Venezuela agribusiness report q2 2012

Q2 2012

www.businessmonitor.com

VeneZueLa

agribusiness Report
INCLUDES BMI'S FORECASTS

ISSN 2040-0489
Published by Business Monitor International Ltd.


VENEZUELA
AGRIBUSINESS
REPORT Q2 2012
INCLUDES 5-YEAR FORECASTS TO 2016

Part of BMI's Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline: April 2012

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Venezuela Agribusiness Report Q2 2012

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Venezuela Agribusiness Report Q2 2012

CONTENTS
BMI Industry View ............................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................. 8
Venezuela Agriculture SWOT ................................................................................................................................................................................ 8
Venezuela Political SWOT ..................................................................................................................................................................................... 9
Venezuela Economic SWOT ................................................................................................................................................................................. 10
Venezuela Business Environment SWOT ............................................................................................................................................................. 10

Supply Demand Analysis .............................................................................................................................. 11
Venezuela Livestock Outlook .................................................................................................................................................................................... 11
Table: Venezuela Poultry Production & Consumption, 2011-2016 ..................................................................................................................... 12
Table: Venezuela Pork Production & Consumption, 2011-2016 ......................................................................................................................... 13
Table: Venezuela Beef & Veal Production & Consumption, 2011-2016 .............................................................................................................. 13
Table: Venezuela Poultry Production & Consumption, 2008-2012 ..................................................................................................................... 16
Table: Venezuela Pork Production & Consumption, 2008-2012 ......................................................................................................................... 16
Table::Venezuela Beef & Veal Production & Consumption, 2008-2012 ............................................................................................................. 16
Venezuela Grain Outlook .......................................................................................................................................................................................... 17
Table: Venezuela Wheat Production & Consumption, 2011-2016 ....................................................................................................................... 19
Table: Venezuela Corn Production & Consumption, 2011-2016 ......................................................................................................................... 19
Table: Venezuela Wheat Production & Consumption, 2008-2012 ....................................................................................................................... 23
Table: Venezuela Corn Production & Consumption, 2008-2012 ......................................................................................................................... 23
Venezuela Coffee Outlook ......................................................................................................................................................................................... 23
Table: Venezuela Coffee Production & Consumption, 2011-2016 ....................................................................................................................... 25
Table: Venezuela Coffee Production & Consumption, 2008-2012 ....................................................................................................................... 28

Commodity Price Analysis ............................................................................................................................ 29
Corn ..................................................................................................................................................................................................................... 29
Rice ...................................................................................................................................................................................................................... 29
Soybean ............................................................................................................................................................................................................... 30
Wheat ................................................................................................................................................................................................................... 31

Monthly Softs Update................................................................................................................................................................................................ 32
Cocoa................................................................................................................................................................................................................... 32
Coffee................................................................................................................................................................................................................... 32
Palm Oil .............................................................................................................................................................................................................. 33
Sugar ................................................................................................................................................................................................................... 34

Downstream Analysis .................................................................................................................................... 35
Food.......................................................................................................................................................................................................................... 37
Total Food Consumption ..................................................................................................................................................................................... 37
Table: Venezuela Food Consumption Indicators - Historical Data & Forecasts, 2009-2016 .............................................................................. 37
Canned And Prepared Food ................................................................................................................................................................................ 38
Table: Canned Food Value/Volume Sales - Historical Data & Forecasts, 2009-2016 ........................................................................................ 38
Table: Fish, 2009-2016, 2009-2016..................................................................................................................................................................... 39
Edible Oil............................................................................................................................................................................................................. 40
Table: Oils And Fats, 2009-2016 ......................................................................................................................................................................... 40
Confectionery....................................................................................................................................................................................................... 41
Table: Confectionery Value/Volume Sales - Historical Data & Forecasts, 2009-2016 ....................................................................................... 41
Mass Grocery Retail ................................................................................................................................................................................................. 42
Table: Venezuela Mass Grocery Retail - Value Sales by Format - Historical Data & Forecasts ........................................................................ 42
Table: Sales Breakdown by Retail Format Type .................................................................................................................................................. 42

