Uganda Agribusiness Report Q2 2016

Uganda Agribusiness Report Q2 2016

BMI View: We see potential for output growth in corn and coffee, two of the main crops in Uganda. Forcoffee, we see Uganda as an East African leader in terms of exports, largely owing to government supportfor the sector and new disease-resistant trees. Moreover, coffee prices are higher y-o-y, meaning farmerswill be able to invest in their crops. We expect Uganda to remain a net corn exporter in the coming years,although most of its corn will be shipped regionally. The country is unlikely to compete with South Africaand Zambia to become one of Sub-Saharan Africa's largest corn exporters. Food security will be of concernin the short term owing to droughts affecting regional neighbours, leading to more corn exports andreduced domestic supply.

Key Forecasts

Coffee production growth to 2019/20: 16.7% to 4.2mn 60kg bags. The Uganda Coffee DevelopmentAuthority's production campaign has developed new disease-resistant coffee trees, which are expected toboost yields over our forecast period. However, lower average coffee prices over the medium term willact as a constraint on production growth.

Corn consumption growth to 2020: 15.9% to 3.1mn tonnes. Growth in demand will come from thecountry's livestock sector, which is growing in response to higher demand. Overall, however, cornconsumption will largely be guided by changes in population.

2016 real GDP growth: 5.0% (down from 5.4% in 2015; predicted to average 5.9% from 2016 to 2020).

2016 consumer price inflation average: 7.3% (up from 4.7% in 2015).