Boston, MA -- (ReleaseWire) -- 02/25/2014 -- 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 but the recovery is under way. We believe the country's main companies, AFGRI, Rainbow Chicken and Astral Foods, can only see profitability bounce from current subdued levels.
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- Sugar production growth to 2017/18: 21.9% to 2.4mn tonnes. This is based on our view that over the long term macroeconomic fundamentals, together with the increasing use of sugar for biofuels, will have a positive impact on sugar production levels.
- Poultry consumption growth to 2018: 24.8% to 2.2mn tonnes. As more South African consumers move towards diets containing higher levels of protein, poultry (predominantly chicken but also turkey and duck) is increasingly being viewed as a convenient, healthy and affordable source of nutrition.
- Corn production growth to 2017/18: 19.9% to 13.6mn 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: 2.6% in 2014, up from 2.0% in 2013; predicted to average 2.9% over the five years to 2018. GDP per capita is expected to rise to US$11,639 in 2018 (from an estimated US$7,773 in 2013). - Unemployment: 24.8% in 2014, from 25.0% in 2013, then to 23.3% by 2017.
- Consumer price inflation: 5.3% in 2014, down from an average of 5.8% in 2013.
- BMI universe agribusiness market value: 6.4% year-on-year (y-o-y) decrease to US$9.4bn in 2012/13; growth forecast to average 2.6% annually between 2011/12 and 2016/17.
Key Revisions To Forecasts
- Sugar: 2013/14 production revised up from 2.3mn tonnes to 2.45mn tonnes
- Corn: 2013/14 production revised down from 12.8mn tonnes to 12.2mn tonnes
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