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Venezuela Agribusiness Report Q2 2012

Trade ................................................................................................................................................................................................................... 43
Table: Food & Drink Trade Balance - Historical Data & Forecasts .................................................................................................................. 43

Economic Analysis - Massive Growth Challenge Beyond The Election .................................................................................................................... 43
Table: Venezuela - Economic Activity.................................................................................................................................................................. 46

Country Snapshot: Venezuela Demographic Data ..................................................................................... 47
Section 1: Population........................................................................................................................................................................................... 47
Table: Demographic Indicators, 2005-2030 ........................................................................................................................................................ 47
Table: Rural/Urban Breakdown, 2005-2030 ....................................................................................................................................................... 48
Section 2: Education And Healthcare .................................................................................................................................................................. 48
Table: Education, 2002-2005 .............................................................................................................................................................................. 48
Table: Vital Statistics, 2005-2030 ........................................................................................................................................................................ 48
Section 3: Labour Market And Spending Power .................................................................................................................................................. 49
Table: Employment Indicators, 2001-2006 .......................................................................................................................................................... 49
Table: Consumer Expenditure, 2000-2012 (US$) ................................................................................................................................................ 49

Global Food & Drink View ............................................................................................................................. 50
Food & Drink Roundup Q112: Core Views .............................................................................................................................................................. 50
Table: Core Views ............................................................................................................................................................................................... 61

BMI Forecast Modelling ................................................................................................................................. 62
How We Generate Our Industry Forecasts ............................................................................................................................................................... 62

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Venezuela Agribusiness Report Q2 2012

BMI Industry View
BMI View: Data for 2011 from the Ministry of Agriculture and Lands demonstrate mixed results for the

first year of President Hugo Chávez's government's two-year plan for the agricultural sector, the Plan
Bienal para la Producción de Alimentos 2011-2012. The plan aimed to improve access to capital for
small- and medium-scale producers, and, according to the ministry's data, 75,000 producers received
VEF2.7bn (US$627.9mn) in order to boost production. The first year has met with some success:
production of beans, cotton, yucca and some vegetables increased. However, yellow corn production
reached only 62.1% of the target of 1.39mn tonnes for 2011; white corn, soy oil and pulses production hit
only 50.0%, 38.3% and 42.1% respectively of official targets. Overall crop area fell by 7.8% year-onyear (y-o-y), and unemployment in the agricultural sector also increased by 5.8% over the year.
Agricultural production was hard hit by heavy rains which caused significant damage to both crops and
infrastructure. In addition to extreme weather conditions, Chávez's Gran Misión Agro Venezuela (Great
Venezuelan Agricultural Mission) has also been held back by shortages of technical staff and equipment,
delays in financing to farmers and inefficient production techniques. Despite the plan's failure to reach its
first-year targets, in late January, Chávez announced the relaunching of the Gran Misión Agro Venezuela
on his radio and television show 'Aló, Presidente'. As part of the relaunch, Chávez announced the creation
of the Organo Superior de Agricultura, a new body which will be headed by Chávez himself, along with
Elías Jaua, vice president and new minister of agriculture. One of the main goals of the Organo Superior
will be to increase land for livestock production, which currently stands at just 800,000 hectares, with the
aim of growing the national herd to 20 million heads by 2019. Chávez called for the cooperation of local
government to achieve these goals. He also pledged a further VEF114mn (US$26.5mn) in investment to
improve the agricultural transport network.
Key Forecasts
ƒ

BMI forecasts that GDP will increase by 2.5% y-o-y in 2012 and 2.2% in 2013, with growth
driven primarily by the oil sector. However, with presidential elections in October 2012,
attempts to keep domestic demand elevated will see inflation levels remaining high. We
currently forecast end-2012 inflation of 26.0%, the highest in Latin America.

