Cameroon Agribusiness Report Q2 2015
BMI View: Dry weather has already affected the main corn harvest and also threatens cocoa output. We do not expect major falls in production, but even a slightly below average corn harvest could aggravate the growing food security crisis in the north of the country. Cocoa farmers, meanwhile, will be disappointed if poor yields prevent them from getting the full benefit of a peak in prices in 2015. The longer term picture for cocoa remains positive and it is encouraging for the profitability of the segment that investment continues to pour into the domestic processing industry. We take a much dimmer view of coffee production, which we expect to stagnate as prices are set to become even less enticing for growers. While the continuing controversy over Justin Sugar Mills raises questions over the investment climate for sugar, new bidders have emerged willing to take on SOSUCAM's monopoly.
We see better prospects for coffee and cocoa output in 2014/15 compared to the previous year, with exports of the two key agricultural commodities set to rise as a result. Cocoa will be particularly important, as higher prices will make any improvements in output translate into substantial gains. This makes it all the more imperative that ongoing issues with distribution and port access are resolved as quickly as possible.
Dry weather poses some downside risk to cocoa and has already reduced expectations for 2014/15 corn production. The newly imposed ban on sugar imports may provide some benefit to local production, but we are sceptical that it can last given its likely political unpopularity.
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