Recently published research from Business Monitor International, "Venezuela Agribusiness Report Q1 2013", is now available at Fast Market Research

Boston, MA -- (SBWire) -- 03/05/2013 --BMI View: The re-election of Hugo Chavez for a fourth presidential term in October 2012 is likely to see a continuation of the interventionist policies of nationalisation and land expropriation. These policies have to date seen a widening gap between domestic production and consumption and an increasing reliance on imports of key products. Data from the Central Bank of Venezuela show that from January to July 2012 the food sector shrank by 8.6% year-on-year. At the same time, private consumption is growing strongly. There are, however, signs that the government is becoming more responsive to the needs and views of producers associations when developing agricultural policies. In Q312, Fedeagro, the National Confederation of Associations of Agricultural Producers, announced that agricultural production during H112 was more positive compared with the same period in previous years, with an increase in the area planted to cereals and rice.

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Key Forecasts

- We now see Venezuela's real GDP growth coming in at 4.7% for 2012 and 2.6% in 2013. Stronger-thanexpected credit-fuelled private consumption and government-financed investment saw real GDP growth come in above our expectations in H112. However, we believe growth will peak in 2012 and slow over the next few years given persisting economic imbalances and the political risks associated with the country.
- Having dipped by 18.1% year-on-year (y-o-y) in 2011/12, we see corn output recovering by 26.4% y-o-y to 1.77mn tonnes in 2012/13. The government has an ambitious target to boost domestic grain production by 70% by 2018. However, this will be highly dependent on government policies to aid increases in output. We expect output to grow by 51.8% on the low 2012 level to reach 2.13mn tonnes in 2017.
- A more than 30% increase in imports helped to boost beef consumption in 2012. We believe that demand increased by 7.0% y-o-y to 599,000 tonnes. High import prices and a drop in domestic production are likely to constrain beef consumption through our forecast period. We see demand falling by 2.0% y-o-y in 2013 to 587,200 tonnes. Out to 2017, we forecast that demand for beef will grow by 4.3% on the 2012 level to 625,100 tonnes.
- After a decline of 13.8% y-o-y in 2010/11, we estimate that coffee production recovered by 36.0% in 2011/12 to 850,000 60kg bags. Production is forecast to increase by a further 2.9% y-o-y in 2012/13 to reach 875,000 bags, though this depends on whether weather conditions remain favourable. In 2017, we forecast production to reach 940,000 bags, 10.6% higher than the 2012 level. This, however, will be dependent on government policy, particularly price controls.

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