ƒ

In 2010/11, we estimate that corn production rose by just 4.7% y-o-y on the low 2009/10 harvest

to 1.71mn tonnes. In 2011/12, we see production increasing by 4.5% y-o-y to 1.79mn tonnes as
the area harvested increases to an expected 450,000 hectares. Out to the end of our forecast
period in 2016, the level of production will be highly reliant on the government's ability to
support the agricultural sector. Without continued support, much of the newly opened farmland
will very likely return to fallow. Despite this risk, we expect output to continue to rise and
forecast production to grow by 27.4% on the 2011 level to reach 2.18mn tonnes.

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Venezuela Agribusiness Report Q2 2012

ƒ

Poultry production has been hit by high input costs, farmgate price controls and increasing
competition from imports. We estimate that output fell by 3.8% y-o-y in 2010/11 to take
production to 625,000 tonnes and we forecast a further decline of 3.0% in 2011/12 to 606,000
tonnes. Out to 2016, we see production increasing by 4.5% on the 2011 level to reach 653,000
tonnes, still some way below the level seen in the early years of the 21st century.

ƒ

In 2010/11, the reliance on imports continued to shore up beef consumption and we estimate that
consumption increased by 2.0% y-o-y to 533,500 tonnes. High import prices and a drop in
domestic production are likely to constrain beef consumption in the short term, and we currently
forecast demand to grow by 0.9% y-o-y in 2011/12 to 538,300 tonnes. Out to 2016, demand for
beef is forecast to grow by 7.4% on the 2011 level to 573,000 tonnes.

Key Trends And Developments
ƒ

Vice President Elías Jaua was appointed as the new minister of agriculture and lands in late
January after Juan Carlos Loyo resigned from the post, citing ill health. New appointments have
also been announced for senior positions within the Ministry of Agriculture. Faiez Kassen
Castillo was named vice minister for agricultural economics; Tatiana Pug was appointed
president of the National Institute for Agriculture Research; Pedro Moreno Montes was named
as the new president of the Institute for Comprehensive Agricultural Health; Javier Ramos was
made acting president of the National Institute for Rural Development; and Eduardo Hurtado
León will head the Venezuelan Agricultural Bank.

ƒ

Also in late January, President Hugo Chávez stepped up pressure on banks to grant loans to
small- and medium-sized producers. He stressed that he would consider nationalising the banks
if they fail to observe Venezuelan law, which states that banks must grant agricultural loans.
Chávez also announced that rather than being granted directly to producers, agricultural loans
would now be transferred to the executive office to establish a new fund, which small- and
medium-sized producers will be able to access. The announcement has not been universally
welcomed within the agricultural sector. Pedro Rivas, president of the National Confederation of
Agricultural Products (Fedeagro), expressed fears that the new fund may exclude private
producers.

ƒ

There were widespread food shortages in 2011, including basic food items such as powdered
milk, oil and beef. There was restricted availability of coffee, precooked corn flour and
margarine for the second half of 2011. According to economic research firm Datanálisis, the
shortage index for December 2011 was 24.8%, in comparison with 8.0% at the beginning of the

year.

ƒ

In March 2012, it was reported in the local press that the Supreme Court had granted an
application seeking to annul the expropriation of agricultural supply company Agroisleña. In late

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Venezuela Agribusiness Report Q2 2012

September 2010, the Chávez government announced the seizure of Spanish-owned Agroisleña,
the largest private agricultural supply distributor in Venezuela. Following its nationalisation,
Agroisleña was renamed Agrotiendas and managed by the Agricultural Inputs, Supplies and
Services Trading Company (Ecisa), which is part of the Ministry of Agriculture and Lands.
Despite Ecisa's goals to strengthen the distribution model for the agricultural sector, Ministry of
Agriculture data indicate that Agrotiendas has been hit by limited supply owing to lack of
transportation equipment and poor cold storage facilities. This has represented a further obstacle
for Venezuela's grain producers, who are already struggling to cope with rising prices and
farmgate price controls.

