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South Africa Agribusiness Report Q1 2013 - New Market Report Now Available

New Food research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 01/08/2013 -- BMI View: The grain market in South Africa is still tight on the back of an average 2011/12 harvest; in our view, relief to food prices will not come before the start of the new season in May 2013. The livestock sector is experiencing difficulties because of the recent surge in grains prices, and the country's main poultry companies have posted falls in earnings in recent quarters. We believe this situation is temporary and see potential for these companies to recover margins in the coming quarters as feed prices moderate. For sugar, we are still positive about growth opportunities in the sector with regard to both production and consumption.

Key Forecasts

- Sugar production growth to 2016/17: 15.7% to 2.2mn tonnes. This is based on our view that, over the long term, macroeconomic fundamentals, together with the increasing use of sugar for biofuel, will have a positive impact on sugar production levels.
- Poultry consumption growth to 2016/17: 23.8% to 2.0mn tonnes. As more South African consumers move towards diets containing higher levels of protein, poultry (predominately chicken but also turkey and duck) is increasingly being viewed as a convenient, healthy and affordable source of nutrition.
- Corn production growth to 2016/17: 29.9% to 14.4mn tonnes. This relatively high growth rate reflects the influence of base effects. Growth will be supported by an improved macroeconomic outlook and the introduction of new corn varieties that generate increased crop yields.
- Real GDP growth: 3.3% in 2013, up from 2.5% in 2012; predicted to average 3.5% over the five years to 2017. GDP per capita expected to rise to US$11,681 in 2017 (from an estimated US$7,626 in 2012).
- Unemployment: 22.0% in 2013, from 23.0% in 2012, then to 19.5% by 2017.
- Consumer price inflation: 5.1% in 2013, down from an average of 5.5% in 2012.
- BMI universe agribusiness market value: 4.2% year-on-year (y-o-y) increase to US$10.3bn in 2012/13; growth forecast to average 2.0% annually between 2011/12 and 2016/17.

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Industry Outlook

We have revised our 2011/12 South African corn production forecast down slightly to 11.1mn tonnes in line with the Crop Estimates Committee (CEC)'s figures. This is the result of dry weather and lower yields in the north-west province, where recent manual surveys by farmers indicated a smaller potential for production growth than previously expected. In 2012/13, we expect plantings to be strong on the back of high domestic and global corn prices. The US Department of Agriculture forecasts that commercial farmers will plant 2.8mn hectares (ha) of corn and subsistence farmers will plant 500,000ha. This, on the basis of average yields, would take production to 12.5mn tonnes in 2012/13, 12.6% higher than in 2011/12.

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