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Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including Daily Alerts, monthly regional Insights, and in-depth quarterly Country Forecast Reports.

Central America Agribusiness Report Q1 2014

Published by Business Monitor International on Jan 10, 2014 - 138 pages
PDF - Download Now with 3 Quarterly Updates format - Download Now
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The region is still struggling with disease outbreaks in the coffee sector in 2013/14. We believe the region will continue to suffer as low global coffee prices limit investment potential. Central America is generally dependent on imports for corn, and we expect the production deficit to widen over our forecast period. That said, Central America is expected to remain self-sufficient in sugar and even increase its potential for sugar exports. The sugar industry has potential to attract investment over the medium term.
  • Coffee production growth to 2016/17: 24.1% to 13.8mn bags. We believe the coffee sector will continue to battle with disease and weather problems, while low global prices will limit investment in the crop, at least in the coming years. We see more potential for the sector in the long term.
  • Corn consumption growth to 2017: 11.1% to 6.8mn tonnes. Demand growth for corn will far outpace production in Central America, affecting prices and keeping the area import-dependent for its grain needs.
  • Sugar production growth to 2016/17: 9.2% to 5.1mn tonnes. Most countries in the region will continue to run a small production surplus out to 2016/17, and development of the export industry could present upside risks to our production forecasts over the long term.
  • 2014 real GDP growth: 3.3% year-on-year (y-o-y). This compares with 3.0% growth in 2013. Real GDP growth is predicted to average 3.3% over our forecast period.
  • Consumer price inflation: 5.1% y-o-y in 2013. Up from 4.8% in 2013 and predicted to average 5.0% over 2012-2017.
Industry Outlook

We maintain our forecast for coffee production in Honduras in 2013/14 to come in at 5.0mn 60kg bags, as we expect production to rebound from 2012/13, when the country's trees were affected by rust that limited yields. We forecast production to increase 8.7% y-o-y in 2013/14 after output fell by 17.9% y-o-y in 2012/13. The rebound will be limited by subdued coffee prices and the limited potential for recovery in global prices in the near term, as we forecast recurring surpluses out to 2017. Still, the implementation of medium- and long-term strategies to control coffee rust, as well as renovation and rehabilitation of farms, will boost yields and output slightly in the coming season.

Israel-based flavours and ingredients producer Frutarom has taken over Guatemala-based company Aroma for a net consideration of US$12.5mn. The move is part of Frutarom's growth strategy in the developing markets of Central and South America. Aroma, which manufactures flavours for beverages, dairy products, confectionery, snacks and convenience food segments, employs 57 people and operates a production, development and marketing site in Guatemala City. Under the terms of the deal, an additional consideration will be paid in the amount of any excess earnings before interest, taxes, depreciation and amortisation (EBITDA) above US$2.25mn in the years 2013 to 2015.

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