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Venezuela Agribusiness Report Q2 2012

SWOT Analysis
Venezuela Agriculture SWOT

Strengths

ƒ
ƒ

Venezuela's tropical climate allows for production of a diversified range of
agricultural products.
Venezuelan cocoa and coffee are known for their high quality; cocoa especially is
sought after by producers of premium chocolate.

ƒ
Weaknesses

ƒ
ƒ
ƒ

Despite having large areas of fertile arable land, lack of investment in agriculture
has left Venezuela a major food importer.
High food price inflation and frequent supply shortages have dampened growth in
food consumption.
Price controls in place since 2003 squeeze the profits of producers and are a
disincentive to investing in increasing production.

ƒ
Opportunities

ƒ
ƒ
ƒ

Threats

ƒ
ƒ

The government has shown interest in revitalising coffee and cocoa production
after years of decline.
The government has introduced a number of programmes, including financing and
subsidies, to help small holders increase production.
Falling oil revenues are bringing more attention to increasing agricultural
production to reduce the cost of food imports.
The threat of land seizures and nationalisation inhibits investment in agriculture in
Venezuela.
Falls in the oil price will severely limit the amount of money the government will be
able to spend on agriculture.

ƒ

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Venezuela Agribusiness Report Q2 2012

Venezuela Political SWOT

Strengths

ƒ

ƒ
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Weaknesses

ƒ

ƒ
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Venezuela is rich in natural resources. In particular, it has huge oil and gas reserves
(it is the world's fifth largest crude producer) and is one of the main suppliers to the
US.
The oil boom has allowed the government to accumulate international reserves.
Although oil is one of the country's strengths, a high level of dependence on the
energy sector makes the economy increasingly vulnerable to economic shocks in the
long term.
The lack of transparency in the government's fiscal accounts is a source of concern.

Opportunities

ƒ

Following the devaluation of the bolivar in January 2010, the non-oil sector has an
opportunity to benefit from increased competitiveness.

Threats

ƒ

Inflation remains dangerously high despite the extensive price control system and
successive interest rate hikes. Further erosion of domestic productive capacity is likely
to raise inflationary pressures in the economy, possibly bringing on hyperinflation.
The sustainability of economic growth will depend on boosting private investment
rather than relying on oil and public investment (both of which are dependent on high
oil prices).

ƒ

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Venezuela Agribusiness Report Q2 2012

Venezuela Economic SWOT

Strengths

ƒ

ƒ

ƒ
Weaknesses

ƒ

ƒ

Venezuela is rich in natural resources. In particular, it has huge oil and gas reserves
(it is the world's fifth largest crude producer) and is one of the main suppliers to the
US.
The oil boom has allowed the government to accumulate international reserves.
Although oil is one of the country's strengths, a high level of dependence on the
energy sector makes the economy increasingly vulnerable to economic shocks in the
long term.
The lack of transparency in the government's fiscal accounts is a source of concern.

Opportunities

ƒ

Following the devaluation of the bolivar in January 2010, the non-oil sector has an
opportunity to benefit from increased competitiveness..

Threats

ƒ

Inflation remains dangerously high despite the extensive price control system and
successive interest rate hikes. Further erosion of domestic productive capacity is likely
to raise inflationary pressures in the economy, possibly bringing on hyperinflation.

The sustainability of economic growth will depend on boosting private investment
rather than relying on oil and public investment (both of which are dependent on high
oil prices).

ƒ

ƒ
Venezuela Business Environment SWOT

Strengths

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ƒ

Venezuela is an important supplier of oil to the US and is a member of OPEC.
Home to some of the largest oil reserves in the world, the Orinoco region will provide
opportunities for large-scale investment.

