Venezuela Agribusiness Report Q2 2012

Business Monitor International's Venezuela 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 Venezuela's agribusiness service.

BMI View: Data for 2011 from the Ministry of Agriculture and Lands demonstrate mixed results for the first year of President Hugo Chávez's government's two-year plan for the agricultural sector, the Plan Bienal para la Producción de Alimentos 2011-2012. The plan aimed to improve access to capital for small- and medium-scale producers, and, according to the ministry's data, 75,000 producers received VEF2.7bn (US$627.9mn) in order to boost production. The first year has met with some success: production of beans, cotton, yucca and some vegetables increased. However, yellow corn production reached only 62.1% of the target of 1.39mn tonnes for 2011; white corn, soy oil and pulses production hit only 50.0%, 38.3% and 42.1% respectively of official targets. Overall crop area fell by 7.8% year-onyear (y-o-y), and unemployment in the agricultural sector also increased by 5.8% over the year.

Agricultural production was hard hit by heavy rains which caused significant damage to both crops and infrastructure. In addition to extreme weather conditions, Chávez's Gran Misión Agro Venezuela (Great Venezuelan Agricultural Mission) has also been held back by shortages of technical staff and equipment, delays in financing to farmers and inefficient production techniques. Despite the plan's failure to reach its first-year targets, in late January, Chávez announced the relaunching of the Gran Misión Agro Venezuela on his radio and television show 'Aló, Presidente'. As part of the relaunch, Chávez announced the creation of the Organo Superior de Agricultura, a new body which will be headed by Chávez himself, along with Elías Jaua, vice president and new minister of agriculture.

One of the main goals of the Organo Superior will be to increase land for livestock production, which currently stands at just 800,000 hectares, with the aim of growing the national herd to 20 million heads by 2019. Chávez called for the cooperation of local government to achieve these goals. He also pledged a further VEF114mn (US$26.5mn) in investment to improve the agricultural transport network.

Key Forecasts
- BMI forecasts that GDP will increase by 2.5% y-o-y in 2012 and 2.2% in 2013, with growth driven primarily by the oil sector. However, with presidential elections in October 2012, attempts to keep domestic demand elevated will see inflation levels remaining high. We currently forecast end-2012 inflation of 26.0%, the highest in Latin America.
- In 2010/11, we estimate that corn production rose by just 4.7% y-o-y on the low 2009/10 harvest to 1.71mn tonnes. In 2011/12, we see production increasing by 4.5% y-o-y to 1.79mn tonnes as the area harvested increases to an expected 450,000 hectares. Out to the end of our forecast period in 2016, the level of production will be highly reliant on the government's ability to support the agricultural sector. Without continued support, much of the newly opened farmland will very likely return to fallow. Despite this risk, we expect output to continue to rise and forecast production to grow by 27.4% on the 2011 level to reach 2.18mn tonnes.
- Poultry production has been hit by high input costs, farmgate price controls and increasing competition from imports. We estimate that output fell by 3.8% y-o-y in 2010/11 to take production to 625,000 tonnes and we forecast a further decline of 3.0% in 2011/12 to 606,000 tonnes. Out to 2016, we see production increasing by 4.5% on the 2011 level to reach 653,000 tonnes, still some way below the level seen in the early years of the 21st century.
- In 2010/11, the reliance on imports continued to shore up beef consumption and we estimate that consumption increased by 2.0% y-o-y to 533,500 tonnes. High import prices and a drop in domestic production are likely to constrain beef consumption in the short term, and we currently forecast demand to grow by 0.9% y-o-y in 2011/12 to 538,300 tonnes. Out to 2016, demand for beef is forecast to grow by 7.4% on the 2011 level to 573,000 tonnes.

