Year 12 | 26 January 2020 | email@example.com
BMI View: Concerns about a growing shortfall in the supply of sugar have led us to downwardly revise our short-term forecast for sugar production. We now expect the output of centrifugal sugar to be much weaker in the five years to 2015. With the exception of sugar, we continue to anticipate strong production growth to 2015 for most of Cameroon's key agricultural sectors. We expect growth to be particularly high in the case of cocoa and coffee; both sectors are benefiting from increased investment, improved industry fundamentals and better macroeconomic conditions. Despite this, we identify disease and corruption as key downside risks to both cocoa and coffee production growth. Meanwhile, our forecasts also envisage positive consumption growth for all of Cameroon's agricultural sectors, with the exception of coffee for which demand will be limited. Staple grains such as corn and sorghum will experience steady demand growth as Cameroon's population continues to expand. Growing domestic demand for cocoa will be fuelled by rising disposable incomes and by the increased consumption of value-added processed products.
Key Industry Forecasts
- We retain our core view that cocoa production will expand by 3.6% in the 2010/11 agricultural year; this will raise total output to almost 222,000 tonnes. Over the long term, we expect Cameroon's cocoa industry to benefit from better crop management techniques, as well as an increase in private and public sector investment. In the five years to 2014/15, we predict that cocoa production will grow by 34.9% to surpass 267,000 tonnes.
- A revised forecast for coffee production envisages coffee output rising by 1.9% in 2010/11 to surpass 750,000 60kg bags. We continue to anticipate robust growth for the sector, with coffee production expected to rise by 23.8% to 2014/15. Our strong growth expectations for coffee reflect the considerable support that the industry is currently receiving from the government and other sources.
- Sugar production will decrease by 11% in 2010/11, before returning to positive, albeit limited growth of 2.6% the following year. In the five years to 2014/15, we now predict that sugar output will rise by just 4%. However, this relatively slow growth trajectory is based on the high production figure for 2009/10, which preceded the dramatic fall in output the following year. Increased competition could yet lead to stronger rates of sugar production growth, especially in the latter part of our forecast. However, we would prefer to wait for the launch of commercial operations by new entrant Forzi Sugar before significantly raising our forecast expectations.
- Our revised grains outlook for Cameroon anticipates steady growth in the production of both corn and sorghum in the five years to 2014/15. Annual average growth will amount to 3.5% in the case of corn and 9.5% in the case of sorghum. Over our forecast period, total corn output will increase by 16.4% to 1.05mn tonnes. Meanwhile, sorghum output will expand by 18.9% to reach 636,000 tonnes.
Key Macroeconomic Forecasts
- Cameroon Real GDP Growth 2011 Forecast: 2.9% (up from 2.6% in 2010).
- Cameroon Unemployment Rate 2011: 7.8% (down from 8.0% in 2010).
- Consumer Price Inflation: Expected to average at 2.8% in 2011, up from a 1.6% average in 2010.
A revised forecast for Cameroon's sugar sector envisages negative output in 2010/11; it also presents a more subdued picture of production growth to 2014/15. In recent months, Cameroon's national sugar company, Societe Sucriere du Cameroun (SOSUCAM), has struggled to raise output. This has contributed to a growing supply shortfall in the domestic market. Adding to weak production growth at SOSUCAM, recent months have seen an increase in the amount of locally produced sugar being smuggled out of Cameroon. As a result of an emergent shortfall in the supply of locally-produced sugar, the government has announced plans to import 33,000 tonnes from Brazil and the Republic of the Congo
Although our new five-year forecast for sugar production is more cautious than before, our long-term view of the sector anticipates steady output growth. We maintain our view that reform and investment could turn Cameroon's sugar sector into a high-growth industry. One initiative with potential to significantly raise sugar output would be to increase the level of competition within the sector.
In some ways, Cameroon's cocoa and coffee industries can be viewed as a model for sugar industry reform. Both sectors have been benefiting from government initiatives to introduce competition and structural reforms. They have also benefited from large-scale investments aimed at tackling problems associated with disease and inadequate infrastructure. BMI is optimistic about the long-term production of both crops, with particularly strong growth envisaged for cocoa in the five years to 2014/15. We believe that Cameroon has potential to tap-into some of the rising global demand for cocoa, as well as the current tightness in the supply of coffee. In 2011, we predict that global consumption will increase by 3.2% y-o-y to reach 3.72mn tonnes. This is despite the extension of an export ban in Cote d'Ivoire, as well as decisions by the EU and the US to respect the ban and prevent the shipment of Ivoirien cocoa. In theory, this should provide Cameroonian producers with an incentive to increase output. Meanwhile, the high price of coffee in world markets is expected to continue into 2011. This has potential to favour growers in smaller producing countries such as Cameroon, which will benefit from improved demand and price fundamentals.
by S. C.
08 april 2011, World News > Africa