Weaknesses

ƒ

A lack of domestic and international investment, largely as a result of the uncertain
political environment, could undermine the long-term growth outlook.
Privatisation has ground to a halt since President Hugo Chávez took office, with the
administration instead preferring production-sharing agreements to encourage foreign
direct investment.

ƒ

Opportunities

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Government support for businesses, through a range of low interest rate loans, is
available. The government fund for industrial credit provides large sums of money for
small- and medium-sized businesses.

Threats

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The implementation of stringent foreign currency controls has hit the business
community hard. This has restricted import growth, as businesses lack the currency to
purchase raw materials.
State expropriation of 'idle' plants and proposals for land reform will act as a
disincentive for prospective investment (domestic and foreign).

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Supply Demand Analysis
Venezuela Livestock Outlook

BMI Supply View: After strong growth in the 1990s and the first few years of the 21st century,
Venezuelan beef production has gone into reverse in the past few years. Venezuela was self-sufficient in
beef in 2003, but by 2009 imports accounted for an estimated 52% of domestic consumption. A complex
system of price controls imposed by President Hugo Chávez in 2003 has restricted the profitability of
livestock production in the country. Chávez is hoping to boost production by turning over land judged as
unproductive to landless farmers. The project, however, has been met with mixed results; some formerly
productive ranches have seen production evaporate under the direction of inexperienced new managers.
In 2009/10 we estimate that beef production grew as imports from Colombia were suspended, giving a
boost to local producers. However, we believe that production dropped back once again in 2010/11 as
high energy and feed costs led to a consequent lack of profitability for producers. Furthermore, heavy
rains and mudslides from February-May 2011 flooded pasture lands in north-west Venezuela, affecting
livestock production. We therefore estimate that output fell by 3.7% year-on-year (y-o-y) to 335,000
tonnes in 2010/11. We forecast only marginal growth of 0.6% y-o-y in 2011/12 as the sector continues to
be held back by a lack of profitability due to high input costs and government price controls, along with
increased competition from imports from Brazil and Nicaragua. Venezuela now depends on imports for
an estimated 51% of beef consumed, according to Instituto Nacional de Estadística, the national statistics
institute. The government has promised credits to cattle ranchers in 2012 and, if granted, this could
provide a much-needed boost to the sector. Towards the end of our forecast period we expect production
to begin to rise again as the government makes efforts to lessen the reliance on imports. However, the
recovery will be slow, and we forecast production increasing by just 4.8% on the 2011 level to reach
351,000 tonnes in 2016.
Poultry production has weathered the storm of Chávez's reforms somewhat better than the cattle-rearing
sector. The sector accounts for an estimated 30% of total agricultural GDP and almost 50% of animal
production. The poultry industry is vertically integrated and efficient, and producers are constantly
working to modernise and improve their production methods. Despite these strengths, the sector has been
hit by the poor economic climate, continued high input costs and the increasing competition from imports
from Brazil and Argentina. Producers continue to be affected by the state-controlled price regime, which
is squeezing profitability. The state-regulated price for poultry was increased in March 2010 to
VEF13.83/kg; this provided some relief for producers but has done little to stem the downwards spiral.
We estimate that output fell by 3.8% y-o-y in 2010/11 to take production to 625,000 tonnes and we

forecast a further decline of 3.0% in 2011/12 to 606,000 tonnes. Out to 2016, we see production
increasing by 4.5% on 2011 output to reach 653,000 tonnes, still some way below the level seen in the
early years of the 21st century.

