Cameroon Agribusiness Market Report Q1 2012

2011-12-28

Report Description

BMI View: We have extended our supply and demand forecasts for Cameroon’s agribusiness industries to the end of 2016. Our new forecasts anticipate positive production growth for most of Cameroon’s key agricultural sectors. Coffee is predicted to show the strongest growth trajectory through to 2016, although production growth rates are also expected to be relatively robust for sugar, cocoa and corn.

Cameroon Agribusiness Market Report Q1 2012

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Stronger long-term production growth for cocoa would be predicted, were it not for the impact of poor weather conditions in the current crop year. On a general level, Cameroon’s cocoa and coffee industries are both benefiting from increased investment, improved industry fundamentals and better macroeconomic conditions. Our newly extended forecasts also envisage positive consumption growth for most of Cameroon’s agricultural commodities. The one exception to this trend is coffee, for which demand is expected to remain muted. Staple grains such as corn will experience steady demand growth as Cameroon’s population continues to expand. Demand growth will be supported by an economy that is predicted to expand at an average annual rate of 4.3% to 2016. Growing domestic demand for cocoa will be fuelled by rising disposable incomes and by the increased consumption of value-added processed products.

Key Industry Forecasts

Cocoa Production Growth to 2015/16: 13.6% to 269,000 tonnes. Output increased by 19.5% in the 2010/11 crop year (ending July 31), with favourable weather contributing to a successful harvest. However, unfavourable weather conditions at the start of the 2011/12 crop year reportedly hampered cocoa cultivation and point to the likelihood of reduced output in the current crop year. Over the long term, Cameroon’s cocoa industry is expected to benefit from better crop management techniques, as well as from increased private and public sector investment.

Coffee Production Growth to 2015/16: 29% to 970,500 60kg bags. We maintain our forecast for a 4.1% increase in production in 2011/12; this will see output rise to 780,500 60kg bags. A combination of domestic and foreign investment should help to build extra production capacity in the industry. Corn Production Growth to 2015/16: Corn: 26% to 2.27mn tonnes. Following a 12.5% increase in production in 2010/11, corn production will remain flat in 2011/12 at 1.8mn tonnes. However, over the longer term, positive production growth will be supported by improved macroeconomics and rising demand for the grain.

Corn Consumption Growth to 2016: 41% to 2.4mn tonnes. Most domestic demand for corn is currently met by domestic production. However, in the latter years of our forecast, we expect to see a growing reliance on imported corn.

Sugar Production Growth to 2015/16: 17% to 140,000 tonnes. We now envisage relatively flat production growth in the 2011/12 agricultural year (harvest ending December 2011). This follows an 11.0% fall in output the previous agricultural year. Although Cameroon’s national sugar company has struggled to raise output, we remain optimistic that various public-private production initiatives will help Cameroon’s sugar sector to slowly evolve into a high-growth industry.

Key Macroeconomic Forecasts

.. Cameroon Real GDP Growth 2012: 4.3%, up from 3.7% in 2011. We forecast GDP growth to average 4.3% between 2011 and 2016.

.. Cameroon Consumer Price Inflation 2012: 2.5%, down from 3.5% in 2011. Inflation is, by a large degree, controlled by the Central African franc’s peg to the euro; it is therefore expected to remain subdued for the foreseeable future.

.. Cameroon Unemployment Rate 2012: 7.6%, down from 7.8% in 2011.

Industry Developments

Cameroon’s agricultural sector stands to benefit from infrastructure improvements. New roads in particular would enable farmers to more effectively transport their produce to market, thereby reducing waste and ensuring that a greater proportion of their crops can be sold domestically or internationally. In September the government announced plans to spend CFA175bn (US$379mn) on constructing roads over the next 10 years. Cameroon will reportedly build 350km of roads each year over the next decade. The country’s roads, of which 5,000km or just 10%, are degrading as traffic volumes continue to increase by an average of 5% each year, according to the ministry. According to government statistics, only 6% of roads are said to be in a good state, while 21% are classified as normal, 70% are mediocre and 3% are considered to be in a very poor state. BMI believes the new road infrastructure would be especially beneficial to Cameroon’s cocoa and coffee industries. Although the new roads will be built around the country, they will encompass the cocoa-producing south, central and eastern regions.

Although investments in new infrastructure, fertilisers and plants will benefit Cameroon’s cocoa sector over the longer-term, short-term cocoa production will remain vulnerable to the vagaries of the weather. In a good season, favourable rains can contribute to a bumper harvest, as occurred in the 2010/11 agricultural year. However, poor weather conditions at the start of the growing season in August were reported to have hampered cultivation efforts. Meanwhile, bad weather also made it difficult for farmers to properly dry their crops from the previous season. As a result, there were said to be smaller quantities of cocoa beans making it onto the local market. Those beans that were making it to market were of poorer quality; this resulted in fewer buyers and falling prices.

Although a fall in cocoa production is predicted for 2011/12, output should still be higher than 2009/10. Furthermore, BMI maintains an upbeat long-term view of Cameroon’s cocoa sector, which we expect to benefit from better crop management techniques and support from both the government and multinational corporate backers. We believe that improved production techniques will give Cameroonian cocoa farmers an opportunity to sell more of their beans on international markets.

Apart from cocoa, key growth sectors which are attracting foreign investment include palm oil production. In August 2011, it was reported that Biopalm Energy, a subsidiary of Singapore’s Siva Group, planned to launch a CFA900bn (US$1.91bn) palm oil investment project in the south of Cameroon. The 200,000-hectare greenfield project will be jointly developed with Cameroon’s National Investment Corporation and should increase Cameroon’s yearly palm oil production by 80,000 tonnes within the first five years of production. Cameroon’s palm oil sector has been successful at attracting other major investors. These include the US agricultural company Herakles Farms, which reportedly plans to develop some 60,000 hectares of oil palm plantations in the country, and Malaysia’s Sime Darby, which is said to be considering a US$2.5bn plantation expansion deal.

Executive Summary
SWOT Analysis
Cameroon Agricultural SWOT
Cameroon Political SWOT
Cameroon Economic SWOT
Cameroon Business Environment SWOT
Supply Demand Analysis
Cameroon Cocoa Outlook
CAMEROON Cocoa Production & Consumption
CAMEROON Cocoa Production & Consumption
Cameroon Coffee Outlook
CAMEROON Coffee Production & Consumption
CAMEROON Coffee Production & Consumption
Cameroon Sugar Outlook
CAMEROON Sugar Production & Consumption
CAMEROON Sugar Production & Consumption
Cameroon Grains Outlook
CAMEROON Corn Production & Consumption
CAMEROON Corn Production & Consumption
Commodity Price Analysis
Monthly Grains Update
Corn
Rice
Soybean
Wheat
Monthly Softs Update
Cocoa
Coffee
Palm Oil
Sugar
Macroeconomic Forecast
CAMEROON – ECONOMIC ACTIVITY
Industry Trend Analysis
Looking Beyond Ghana And Nigeria For Opportunities In West Africa
BMI Launches Food Consumption And Retail Data For Three West Africa Economies
BMI Forecast Modelling
How We Generate Our Industry Forecasts
Filed in: Agribusiness
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