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.
- Rice production growth to 2016/17: 42.3% to 1.4mn tonnes. The rice sector will benefit from increased investment from foreign companies, which plan to cultivate rice in an effort to boost food security. New varieties also could boost yields in the medium term.
- Corn consumption growth to 2017: 30.5% 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: 113.2% to 1.1mn 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.
- 2013 real GDP growth: 7.2% year-on-year (y-o-y), up from 6.9% in 2012; forecast to average 7.5% over 2012-2017.
- Consumer price inflation: 8.2% average in 2013 (down from 16.1% average in 2012).
- BMI universe agribusiness market value: 5.6% y-o-y decrease to US$1.9bn in 2012/13, forecast to decrease by an annual average of 0.2% between 2011/12 and 2016/17.
Key Revisions To Forecasts
- 2013/14 corn production: revised up from 3.9mn tonnes to 4.2mn tonnes on the latest official estimates.
- 2012/13 coffee production: revised up from 918,000 bags to 1.0mn bags on the latest International Coffee Organization revisions.
- 2013/14 coffee production: revised up from 850,000 bags to 900,000 bags on strong first auctions and sharply moderating local prices.
We have revised up our 2013/14 forecast for Tanzanian corn production to 4.2mn tonnes (from 4.0mn tonnes previously) 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. In the coming 2014/15 season, we believe the impact of lower global corn prices will be more significant, and we expect production to fall back to 4.1mn tonnes.
Recent strong sugar import data from the Middle East and Africa shows that these regions are likely to take the lead in terms of demand growth in the coming years. Anecdotal reports have pointed to sharply higher import demand from both regions over summer 2013, with imports turning towards refined sugar at the expense of raw, mainly as the refined variety trades at a smaller premium to raw sugar. The US Department of Agriculture forecasts sugar demand in major markets in both regions to grow by an average of 59.0% between 2009/10 and 2013/14, with the strongest growth seen in Tunisia, Ghana and Saudi Arabia and the weakest in South Africa. These reflect the very different sugar consumption pictures across the two regions: There is very low consumption per capita in most of Africa, while some markets in Middle East and North Africa (Egypt, Saudi Arabia) and South Africa already have average to high levels of sugar demand per capita.
We have revised up our estimate for Tanzanian coffee output in 2012/13 to 1.0mn bags in line with final estimates from the International Coffee Organization. We have also revised up our forecast for 2013/14 production, as first coffee sales since the start of the season have been particularly strong. As a result, we now forecast coffee output of 900,000 bags in 2013/14. Because production in the country is often volatile, and lower coffee prices could discourage investment in the crop, we are sceptical that the country will manage to increase production above 900,000 in 2013/14.