Key Trends And Developments
- Vice President Elías Jaua was appointed as the new minister of agriculture and lands in late January after Juan Carlos Loyo resigned from the post, citing ill health. New appointments have also been announced for senior positions within the Ministry of Agriculture. Faiez Kassen Castillo was named vice minister for agricultural economics; Tatiana Pug was appointed president of the National Institute for Agriculture Research; Pedro Moreno Montes was named as the new president of the Institute for Comprehensive Agricultural Health; Javier Ramos was made acting president of the National Institute for Rural Development; and Eduardo Hurtado León will head the Venezuelan Agricultural Bank.
- Also in late January, President Hugo Chávez stepped up pressure on banks to grant loans to small- and medium-sized producers. He stressed that he would consider nationalising the banks if they fail to observe Venezuelan law, which states that banks must grant agricultural loans. Chávez also announced that rather than being granted directly to producers, agricultural loans would now be transferred to the executive office to establish a new fund, which small- and medium-sized producers will be able to access. The announcement has not been universally welcomed within the agricultural sector. Pedro Rivas, president of the National Confederation of Agricultural Products (Fedeagro), expressed fears that the new fund may exclude private producers.
- There were widespread food shortages in 2011, including basic food items such as powdered milk, oil and beef. There was restricted availability of coffee, precooked corn flour and margarine for the second half of 2011. According to economic research firm Datanálisis, the shortage index for December 2011 was 24.8%, in comparison with 8.0% at the beginning of the year.
- In March 2012, it was reported in the local press that the Supreme Court had granted an application seeking to annul the expropriation of agricultural supply company Agroisleña. In late September 2010, the Chávez government announced the seizure of Spanish-owned Agroisleña, the largest private agricultural supply distributor in Venezuela. Following its nationalisation, Agroisleña was renamed Agrotiendas and managed by the Agricultural Inputs, Supplies and Services Trading Company (Ecisa), which is part of the Ministry of Agriculture and Lands. Despite Ecisa's goals to strengthen the distribution model for the agricultural sector, Ministry of Agriculture data indicate that Agrotiendas has been hit by limited supply owing to lack of transportation equipment and poor cold storage facilities. This has represented a further obstacle for Venezuela's grain producers, who are already struggling to cope with rising prices and farmgate price controls.

BMI Industry View

SWOT Analysis
Venezuela Agriculture SWOT
Venezuela Political SWOT
Venezuela Economic SWOT
Venezuela Business Environment SWOT

Supply Demand Analysis

Venezuela Livestock Outlook
Table: Venezuela Poultry Production & Consumption, 2011-2016
Table: Venezuela Pork Production & Consumption, 2011-2016
Table: Venezuela Beef & Veal Production & Consumption, 2011-2016
Table: Venezuela Poultry Production & Consumption, 2008-2012
Table: Venezuela Pork Production & Consumption, 2008-2012
Table::Venezuela Beef & Veal Production & Consumption, 2008-2012

Venezuela Grain Outlook
Table: Venezuela Wheat Production & Consumption, 2011-2016
Table: Venezuela Corn Production & Consumption, 2011-2016
Table: Venezuela Wheat Production & Consumption, 2008-2012
Table: Venezuela Corn Production & Consumption, 2008-2012

Venezuela Coffee Outlook
Table: Venezuela Coffee Production & Consumption, 2011-2016
Table: Venezuela Coffee Production & Consumption, 2008-2012

Commodity Price Analysis
Corn
Rice
Soybean
Wheat
Monthly Softs Update
Cocoa
Coffee
Palm Oil
Sugar
Downstream Analysis
Food
Total Food Consumption
Table: Venezuela Food Consumption Indicators - Historical Data & Forecasts, 2009-2016
Canned And Prepared Food
Table: Canned Food Value/Volume Sales - Historical Data & Forecasts, 2009-2016
Table: Fish, 2009-2016, 2009-2016
Edible Oil
Table: Oils And Fats, 2009-2016
Confectionery
Table: Confectionery Value/Volume Sales - Historical Data & Forecasts, 2009-2016
Mass Grocery Retail
Table: Venezuela Mass Grocery Retail - Value Sales by Format - Historical Data & Forecasts
Table: Sales Breakdown by Retail Format Type
Trade
Table: Food & Drink Trade Balance - Historical Data & Forecasts
Economic Analysis - Massive Growth Challenge Beyond The Election
Table: Venezuela - Economic Activity

Country Snapshot: Venezuela Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)

Global Food & Drink View
Food & Drink Roundup Q112: Core Views
Table: Core Views
BMI Forecast Modelling
How We Generate Our Industry Forecasts

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