Boston, MA -- (ReleaseWire) -- 02/20/2014 -- Overall, we hold an optimistic outlook on Indonesia's agriculture sector and see significant growth opportunities in sub-sectors such as livestock, palm oil and cocoa. While we believe the government's goal to reach self-sufficiency in rice by 2015 is attainable, we are less confident about other commodities such as sugar and corn. We also highlight that the country's aim to become the second largest coffee producer in the world by 2015 is unrealistic. Much of our scepticism relates to the lack of proper infrastructure and the existence of a large number of low-technology, small-scale farmers. We believe the shift from raw commodity exports to refined exports (especially for palm oil and cocoa) will warrant more public and private investment in order for the raw inputs industry to keep pace with downstream industries. Investments by Wilmar, Golden Agri Resources and Barry Callebaut are clear signs of the growing interest in these sectors.
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- Rice production growth to 2017/18: 14.5% to 42.0mn tonnes. We believe Indonesia will attain its goal of being self-sufficient in rice in the coming years, as the country is multiplying the initiatives to boost production. Growing use of high-yielding paddy varieties and agriculture intensification will help output record higher growth rate than in the past.
- Sugar consumption growth to 2018: 32.9%% to 6.8mn tonnes. Consumption growth will continue to outstrip production growth, driven by rising incomes, greater urbanisation, population growth and the growing demand from the food and beverage industry.
- Poultry production growth to 2017/18: 19.0% to 1.85mn tonnes. Output growth will come from increased domestic demand as well as further government support.
- BMI universe agribusiness market value: US$63.6bn in 2014 (up from US$58.4bn in 2013; forecast to grow annually by 5.7% on average between 2013 and 2018).
- 2014 real GDP growth: 5.4% (down from 5.7% in 2013; forecast to grow annually by 6.3% on average between 2014 and 2018).
- 2014 consumer price index: 7.0% year-on-year (y-o-y) (up from 6.4% y-o-y in 2013; forecast to grow annually by 5.4% on average between 2014 and 2018).
- 2014 central bank policy rate: 7.00% (down from 7.00% in 2013; forecast to average 7.00% from 2013 to 2018).
Key Revisions To Forecasts
- 2012/13 cocoa production estimate revised down, to 430,000 tonnes (compared with a previous forecast of 455,000 tonnes). This is mainly because diseases are blighting yield and area expansion. Output growth is being hampered by poor agronomic practices, poor-quality planting materials and the abundance of ageing, less productive trees, which render the sector more prone to severe weather patterns.
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