Colombia Agribusiness Report Q4 2009

In BMI's Colombia Agribusiness Report for Q409 we introduce the new Grains Outlook. Colombia runs a deficit in both food and feed grains and is reliant on imports, predominantly from the US. Grain production suffered following the liberalisation of the agricultural sector in 1991. Corn production fell in the 1990s as many smaller producers switched to other crops and the area planted contracted. This decade, however, has seen production climb back up as the expansion of larger, more modern farms has improved yields. The average yield for corn rose from a mere 1.6 tonnes per hectare in 1999 to 2.85 tonnes/ha in 2008.

Despite the improvement, by international and even Latin American standards productivity is still low. In 2008, corn yields in the US were 9.46 tonnes/ha according to data from the US Department of Agriculture. In the same year, yields in neighbouring Venezuela and Ecuador stood at 3.00 tonnes/ha and 3.13 tonnes/ha, respectively. The low productivity is in part down to the continuation of small-scale subsistence corn production where yields are often lower than 1 tonne/ha. The expansion of larger, more modern farms will see yields continue to rise moving into the next decade. We forecast production to grow 25.6% to 2013 to reach 2.08mn tonnes. This will be driven predominantly by improvements in yield.

Corn producers are helped by direct subsidy payments from the government and subsided credit to help with input costs. Many smaller producers will be increasingly reliant on government support as trade agreements with other South American countries as well as the pending United States-Colombia Trade Promotion Agreement will see restrictions on imports fall.

Demand for corn has seen rapid growth over the past decade as the feed requirements of the country's livestock sector have risen. Strong economic growth this decade has spurred a large expansion in the production of meat, particularly poultry, and dairy products. This has seen demand for feed corn grow by more that 150% over the past 10 years. Beyond the current economic problems, we expect the strong growth in demand for grain to continue.

While in the longer term the future still looks bright for Colombia's livestock and dairy producers, 2009 is proving a difficult year. Farmers have already been struggling with high input costs and flagging demand as consumers cut back on non-essential food purchases in the face of the economic slowdown. At the end of July, the situation took a dramatic turn for the worse when Venezuelan President Hugo Chav?(C)z announced a freeze on trade with Colombia following his latest spat with Colombian President ??lvaro Uribe. This is not the first time Chavez has threatened to cut trade between the two countries, which in 2008 was worth US$1.7bn for food products alone. This time, however, action has followed words and trade ground to a halt in August. Chav?(C)z' ally Ecuador has also recently imposed stiff tariffs on food imports from Colombia.

In 2008, Colombia exported around 200,000 tonnes of beef and a significant amount of dairy products to Venezuela. If Chavez refuses to relent, finding new markets will not be easy. In the longer term, with the current poor state of Venezuelan agriculture, we believe Colombian food imports will be too important to Venezuelans to be permanently restricted. In the short term though producers will see heavy losses as demand on the export market collapses and domestic demand remains slow.

We have revised our real GDP growth forecast for France to 0.7% in 2008 with a 3.0% contraction for 2009, before improving slightly to 0.2% in 2010. Unemployment is expected to increase to 9.3% in 2009 up from an estimated 7.8% in 2008 and is expected to rise to 10.6% in 2010.

• Executive Summary
• SWOT Analysis
• Colombia Agricultural SWOT
• Industry Business Environment Overview
• Supply Demand Analysis
• Colombia Dairy Outlook
• Colombia Sugar Outlook
• Colombia Livestock Outlook
• Colombia Cocoa Outlook
• Colombia Coffee Outlook
• Colombia Grain Outlook
• Competitive Landscape
• Commodity Price Analysis
• Corn
• Rice
• Soy
• Wheat
• Softs Update
• Cocoa
• Coffee
• Milk
• Sugar
• Downstream Supply Chain Analysis
• Industry Forecast Scenario - Food
• Colombia Food Consumption Indicators -- Historical Data & Forecasts, 2007-2013
• Trade
• Food & Drink Trade Balance -- Historical Data & Forecasts, 2006-2012
• Canned Food/Prepared Food
• Canned Food Value/Volume Sales -- Historical Data & Forecasts, 2006-2013
• Confectionery
• Confectionery Value/Volume Sales -- Historical Data & Forecasts, 2006-2013
• Industry Forecast Scenario - Retail
• Industry Forecast Scenario - Retail
• Colombia Mass Grocery Retail -- Value Sales by Format (US$bn) -- Historical Data & Forecasts, 2006-2012
• Sales Breakdown by Retail Format Type
• Macroeconomic Forecast
• Special Focus
• Industry News - Trade Between Venezuela, Colombia Impacted By Political Dispute
• BMI Forecast Modelling
• How We Generate Our Industry Forecasts
• List of Tables
  • Table: Colombia Milk Production & Consumption
  • Table: Colombia Butter Production, Consumption & Trade
  • Table: Colombia Cheese Production, Consumption & Trade
  • Table: Colombia Whole Milk Powder Production, Consumption & Trade
  • Table: Colombia Milk Production & Consumption
  • Table: Colombia Butter Production, Consumption & Trade
  • Table: Colombia Cheese Production, Consumption & Trade
  • Table: Colombia Whole Milk Powder Production, Consumption & Trade
  • Table: Colombia Sugar Production, Consumption & Trade
  • Table: Colombia Sugar Production, Consumption & Trade
  • Table: Colombia Poultry Production, Consumption & Trade
  • Table: Colombia Pork Production, Consumption & Trade
  • Table: Colombia Beef & Veal Production, Consumption & Trade
  • Table: Colombia Poultry Production, Consumption & Trade
  • Table: Colombia Pork Production, Consumption & Trade
  • Table: Colombia Beef & Veal Production, Consumption & Trade
  • Table: Colombia Cocoa Production, Consumption & Trade
  • Table: Colombia Cocoa Production, Consumption & Trade
  • Table: Colombia Coffee Production & Consumption
  • Table: Colombia Coffee Production, Consumption & Trade
  • Table: Colombia Wheat Production, Consumption & Trade
  • Table: Colombia Corn Production, Consumption & Trade
  • Table: Colombia Barley Production, Consumption & Trade
  • Table: Colombia Wheat Production, Consumption & Trade
  • Table: Colombia Corn Production, Consumption & Trade
  • Table: Colombia Barley Production, Consumption & Trade
  • Table: Agricultural Commodity Producers & Traders
  • Table: Agribusiness Suppliers
  • Table: Integrated Agricultural Producers
  • Table: Corn
  • Table: Rice
  • Table: Soybean
  • Table: Wheat
  • Table: Cocoa
  • Table: Coffee
  • Table: Milk
  • Table: Sugar
  • Table: Colombia - Economic Activity