Boston, MA -- (SBWIRE) -- 11/04/2013 -- Colombia's agricultural sector faces a number of challenges in the medium term. Key export crops - such as coffee and cocoa - have underperformed in recent years, owing to a lack of investment in infrastructure and serious outbreaks of disease. Although regeneration work is under way, it will take time to bear fruit. The strength of the Colombian peso against the US dollar is also posing challenges for the agribusiness sector, as the competitiveness of Colombia's exports is being eroded. Finally, there is still unrest among dairy, livestock and grain producers who fear that the entry into force of the Colombia-EU free trade agreement will further erode their profitability. The Ministry of Agriculture has taken steps to support these sectors to adapt to the arrival of inexpensive imports; however, ongoing efforts to improve infrastructure and modernise production techniques will be required.

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Key Forecasts

- Sugar consumption growth to 2017: 7.2% to 1.89mn tonnes. This will mainly be driven by increases in the consumption of confectionery products as per capita incomes and young population rise.
- Poultry production growth to 2016/17: 10.2% to 1.16mn tonnes. The consolidation of the sector will accelerate in the coming years after the difficult conditions for poultry producers over recent years, including soaring feed prices and sluggish demand.
- Coffee production growth to 2016/17: 36.5% to 10.45mn tonnes. Production will be aided by programmes to replace aging plantations and improve resistance to disease. However, we remain cautious about the long-term trajectory of Colombian coffee production, especially with prices currently low and the Colombian peso strong.
- BMI universe agribusiness market value: US$15.16bn in 2013; down from US$15.25bn in 2012; growth expected to average 2.7% annually between 2013 and 2017.
- 2013 real GDP growth: 4.1%; up from 4.0% in 2012. Forecast to average 4.5% from 2013 to 2017.
- 2013 consumer price index: 2.6%; down from 3.2% in 2012. Forecast to average 3.3% from 2013 to 2017.
- 2013 central bank policy rate (average): 3.00%; down from 4.25% in 2012. Forecast to average 4.15% from 2013 to 2017.

Key Revisions To Forecasts

- 2012/13 cocoa production forecast revised up, to 49,000 tonnes (compared with a previous forecast of 38,800 tonnes), due to favourable weather and a higher-than-expected increase in harvested area.

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