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Cameroon Agribusiness Report Q1 2013

Cameroon agribusiness market: New market research published

Overall, we expect Cameroons agricultural performance in 2012/13 to represent an improvement on the previous year. The main corn harvest has already been taken in, and early indications suggest that some of the ground lost in the past two years has been regained despite weather that was unfavourable at times. The two main cash crops, coffee and cocoa, also are likely to see modest increases in production.

That said, in the case of cocoa, weather has intervened, in the form of persistent heavy autumnal rains, leading to an outbreak of black pod disease.

Key Forecasts

- Corn production growth to 2016/17: 62.6% 1.8mn tonnes. After two years of setbacks, we expect investment to facilitate rapid output growth that will allow Cameroon to surpass even buoyant demand growth.

- Cocoa production growth to 2016/17: 33.2% to 273,100 tonnes. Government and private sector investment will improve yields and quality, leading to increased exports.

- Sugar consumption growth to 2017: 23.2% to 306,800 tonnes. Significant increases in GDP per capita, rapid population growth and a fast expanding food and drink sector will support solid growth.

- 2013 real GDP growth: 5.2% (up from 4.7% in 2012).

- 2013 consumer price inflation: 2.5% (up from 2.0% in 2012).

Industry Outlook

Strong economic growth is forecast for Cameroon over the next few years, with year-on-year GDP increases of around 5% expected to 2016, when growth will moderate. For the agricultural sector, this is likely to bring increased consumer demand, particularly for sugar as rising incomes provide a boost to the carbonated drinks segment, and for corn on the back of demand for feed from the livestock sector. Direct investment into the key export commodities of coffee and cocoa, as well as into the reviving sugar industry, are expected to become more readily available, although the notably poor business environment remains a concern. Government investment in infrastructure, which is expected to increase sharply, will play a key role in facilitating growth in agribusiness as domestic markets become more integrated and exports to neighbouring countries increase. Currently, it is often more cost effective for the main coastal population centres to import sugar from Brazil than to transport it from the inland sugar cane growing regions.

Domestic demand for coffee and cocoa remains negligible and is unlikely to be boosted even by growing incomes, as this growth comes from a very low base. However, as part of a joint proposal with the Central African Republic, Cameroon is seeking financial support to boost domestic coffee consumption alongside other more pressing ambitions related to production. The two countries are seeking to bring in supervisory support from the International Coffee Organisation (which Cameroon has recently joined) as well as substantial financial support from the Common Fund for Commodities of around US$7mn. The project aims to increase productivity, quality and sustainability in the sector, seeking also to encourage and train more young growers, and to distribute improved seedlings.

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