Tanzania Agribusiness Report Q2 2014 - New Report Available

We continue to favour the Tanzanian sugar and coffee industries over the medium term owing to their potential for growth on the back of strong investment in capacity. The grain industry in Tanzania will remain less competitive than in other countries in the region, particularly South Africa and Zambia, and we see little potential for the country to become a major grain exporter.

Key Forecasts

* Sugar production growth to 2017/18: 39.2% to 424,500 tonnes. This will come from increased investment in the sector as well as booming demand for local consumption on the back of growing confectionary and soft drinks demand in the country.
* Corn consumption growth to 2018: 31.2% to 5.7mn tonnes. A combination of enhanced yields (contributing to lower prices) and rising living standards is expected to drive corn consumption growth.
* Coffee production growth to 2017/18: 25.2% to 1.3mn 60kg bags. The sector is benefiting from investment in disease-resistant trees, and from incentives for small producers.
* 2014 real GDP growth: 7.2% year-on-year (y-o-y), up from 6.5% in 2013; forecast to average 7.3% over 2013-2018.
* Consumer price inflation: 7.5% average in 2014 (down from 7.9% average in 2013).
* BMI universe agribusiness market value: 16.7% y-o-y decrease to US$1.6bn in 2014, forecast to decrease by an annual average of 2.3% between 2012/13 and 2017/18.

Full Report Details at
- http://www.fastmr.com/prod/800084_tanzania_agribusiness_report_q2_2014.aspx?afid=301

Industry Developments

We have revised up our forecast for Tanzania's coffee production in 2013/14 to 1.2mn bags (from 900,000 tonnes previously). This will come as the country continued to invest in its coffee crop and as weather conditions were favourable. We continue to forecast output to grow in 2014/15 as the recent surge in coffee prices will help farmers' incomes and encourage plantings. Historically, coffee output has been quite volatile because of unstable farmers' incomes, credit conditions and government support. Out to 2017/18, we forecast production to reach 1.3mn bags as we see less volatile conditions for the crops.

Switzerland-based chocolate manufacturer Barry Callebaut has acquired the remaining 51% stake in Tanzania-based company Biolands, Callebaut's supplier of certified cocoa beans from East and West Africa. Barry Callebaut has been purchasing 100% of Biolands' top-grade cocoa since 2000 and acquired a 49% stake in Tanzanian based Biolands International in 2008. Biolands has since then developed in Sierra Leone and Cote d'Ivoire. The acquisition will make the 143 full-time employees at Biolands a part of Barry Callebaut. It also brings closer the thousands of farmers included in the sustainable cocoa production processes.

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