Colombia Agribusiness Report Q1 2013Published by: Business Monitor International Published: Dec. 19, 2012 - 92 Pages Table of Contents
AbstractOn November 16 2012, Colombian President Juan Manuel Santos announced that Colombia and the EUwould ratify a free trade agreement (FTA) on December 13. The agreement is expected to come intoeffect in 2013. According to Sergio Diaz-Granados, Colombia's minister of commerce, industry andtourism, the FTA will see Colombia's GDP increase by 0.5%. However, there is continued oppositionfrom human rights groups and trade unions, which are pressing the EU to reject the pact, citingcontinued human rights abuses in Colombia. The Colombian agribusiness sector is already adapting tothe challenges and opportunities presented by the FTA with the US, which entered into force in May2012. During the first 100 days of the FTA, Colombian imports to the US increased by 18% on the sameperiod in 2011. Dairy imports increased by 287% year-on-year, from US$97,000 to US$375,000. Exportsof sugar and sugar products also posted strong growth. However, there are concerns about the capacityof domestic producers to adapt to increased imports of grains and dairy products from the US.Key Forecasts We believe that strong investment into Colombia's hydrocarbons and infrastructure sectors,combined with resilient private consumption, will drive a robust economic expansion in2013.We therefore forecast real GDP growth to come in at 4.3% in 2013, down slightly from4.4% in 2012 due to a moderation in export growth. Sugar consumption is forecast to grow by 1.2% year-on-year (y-o-y) in 2013 to take demand to1.65mn tonnes. Consumption is likely to be supported by a fall in prices; according to Acosana,the cane growers' association, the price of refined sugar fell by 17% during 2012. We forecastsugar consumption growth of 6.4% between 2012 and 2017, to 1.73mn tonnes. We estimate that corn output increased by 18.6% y-o-y to reach 1.72mn tonnes in 2011/12, asthe area harvested increased, boosted by the government's País Maíz plan. Corn production isforecast to expand by a further 5.8% y-o-y in 2012/13 to 1.82mn tonnes. Through to 2017, weforecast production to rise by 24.4% from the 2012 level to reach 2.14mn tonnes. In 2013, coffee consumption is forecast to increase by 3.0% y-o-y to 1.21mn tonnes. BMIforecasts coffee consumption in Colombia to rise by 14.2% from the 2012 level to 1.34mn bagsby 2017. We see beef production dipping by 1.7% y-o-y in 2013 owing to high input costs and the knockoneffects of poor weather in 2012. Over our forecast period, we expect production growth toresume, fuelled by the expanding economy and improved national security under President JuanManuel Santos. Out to 2017, we forecast beef production to grow by 7.7% on the 2012 level to975,000 tonnes. Key Trends And Developments In October 2012, the Colombian Ministry of Agriculture unveiled a plan to counter the effects ofEl Niño weather pattern, which could hit the country between December 2012 and March 2013.The probability of the weather system hitting Colombia is currently forecast at 50%. El Niñousually occurs every five years and is caused by unusually high sea temperatures in the tropicaleastern Pacific Ocean along with high air surface pressure in the tropical western Pacific. Theweather system brings droughts and reduced agricultural productivity. The Ministry ofAgriculture's mitigation plan focuses on supporting producers to manage water usage andirrigation efficiently to limit the weather's impact on agricultural output. In November 2012, the Ministry of Agriculture announced funding of COP14.2bn (US$7.8mn)to support the commercialisation of cocoa and to fund scientific research to combat frosty podrot. Monilia is a fungal disease that attacks cocoa trees, particularly during the winter, causingmajor decreases in yields. It has been estimated that Monilia destroys up to half of Colombia'scocoa production each season. Under the plan, COP5.2bn has been designated for promoting thecommercialisation of cocoa, COP7bn will be used to combat frosty pod rot, and COP2bn willfund a research and technology programme to increase the sector's competitiveness andproductivity. In November 2012, the Ministry of Agriculture announced funding of COP11bn to support thecommercialisation of the 2012/13 corn crop. The money will be directed towards improvingstorage and transportation and promoting price hedging. In September 2012, it was reported by the coffee growers' federation Fedecafé that 50% of thecountry's coffee-growing region had been planted with varieties resistant to coffee rust. Therenovation programme saw the area affected by roya fungus fall from around 30% to 12% in2011. The long-term goal is to renovate 98% of coffee plantations by 2020. Get full details about this report >> |
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