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Venezuela produces only small quantities of pork. Output has remained stable at around 125,000 tonnes
in recent years. We see production increasing by 4.0% on the 2011 level over our forecast period to reach
130,000 tonnes in 2016.
BMI Demand View: Meat consumption soared in Venezuela's boom years from 2004 to 2008. The rise
in demand was driven by a combination of strong oil-fuelled economic growth and government price
controls making staple foodstuffs more affordable. After falling sharply in 2003, poultry consumption had
grown by more than 50% by 2008. Beef consumption also grew by almost 40% between 2004 and 2008.
In 2011, annual per capita consumption stood at an estimated 25.5kg for poultry, 18.50kg for beef and
4.85kg for pork. While price controls have increased demand, they have worked against investment in
production and led to an increasing reliance on imports. In 2012, imports are forecast to reach 175,000
tonnes for poultry and 200,000 tonnes for beef.
We now believe that demand for poultry fell by 12.0% y-o-y to 780,600 tonnes in 2011 on the back of
lower production as well as a 38.8% y-o-y decrease in exports. We see consumption growing by just
1.0% in 2012 to 788,400 tonnes. Out to 2016, we forecast that demand for poultry will grow by 9.9% on
the low 2011 level to reach 857,500.
In 2010/11, the reliance on imports continued to shore up beef consumption and we estimate that
consumption increased by 2.0% y-o-y to 533,500 tonnes. High import prices and a drop in domestic
production are likely to constrain beef consumption, and we therefore currently forecast demand to grow
by 0.9% y-o-y in 2011/12 to 538,300 tonnes. Out to 2016, demand for beef is forecast to grow by 7.4%

on the 2011 level to 573,000 tonnes.
Pork consumption is much lower than that of poultry and beef. Consumption grew by 3.1% from 20062011 to reach 134,000 tonnes. We forecast growth of 3.9% between 2011 and 2016, fuelled primarily by
population increases, to take consumption to 139,000 tonnes at the end of our forecast period.

Table: Venezuela Poultry Production & Consumption, 2011-2016

Poultry Production, '000 tonnes

1

Poultry Consumption, '000 tonnes
e

1

f

2011

2012

2013

2014

2015

2016

625.0

606.0

622.0

632.0

644.0

653.0

780.6

788.4

800.2

816.2

836.6

857.5

1

Notes: BMI estimates. BMI forecasts. Sources: USDA.

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Venezuela Agribusiness Report Q2 2012

Table: Venezuela Pork Production & Consumption, 2011-2016

Pork Production, '000 tonnes

1

Pork Consumption, '000 tonnes
e

1

f

2011

2012

2013

2014

2015

2016

125.0

126.0

128.0

129.0

129.0

130.0

134.0

134.8

135.5

136.7

137.8

138.9

1

Notes: BMI estimates. BMI forecasts. Sources: USDA.

Table: Venezuela Beef & Veal Production & Consumption, 2011-2016

Beef & Veal Production, '000 tonnes

1

Beef & Veal Consumption, '000 tonnes
e

f

1

2011

2012

2013

2014

2015

2016

335.0

337.0

341.0

344.0

347.0

351.0

533.5

538.3

546.3

556.2

564.5

573.0

1

Notes: BMI estimates. BMI forecasts. Sources: USDA.

Chávez Unveils Plans To Increase Livestock Production
In late January 2012, Chávez announced the relaunching of the Gran Misión Agro Venezuela, his
government's plan to boost agricultural production and improve food security in Venezuela. As part of the
relaunch, Chávez announced the creation of the Organo Superior de Agricultura, a new body which will
be headed by Chávez himself, along with Elías Jaua, the vice president and new minister of agriculture.
One of the main goals of the Organo Superior will be to increase land for livestock production, which
currently stands at just 800,000 hectares (ha), with the aim of growing the national herd to 20 million
heads by 2019. Chávez called for the cooperation of local government to achieve these aims. He also
promised a further VEF114mn (US$26.5mn) in investment to improve the agricultural transport network.
Increased investment in the sector is expected to provide some relief to producers, who have been hit by

high prices and competition from imports. However, BMI believes that it will also be necessary to
address structural problems within the sector if significant gains in production are to be made. In
particular, farmgate price controls and high input costs are severely impacting the profitability of the
sector and providing significant disincentives for producers.
Chávez Orders Further Vestey Land Seizures
On November 1 2011, Chávez announced the immediate expropriation of 290,000ha of farmland in 11
ranches owned by Agroflora, a subsidiary of the British beef producing firm Vestey Group. The
company is owned by Lord Vestey's family, who first began trading in Venezuela in 1909. Agroflora is
engaged in the production of cattle, beef and buffalos. Chávez announced the news during a live
broadcast on state television channel Vive, claiming that under the terms of the Food Security and

