Tanzania Agribusiness Report Q3 2016: New research report available at Fast Market Research

The 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 low sugar prices and 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.

Key Forecasts

We have revised upwards our growth forecasts for sugar production out to 2019/20 as the government's plan to raise duty imports on sugar will help protect local factories and slowly reduce the country's dependence on imports. We now forecast sugar production to reach 335,000 tonnes in 2019/20, in line with production levels for 2014/15 level.

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We have revised upwards our growth forecasts for coffee production across the duration of our forecast period to 2019/20 to reach a level of 642,380 60kg bags. Thanks to government support for the sector and the sharp downturn in output in 2013/14 we believe there is plenty of upside potential for growth.

2016 real GDP growth: 6.7% y-o-y (down from an estimated 7.1% in 2015)

2016 consumer price inflation: 5.6% y-o-y (flat with an estimated 5.6% in 2015)

Latest Updates & 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.

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.

The Tanzania Agribusiness Report features BMI Research's market assessment and independent forecasts for production, consumption and trade across core agricultural commodities.

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