Boston, MA -- (SBWIRE) -- 12/24/2013 -- We hold a positive view on India's agribusiness sector, as the country will remain an agricultural powerhouse and is likely to maintain high levels of self-sufficiency for major food crops. Production growth of various commodities will be driven by strong government support and robust demand for manufactured foodstuffs. We see significant growth opportunities in sub-sectors such as dairy, coffee and livestock. However, India will be increasingly vulnerable to exceptional weather phenomena owing to climate change effects and serious water shortages. Moreover, the country will remain prone to erratic government intervention, which seriously hampers its reputation as an international provider. As such, we see the partial liberalisation of the sugar industry as a first positive step that will incentivise production growth and investment in the sector.

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Key Forecasts

- Coffee production growth to 2016/17: 7.5% to 5.6mn 60kg bags. Strong growth will be driven by major export potential, government support, the expansion of cultivated area and India's robust coffee consumption growth.
- Palm oil consumption growth to 2017: 33.5% to 9.9mn tonnes. Domestic palm oil consumption will be propelled by strong demand for its use in domestic food, which makes up about 80% of total domestic palm oil demand.
- Milk production to 2016/17: 18.4% to 151.4mn tonnes. Growth will be driven by improvements in breeding techniques, robust expansion of domestic consumption and increasing dairy prices, which will renew interest in dairy production as a commercial activity.
- BMI universe agribusiness market value: US$232.8bn in 2014 (up from an expected US$231.0bn in 2013; forecast to grow annually by 2.9% on average from 2013 to 2017).
- 2014 real GDP growth: 5.6% (up from 5.0% in 2012 and 2013; forecast to average 6.0% from 2013 to 2017).
- 2014 consumer price inflation: 5.8% (down from 8.1% in 2012 and an expected 7.0% in 2013; forecast to average 5.1% from 2013 to 2017).
- 2014 central bank policy rate: 7.00% average (down from 7.50% in 2012 and an expected 7.25% in 2013; forecast to average 7.05% from 2013 to 2017).

Key Revisions To Forecasts

- Sugar production in 2013/14 revised up, to 27.0mn tonnes (compared with a previous forecast of 25.5mn tonnes). The strong 2013 summer monsoon in India has supported sugar cane plantings and improved the outlook for final production.
- Coffee production in 2013/14 revised up, to 5.4mn 60kg bags (compared with a previous forecast of 5.2mn bags). The summer monsoon in 2013 led to an adequate and timely flower blossoming period. However, heavy rains damaged beans and increased pest attacks, limiting the production growth stemming from the favourable monsoon.

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