Mozambique Agribusiness Report Q3 2016 - New Market Research Report

Mozambique's agricultural production is currently being significantly impacted by the 2015/16 El Nino episode. The dry weather will dent grains, sugar and livestock production for a second consecutive year in 2016. We hold a relatively positive view on the agribusiness sector of Mozambique beyond 2017 . Indeed, Mozambique has been attracting growing interest from foreign investors , and the industry will benefit from this trend in the coming years. However, although the country could be able to tap abundant and largely unexploited land and water resources, its production will not keep up with robust consumption growth. Self -sufficiency regarding corn and poultry will slowly decrease in the coming years, leading to increasing imports.

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Key Forecasts

Sugar production growt h to 2019/20: 11.5% to reach 457 ,000 tonnes. As one of Mozambique's key cash crops, long-term sugar production growth will reflect an increase in export-driven demand and the opening up of new markets; output is also expected to benefit from investment in biofuels.

Poultry consumption growth to 2020: 25.9% to 61, 1 00 tonnes. Among the factors underpinning our strong growth expectations are Mozambique's expanding population and the country's rising standards of living.

2016 BMI universe agribusiness market value: USD10.67bn (up from USD10.54bn in 2015; growth expected to average 6.3% annually between 2016 and 2020).

2016 real GDP growth: 6.3% (up from 6.2% in 2015; projected to average 7.0% annually between 2016 and 2020).

2016 consumer price inflation: 14.9% y-o-y (up from 3.5% in 2015; predicted to average 9.7% y-o-y over 2016-2020).

Key Developments

Countries in the southern part of Africa, including Mozambique, have been grappling with adverse weather since 2014. In 2015, these countries recorded drought conditions, a consequence of the re-emergence of El Nino in May that year. The weather phenomenon typically brings dry and warm weather to Madagascar, Mozambique, South Africa, Zimbabwe, Bostwana, Zambia and Tanzania.

Rains were below average over most of 2015 and in Q116 in Mozambique. Agricultural production decreased in the 2015/16 season and will most likely decline for a second consecutive year in 2016/17. We forecast production of grains, sugar and poultry to decrease. Lower output is threatening the food security of a growing number of Mozambican citizens, as we expect food prices to increase and the self-sufficiency ratio to decline.

The outlook is more positive for the 2017/18 season, as El Nino is currently fading.

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

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