agribusiness sectors over the next few years.
Mozambique Agricultural SWOT
Mozambique Political SWOT
Mozambique Economic SWOT
Mozambique Business Environment SWOT
Supply Demand Analysis
Mozambique Livestock Outlook
MOZAMBIQUE Poultry Production & Consumption,2011-2016
MOZAMBIQUE Poultry Production & Consumption,2008-2012
Mozambique Sugar Outlook
Mozambique Sugar Production & Consumption,2011-2016
Mozambique Sugar Production & Consumption,2008-2012
Mozambique Grains Outlook
Mozambique Corn Production & Consumption,2011-2016
Mozambique Corn Production & Consumption,2008-2012
Commodity Price Analysis
Monthly Grains Update
Monthly Softs Update
Mozambique - Economic Activity
Industry Trend Analysis
Introducing New And Improved Risk/Reward Ratings Using Southern Africa As An Example
Table: Q112: Food & Drink Risk/Reward Ratings - South Africa
Table: Southern Africa Food & Drink Risk/Reward Ratings
BMI Launches Food Consumption And Retail Data For Three Southern African Economies
BMI Forecast Modelling
How We Generate Our Industry Forecasts
- Palm Oil
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