Venezuela Agribusiness Report Q2 2016
BMI View: The operating environment for the agribusiness sector has deteriorated significantly over recentyears, due to the poor macroeconomic climate, a shortage of foreign currency for input purchases andgeneral government mismanagement. Venezuela's economy will continue to be under extreme downwardpressure in 2016 amidst low international oil prices. The growing headwinds to the economy will weigh onagricultural production and consumption in the coming years, and we forecast most of the commodities tostagnate out to 2020. Producers of agricultural goods will struggle as rising production costs andcontrolled prices at the farm level reduce margins. As such, the divergence between Venezuela and itsneighbouring countries in terms of agricultural sector development will continue to grow in the comingyears.
Coffee production growth to 2019/20: 7.2% to 536,000 60kg bags. Venezuela's coffee sector suffersfrom many structural weaknesses and is on the decline. Low profitability (due to government-mandatedprices), the lack of private and public investment and rust disease will impede production from growing.
Poultry production growth to 2019/20: -5.2% to 578,000 tonnes. The sector is held back by a lack ofprofitability due to high input costs, inflation and government price controls, along with increasedcompetition from imports. The poultry industry will fare somewhat better than the beef sector, for whichthe outlook is especially bleak.
Corn consumption growth to 2020: 4.6% to 3.8mn tonnes. Grains consumption is also feeling thepinch of economic woes and the decrease in foreign exchange, as Venezuela encounters problems withimporting grains. Demand in the medium term will remain lacklustre, amidst low domestic grains supplyand the weak growth in the livestock sector.
2016 BMI universe agribusiness market value: USD26.63bn (down 2.6% from 2015; forecast to growannually by 1.7% on average from 2016 to 2020).
2016 real GDP growth: -6.2% (up from -7.5% expected in 2015; forecast to grow annually by 0.4% onaverage between 2016 and 2020).
2016 consumer price index: 252.9% y-o-y (up from 116.2% expected in 2015; forecast to growannually by 133.2% on average between 2016 and 2020).
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