BMI View: T he Tanzanian coffee industry will struggle over the medium term , but renewed government support for the sector has provided hope that it can recover over the longer term . The corn industry , meanwhile, will continue to benefit from solid demand from domestic and export markets , while rising income levels will stimulate rice consumption . The Tanzanian sugar sector will see limited production growth in the next few years, largely due to the fact that Tanzania scores poorly on productivity measures compared to its regional neighbours. As a result, a growing share of the country's growing sugar demand is met by imports. In addition, we believe that while sugar prices will be supported across 2017, they are likely to take a move lower over the medium term as, in our view, they already reflect the tight balance between supply and demand in the global sugar market.
Our forecast for coffee production and consumption both remain unchanged from our last quarterly update. We continue to see consumption reaching a level of 52.7mn 60kg bags in 2020, an average annual increase of 1.0% across our forecast period. Meanwhile, we see production reaching a level of 1.22mn 60kg bags in 2020 - an average annual increase of 1.5% across our forecast period.
Since our last quarterly update, we have revised down our forecasts for sugar consumption in Tanzania starting in 2016 and for each full-year period through to the end of our forecasts in 2020. We now see demand reaching a level of 642,000 tonnes in 2020, which equates to an average annual growth rate of 2.0% across our forecast period.
Our forecasts for rice production and consumption in Tanzania remain unchanged from our last quarterly update, however, we have revised up our historical data for 2014 consumption owing to a revision in USDA data. We continue to forecast that rice output will reach a level of 2.0mn tonnes by 2020, an average annual increase of 3.4% across our forecast period to 2020. Meanwhile, we see demand reaching a level of 2.1mn tonnes in 2010, equating to an average annual increase of 2.7% across our forecast period.
Our forecasts for corn production and consumption in Tanzania remain unchanged from our last quarterly update. We continue to predict production to fall by 10.9% y-o-y to reach 6.0mn tonnes in 2016 before returning to growth in 2018 and closing our forecast period at a level of 6.3mn tonnes in 2020. This equates to an average annual contraction of 1.2% y-o-y through to 2020.
2016 real GDP growth: 7.0% y-o-y (flat from 7.0% in 2015, and up from a forecasted 2016 real GDP growth rate of 6.8% in our last update).
2016 consumer price inflation: 5.2% y-o-y (down from an estimated 5.6% in 2015 and down from our forecast of 5.4% for 2016 in our last quarterly update).
|Agribusiness Market Value|
|BMI Market Value By Commodity (2012-2020)|
|e/f = BMI estimate/forecast. Source: BMI, FAO|
Latest Updates And Structural Trends
Corn production will decline in 2015/16, the first of two consecutive years that we are forecasting output to contract. However, strong demand from the domestic and export markets will maintain elevated local prices. Out to 2020, we forecast Tanzania to record growing corn surpluses as rising income levels induce greater consumption of rice and bread at the expense of corn.
We hold a positive outlook for the Tanzanian rice sector. Nevertheless, we hold the opinion that rice farming in Tanzania is largely undertaken by small farmers with basic know-how, very limited infrastructure capabilities and using traditional seed varieties. Rising income levels out to 2020 will stimulate rice consumption at the expense of more basic staples such as corn and cassava. Towards the end of our forecast period, rice output may begin to benefit from the renewal of rice exports by the Tanzanian government to countries in the Southern African Development Community and East African Community - a policy announced in September 2016.
Tanzania will continue to grow its sugar production marginally but consistently out to 2019/2020, while the government will maintain strong oversight on the sector. Nevertheless, growth will be lacklustre at best and Tanzania will continue to import sugar from its neighbours to meet its growing level of demand over the next decade.
A growing import bill will see Tanzania's current account deficit widen in 2017 and 2018 as substantial infrastructure sector activity bolsters demand for capital imports. Indeed, while export growth will remain steady on the back of higher gold and corn production and prices, we anticipate that the aforementioned import demand will see the country's goods trade balance deteriorate. We are forecasting 2017 and 2018 current account deficits of 9.1% and 9.4% of GDP, respectively, up from 7.1% in 2016. That said, the increased external account shortfall will be funded by robust foreign direct investment (FDI) inflows, allowing the central bank to bolster the country's stock of foreign reserves and limiting scope for any deterioration in Tanzania's sovereign credentials. Export growth will be steady, albeit insufficient to fully offset import growth. While our Agribusiness team forecasts the country's corn production will fall in 2017 due to poor rainfall, Tanzania will still benefit from a production surplus, and our Agribusiness team is forecasting corn prices to tick up.
The Tanzania Agribusiness Report features BMI Research's market assessment and independent forecasts for production, consumption and trade across core agricultural commodities.
BMI's Tanzania Agribusiness Report includes independent commodity price forecasting and analysis for key agricultural outputs, an overview of the agribusiness competitive landscape and a discussion of the downstream context of agricultural production in relation to country food consumption forecasts and composite food and beverage trade forecasts.
- Use BMI's independent industry forecasts to test other views - a key input for successful planning in dynamic agribusiness markets.
- Apply BMI's medium-term commodity price analysis to assist with budgetary planning and the identification of investment opportunities and potential risks.
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BMI Industry View
Summary of BMI’s key industry forecasts and views, highlighting recent changes and key risks to the industry outlook.
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the wider agricultural industry.
BMI Supply & Demand Forecasts
Divided into sections based on various diverse sectors in the agriculture market, the chapter provides insight into each market’s agricultural industry, centred on sector forecasts to end-2019 for the consumption, production and trade of key commodities.
- Consumption Forecasts: Accompanied by a discussion of the main drivers of consumption growth: macroeconomic factors, food processing trends, price movements and increasingly, demand from the non-food sector.
- Production Forecasts: Examine the trends influencing BMI’s production outlook: global demand, price increases, public and private sector investment and agricultural efficiency improvements.
- Trade Forecasts: Accompanied by a discussion of the factors influencing a country’s trade in agricultural goods, including domestic demand, global prices and government trade policies.
- BMI’s Forecasts: Accompanied by a risks-to-outlook assessment, which examines potential factors that could affect our existing forecast picture and the likelihood of their occurrence.
BMI’s Commodity Price Analysis
Fundamental and technical analysis of the short- and medium-term price outlook for eight agricultural commodities based on globally recognised benchmarks.
Analysis of headline food and drink forecasts, including total food consumption, per capita food consumption and total sector trade, which provide important downstream intelligence for primary agricultural producers.
Includes relevant articles from BMI’s daily analysis service. These can include: long-term projections on agricultural imports and exports; our perceptions of the impacts of economic slowdown on key companies and subsectors within the Agribusiness industry in a given country; our analysis of fertilizer production; as well as other relevant analysis of recent news and events.
The reports contain information on prominent companies operating in each market.
Key Commodities Covered By The Agribusiness Market
Reports Include: Grains, Dairy, Livestock, Rice, Sugar, Palm Oil, Edible Oils, Coffee, Cocoa, Cotton, Soybean
Please note – not all reports cover all commodities.
The Agribusiness reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.