Ethiopië: Agribusiness, kwartaal II - 2012

Samenvatting van trends, ontwikkelingen en activiteiten van belangrijke spelers in de Agrosector in Ethiopië. Deze informatie komt uit het kwartaalrapport van Business Monitor International (BMI). Het volledige rapport is bij BMI beschikbaar.

BMI View

In this report we unveil our newly created production forecasts for grains, sugar and coffee in Ethiopia, three sectors about which we are very positive. High global commodity prices and government support should encourage Ethiopia's farmers to plant more in the coming years. Also, even though government investment in output capacity renovation could delay increases in production, we believe these will take place by the end of our forecast period in 2015/16. However, in the short term, and as long as the sector remains fragmented and use of fertiliser is low, the country's agricultural sector will mainly be vulnerable to weather patterns. In fact, a potential return of la Niña in 2011/12 could cause more droughts in the region, affecting yields and potentially reigniting food security worries, especially for grains.

Key Views

• Corn production growth to 2015/16: 49.0% to 6.0mn tonnes. This will come on the back of yield improvements as the sector begins to consolidate.
• Coffee consumption growth to 2016: 7.4% to 2.1mn tonnes. Growth in demand will be slow as the country already has a relatively high consumption rate compared to its neighbours.
• Sugar production growth to 2015/16: 48.6% to 520,000 tonnes. This is mainly due to public investment by state-run Sugar Corporation that should lead to a significant increase in area dedicated to sugar production.
• 2012 Real GDP Growth: 7.8% (down from 8.8% in 2011; predicted to average 6.9% from 2011 until 2016).
• Consumer Price Inflation: 9.5% year-on-year (y-o-y) in 2012 (down from 10.0% y-o-y in 2011).

Industry developments

The Ethiopian Sugar Corporation announced in December it planned to import 30,000 tonnes of sugar in February 2012, which confirms that the country is set to remain a net sugar importer in the medium term. In fact, we forecast Ethiopia's sugar deficit to reach 100,000 tonnes in 2011/12, which should be supplied through imports mainly from India and Brazil. We note that we forecast the country's sugar deficit to fall from 125,000 tonnes in 2010/11 to 100,000 tonnes in 2011/12 and we believe this trend will continue over our forecast period. In 2015/16, we see the domestic sugar market almost balanced. This is because of the government investment in six new sugar factories, currently in construction in the Southern Regional State, and which will be made available by 2015. These should significantly increase the country's sugar production capacity and therefore decrease its reliance on imports.

During the summer of 2011, a combination of rapidly depreciating currencies, local tightness in food markets and the decision by South African corn exporters to look overseas is likely to exacerbate current food security concerns in East Africa over the medium term. Although maize output for the whole region is at average levels by historical standards, the combination of previously depreciating currencies and local droughts (particularly in Ethiopia and Kenya) are conspiring to force maize prices higher. We expect to see local problems to continue over the short term, as countries await foreign aid. However, the situation should improve over the medium term as corn prices moderate.

Ethiopian domestic coffee demand is very high by regional standards, despite the fact that consumption barely increased between 1997 and 2006 to 1.5mn 60kg bags. By comparison, neighbouring Kenya consumed only 22,000 bags despite having a similar population and a higher per capita income. Consumption is also much higher than Uganda, another large coffee exporter. Globally, however, consumption is still low, with the country ranking 69th in per capita consumption in 2006. In 2011/12, we see coffee consumption in Ethiopia growing by roughly 2.0% to 1.9mn bags, largely on the back of economic gains. Given the relatively high consumption rates already, we are only forecasting a minor 2% annual average increase in coffee consumption to 2.1mn bags in 2015/16.