Boston, MA -- (ReleaseWire) -- 05/30/2014 -- We hold a positive view on India's agribusiness sector, as the country will remain an agricultural powerhouse and is likely to maintain high levels of self-sufficiency for major food crops. Production growth of various commodities will be driven by strong government support and robust demand for manufactured foodstuffs. We see significant growth opportunities in sub-sectors such as dairy, coffee and livestock. However, India will be increasingly vulnerable to exceptional weather phenomena owing to climate change effects and serious water shortages. Moreover, the country will remain prone to erratic government intervention, which seriously hampers its reputation as an international provider. As such, we see the partial liberalisation of the sugar industry as a first positive step that will incentivise production growth and investment in the sector.
- Coffee production growth to 2017/18: 6.4% to 5.6mn 60 kg bags. Strong growth will be driven by major export potential, government support, the expansion of cultivated area and India's robust coffee consumption growth.
- Palm oil consumption growth to 2018: 22.4% to 10.5mn tonnes. Domestic palm oil consumption will be propelled by strong demand for domestic food use, which makes up about 80% of total domestic palm oil demand.
- Milk production to 2017/18: 20.3% to 160.0mn tonnes. Growth will be driven by the improvements in breeding techniques, robust expansion of domestic consumption and increasing dairy prices, which will renew interest in dairy production as a commercial activity.
- BMI universe agribusiness market value: USD233.2bn in 2014 (down from USD233.6bn in 2013; forecast to grow annually by 3.6% on average from 2013 to 2017).
- 2014 real GDP growth: 5.6% (up from 4.4% in 2013; predicted to average 6.4% from 2014 to 2018).
- 2014 consumer price inflation: 5.8% (down from 8.1% in 2012 and 7.0% in 2013; forecast to average 4.5% from 2014 to 2018).
- 2014 central bank policy rate: 7.75% average (down from 8.00% in 2013; forecast to average 7.75% from 2014 to 2018).
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Key Revisions To Forecasts
- Wheat production forecast in 2013/14 revised up, to 95.0mn tonnes (compared with a previous estimate of 93.4mn tonnes). The harvest of the 2013/14 wheat crop is now ongoing. The outlook is positive and production is likely to exceed the record set in 2012/13. Favourable rains from September to December over much of the country, except north-western areas which experienced below-average rains, improved soil moisture, allowing farmers to start planting early.
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