Ethiopia Agribusiness Report Q2 2016

Ethiopia Agribusiness Report Q2 2016

BMI View: Production prospects look broadly favourable for the Ethiopian agriculture sector over the longterm. This will largely be due to more investment in the sector, along with higher incomes contributing toconsumption growth. We believe the sugar sector has the most potential, as investments in new sugarrefineries will make sugar one of the few reliable agricultural exports over the forecast period. In terms ofgrains, the country's food security will remain in a precarious situation due to recent droughts linked to ElNiño. Moreover, even with recent multinational interest in the country's farmland, Ethiopia is most likely toremain a net grains importer over the medium term.

Key Forecasts

Sugar production growth to 2019/20: 148.8% to 746,500 tonnes. Investment by the state-run sugarcorporation is likely to lead to a significant increase in the area dedicated to sugar production. The aim ofthe plan is to make Ethiopia one of the world's top 10 largest sugar exporters.

Coffee consumption growth to 2020: 4.2% to 3.1mn bags. Economic gains will boost consumption,although Ethiopians already have high per capita consumption rates compared with neighbouring Kenyaand Uganda.

2016 real GDP growth: 7.8% (down from 8.1% in 2015; predicted to average 7.5% from 2016 until2020).

2016 consumer price inflation: 10.5% average in 2016 (up from 10.4% in 2015).