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Recently Released Market Study: Colombia Agribusiness Report Q2 2012

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Boston, MA -- (SBWIRE) -- 05/11/2012 -- BMI View: The agricultural sector was hit by further flooding in late 2011 caused by La Nina weather phenomenon, with the flooding affecting both production levels and the quality of crops. Road networks have also suffered extensive damage in what has been the heaviest rainy season on record. Coffee output has not been able to fully recover from the disastrous 2009/10 harvest, and the cattle and dairy industries have been hit especially hard. The costs to the Colombian economy have been estimated at US$5.8bn. Severe weather conditions continue to pose a growing challenge to the agricultural sector as Colombia faces both heavy rainfall and intense droughts.

Key Forecasts

- Colombia will be a regional outperformer in 2012, with private consumption driving the majority of growth. We expect GDP growth of 4.7% in 2012, 4.4% in 2013 and 4.9% in 2014.
- We now estimate that Colombian coffee production came in at 8.53mn tonnes in 2010/11. This was an increase of just 5.2% y-o-y on the disastrous 2009/10 harvest. The poor harvest was the result of very heavy rains caused by La Nina, which left the plantings vulnerable to damage by roya fungus (coffee rust). Production looks set to remain flat in 2011/12 as heavy rains have once again hit the harvest. Out to 2016, production will be aided by programmes to replace aging plantations and improve resistance to disease. We forecast growth of 29.6% on the low 2011 level to reach 11.05mn bags by 2016.
- We forecast corn output to increase by 10.2% y-o-y in 2011/12 to reach 1.60mn tonnes, as the area harvested increases, boosted by the government's Pais Maiz plan. Through to 2016, we forecast production to rise by 33.0% from the low 2011 level to reach 1.93mn tonnes. This will be driven by continued improvements in yields as access to hybrid seeds and fertilisers increases, as well as expansion of corn production into the Eastern Altillanura plains.
- The dairy sector was affected by flooding in the final quarter of 2011 during what is thought to be Colombia's worst rainy season on record. About 1,000 farms in the Boyaca and Cundinamarca regions were estimated to be flooded and functioning well below capacity. We currently forecast fluid milk output for 2011/12 to come in at 7.44mn tonnes, a decline of 2.6% y-o-y.
- We expect growth in poultry consumption to continue to outpace beef as poultry production becomes more efficient and prices continue to fall. The free trade agreement (FTA) with the US is also likely to boost the availability of inexpensive poultry products. Consumption increased by an estimated 1.2% y-o-y in 2011 to reach 1.08mn tonnes, and we are forecasting demand growth of 0.9% y-o-y in 2012 to reach 1.08mn tonnes. Over our forecast period, we expect growth of 18.0% from the 2011 level to take consumption to 1.26mn tonnes in 2016.

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