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Sovereignty Law, land is 'social property'. Chávez said that the forced expropriation came following the
breakdown in negotiations with Agroflora over a compensation agreement for the land.
Previously, in October 2010, Chávez ordered the seizure of 300,000ha of land and 120,000 head of cattle
owned by Compañía Inglesa, the Venezuelan arm of Vestey Group. The announcement was made on
Chávez's weekly programme, 'Aló Presidente', and came just days after his United Socialist Party of
Venezuela failed to maintain his powerful two-thirds supermajority in local elections owing to inroads
made by a coalition of opposition parties. In response, Chávez called for an acceleration of the agrarian
reform programme and vowed to clamp down on foreign landholding.
The Vestey Group was also targeted by Chávez's government in 2005, when four farms were
nationalised, including the 33,600-acre Charcote estate south of Caracas, with 13,000 head of cattle.
Beef Price Rise Brings Some Relief For Producers
The Venezuelan livestock sector continues to be held back by the government-controlled price regime,

which is squeezing profitability and holding back production. The mandated price for beef was last
reviewed in 2008; with input costs rising, producers have long been pressing for the maximum sale and
retail prices to be increased. In June 2011, the government announced an increase of 29.2% in the cost of
a kilo of prime beef, from VEF17.60 to VEF22.74. The maximum prices of second- and third-class beef,
live cattle and carcass meat were all raised. The news will be welcomed by producers; however, some
producers' representatives have argued that the price adjustments do not go far enough to restore
profitability to the sector.
Improved Relations With Colombia Ease Beef Supply Restrictions
The long-running trade dispute between Chávez and former Colombian president Álvaro Uribe posed
difficulties for Venezuela's beef supply for much of 2009/10. In 2008, Venezuela imported about 200,000
tonnes of beef from Colombia, in addition to live cattle. However, at the end of July 2009, Chávez froze
diplomatic relations with Colombia in response to the country allowing US troops to operate out of its
bases in their fight against drug production. Chávez was also angered by Colombian protests over antitank missiles found in the possession of Fuerzas Armadas Revolucionarias de Colombia guerrillas that
apparently originated from the Venezuelan army. Following the dispute, Chávez vowed to cut trade with
Colombia and find alternative sources of vital imports. Tensions continued in late 2009, with Venezuelan
troops reportedly blowing up foot bridges between the two countries in mid-November.
While we do not believe exports completely ground to a halt - even if official trade is completely stopped,
a lucrative smuggling industry remains - the fall in trade placed strain on Venezuela's meat supply. The
value of imports of meat and offal from Colombia fell by a whopping 97.6% y-o-y in October 2009,
according to Colombia's statistics agency DANE, with total imports from Colombia for the month falling
by 70.4%. Venezuela was forced to seek imports from other countries in the region, including Brazil,
Argentina, Paraguay and Nicaragua.

