Boston, MA -- (ReleaseWire) -- 01/24/2014 -- BMI View: We continue to favour the Tanzanian sugar and coffee industries over the medium term owing to their potential for growth on the back of strong investment in capacity. The grain industry in Tanzania will remain less competitive than other countries in the region, particularly South Africa and Zambia, and we see little potential for the country to become a major grain exporter.
Dominated By Grains
Tanzania - BMI Market Value By Commodity (% of total)
- Sugar production growth to 2016/17: 35.1% to 398,000 tonnes. This will come from increased investment in the sector as well as booming demand for local consumption on the back of growing confectionary and soft drinks demand in the country.
- Corn consumption growth to 2017: 31.2% to 5.4mn tonnes. A combination of enhanced yields (contributing to lower prices) and rising living standards is expected to drive corn consumption growth.
- Coffee production growth to 2016/17: 125.8% to 1.2mn 60kg bags. Although this eye-catching growth can partly be attributed to base effects, the sector is benefiting from investment in disease-resistant trees, and from incentives to small producers.
- 2014 real GDP growth: 7.3% year-on-year (y-o-y), up from 7.2% in 2013; forecast to average 7.5% over 2012-2017.
- Consumer price inflation: 5.4% average in 2014 (down from 7.7% average in 2013).
- BMI universe agribusiness market value: 16.7% y-o-y decrease to US$1.6bn in 2014, forecast to decrease by an annual average of 1.0% between 2011/12 and 2016/17.
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We maintain our 2013/14 forecast for Tanzanian corn production to 4.2mn tonnes as the latest official estimates show a smaller decrease in output than previously anticipated. This is because corn prices during plantings held up better than expected, encouraging production. Also, the impact of the recent black caterpillar outbreak was less than expected on plantings for the 2013/14 corn harvest. The USDA forecasts area harvested at 3.1mn hectares in 2013/14, which is in line with the five-year average, while yields are forecast at 1.4tonnes/ha, compared with 1.3tonnes/ha on average over the past five years. Growth in output in the past decade has come mainly from a steady increase in area planted, while yields have actually declined over the period, especially towards the end.
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