Now Available: South Africa Agribusiness Report Q3 2013

We hold a positive view on the South African agricultural sector and see particular growth potential in the grain and livestock sectors. Both sectors' growth will be boosted by regional export demand. The sugar sector also presents interesting growth opportunities, mainly thanks to renewed investment and improved technologies. Overall, the country's grain and livestock producers have been hit by recent hikes in grain prices and subdued corn supply on the domestic market. Margins have plummeted, and foreign competition for exports has made it even more difficult for producers to stay afloat. We believe the country's main companies, AFGRI, Rainbow Chicken and Astral Foods, have managed to weather this crisis well and are likely to see increased profitability.

* 15.7% to 2.2mn tonnes. This is based on our view that, over the long term, macroeconomic fundamentals, together with the increasing use of sugar for biofuel, will have a positive impact on sugar production levels.
* Poultry consumption growth to 2016/17: 23.8% to 2.1mn tonnes. As more South African consumers move towards diets containing higher levels of protein, poultry (predominately chicken but also turkey and duck) is increasingly being viewed as a convenient, healthy and affordable source of nutrition.
* Corn production growth to 2016/17: 15.4% to 14.4mn tonnes. This relatively high growth rate reflects the influence of base effects. Growth will be supported by an improved macroeconomic outlook and the introduction of new corn varieties that generate higher crop yields.
* Real GDP growth: 2.8% in 2013, up from 2.5% in 2012; predicted to average 3.2% over the five years to 2017. GDP per capita is expected to rise to US$9,557 in 2017 (from an estimated US$7,577 in 2012).
* Unemployment: 24.0% in 2013, from 25.0% in 2012, then to 21.2% by 2017.
* Consumer price inflation: 6.1% in 2013, down from an average of 5.7% in 2012.
* BMI universe agribusiness market value: 2.3% year-on-year (y-o-y) decrease to US$9.8bn in 2012/13; growth forecast to average 0.8% annually between 2011/12 and 2016/17.

Full Report Details at
- http://www.fastmr.com/prod/607223_south_africa_agribusiness_report_q3_2013.aspx?afid=301

Key Revisions To Forecasts

* Sugar 2012/13 production revised down from 2.20mn tonnes to 1.95mn tonnes. This is in line with the final estimates for the season finished in April.
* Rice 2011/12 and 2012/13 consumption revised up to 850,000 tonnes and 909,500 tonnes respectively. This is in line with latest estimates for imports in both seasons.
* Poultry 2012/13 production revised down from 1.40mn tonnes to 1.37mn tonnes. This is because of a worse-than-expected operating environment, reflected by below-consensus results from main companies in the sector.

Industry Developments

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