Malaysia Agribusiness Report Q1 2014 - New Report Available

Strong growth prospects, opportunities for increased exports and government support will be the key factors driving growth in the Malaysian agribusiness sector. We see conditions being particularly favourable for sugar, poultry and cocoa production, on the back of strong investments being poured into the segments. However, we highlight that changing consumption patterns, disease outbreaks, sudden change in policies and shortage of resources could dent growth potential in the sector in the medium and longer term.

Key Forecasts

* Palm oil production growth to 2016/17: 8.2% to 20.9mn tonnes. Growth will be supported as companies replant mature estates and yields improve on the back of better technology.
* Sugar consumption growth to 2017: 22.7% to 1.75mn tonnes. The dominance and continued expansionary activities of market players F&N, Permanis and Yeo Hiap Seng have fuelled considerable growth in the Malaysian soft drinks sector, a significant factor fuelling demand for sugar.
* Cocoa production growth to 2016/17: 12.2% to 10,100 tonnes. Cocoa yields on the Peninsula (the second-largest cocoa-producing region, behind Sabah) have increased, due to the Malaysian Cocoa Board (MCB)'s distribution of high-yielding seeds and incentive programmes for farmers to switch to cocoa. In 2011, the MCB also started a plan to ramp up cocoa planting areas.
* 2014 BMI universe agribusiness market value: 17% year-on-year (y-o-y) increase, to US$23.4bn (contributes to 8.2% of GDP)
* 2014 real GDP growth: 4.4% (down from 4.6% expected in 2013, forecast to average 4.2% from 2014 to 2017).
* 2013 consumer price inflation: 2.5% (up from 1.9% in 2013, forecast to average 2.3% from 2014 to 2017).
* 2013 lending rate: 5.5% % average (same as 2012, forecast to average 5.8% from 2012 to 2017).

Full Report Details at
- http://www.fastmr.com/prod/759113_malaysia_agribusiness_report_q1_2014.aspx?afid=301

Key Developments

In October 2013, US-based chocolate company The Hershey Company revealed plans to open its first confectionery manufacturing plant in Johor, Malaysia. The MYR816mn (US$250mn) facility will include innovations in automated confectionery manufacturing technology and high-speed wrapping equipment featuring proprietary as well as specially engineered wrapping technologies. The new plant is expected to address the rising consumer demand for the company's products in its fastest-growing region, Asia. Construction of the new plant is also expected to help local cocoa producers and processors, particularly those that are already supplying to the company.

Earlier in July 2013, Switzerland-based Nestle announced its plans to invest MYR150mn in the city of Shah Alam towards a new factory targeted at doubling production of ready to drink (RTD) liquid milk and coffee products. The factory is expected to be fully operational by 2014. The company is targeting further growth in Malaysia as it looks to pursue high-growth opportunities with its broad drinks portfolio.

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