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However, in August 2010, newly elected Colombian President Juan Manuel Santos met with Chávez and
agreed to restore diplomatic relations between the two countries. The two presidents agreed to reinforce
security along their shared border to clamp down on terrorist groups and drug trafficking. Venezuela also
agreed to pay debts amounting to some US$800mn to Colombian exporters. The agreement paves the
way for the restoration of trade relations between the two countries, which promises to ease supply
shortages of beef on Venezuelan shelves.
Subsequently, in April 2011, the two governments reached an agreement to restore trade relations
following a meeting in Cartagena. The deal opens the way for Colombia to export 6,500 head of cattle in
addition to 3,000 live cattle and 3,500 pregnant cows to increase Venezuela's breeding stock. The deal
also included the offer to export 60,000 day-old chicks and 100,000 hatching eggs. Quantities of chicken
meat and table eggs are yet to be agreed. This bodes well for Colombia's livestock sector and is expected
to provide much-needed relief for the food shortages and spiralling prices that have gripped Venezuela.
Butchers Behind Bars
Controversy hit the beef sector in 2010 as at least 40 butchers were arrested in early May on charges of
selling meat at higher prices than authorised by the government's strict price control system. The
government at the time allowed beef to be sold at VEF17 (US$4) per kilogram, but the butchers are
accused of charging VEF24-40 per kilo, depending on the cut. Butchers have said that they have to pay
around VEF14 for the meat, leaving them unable to cover the costs of running their business. Eight
butchers have been found guilty, fined US$3,000 and put on parole; they also must check in with the
court every two weeks, according to Dow Jones. A further 32 butchers are yet to be tried; if convicted,
they too face heavy fines or between two and six years in prison.
Chávez has criticised the butchers' arrest, arguing that officials from the government's consumer rights
defence institute, Indepabis, should instead scrutinise the activities of the distributors and big businesses
in the beef industry. Chávez insisted that if they are found to be violating price controls their assets should
be expropriated.
The arrest of the butchers is indicative of the extreme difficulties caused by the rigid controls imposed by
Chávez's government in its move towards an ever more centralised, state-controlled economic model.
Despite strong demand, domestic beef production is falling dramatically, as government restrictions drive
producers and retailers out of the market, leading to a scarcity of beef on the domestic market. As in other
areas of the Venezuelan economy, a once profitable sector has been crippled by Chávez's campaign

against capitalism.
Militia Fears Spook Ranchers
Government-supported farm invasions by the rural poor have been a regular occurrence under the rule of
Chávez. Venezuela's wealthy ranchers have therefore been particularly perturbed by the announcement of
the formation of armed peasant militias. The Associated Press reported that Chávez said that poor farmers

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needed protection from gangs loyal to wealthy landowners. The government has said that 300 poor
farmers were killed by the gangs over the past decade, a claim the ranchers deny. Ranchers in turn said
that they have been the target of kidnapping and extortion by gangs supportive of the government. While
poor farmers have undoubtedly become the victims of predatory landlords in the past, the spectre of
armed mobs with government sanction is a worrying one for Venezuela's already struggling cattle
ranching industry. The move to arm the groups, if followed through, is likely to see a rise in violence in
rural areas and will inhibit investment by ranchers worried that their land or livestock could fall victim to
the militias. This would slow any recovery in beef production.

Table: Venezuela Poultry Production & Consumption, 2008-2012

Poultry Production, '000 tonnes

2009

2010

2011

2012

695.0

680.0

650.0

625.0

606.0

1,047.0

861.0

887.0

780.6

788.4

2008

2009

2010

2011

2012

125.0

125.0

125.0

125.0

126.0

133.0

129.0

134.0

134.0

134.8

1

Poultry Consumption, '000 tonnes
e

2008

1

f

1

Notes: BMI estimates. BMI forecasts. Sources: USDA.

Table: Venezuela Pork Production & Consumption, 2008-2012

Pork Production, '000 tonnes

1

Pork Consumption, '000 tonnes
e

1

f

1

Notes: BMI estimates. BMI forecasts. Sources: USDA.

Table::Venezuela Beef & Veal Production & Consumption, 2008-2012

Beef & Veal Production, '000 tonnes

1

Beef & Veal Consumption, '000 tonnes
e

f

1

2008

2009

2010

2011

2012

305.0

290.0

348.0

335.0

337.0

615.0

508.0

523.0

533.5

538.3

1

Notes: BMI estimates. BMI forecasts. Sources: USDA.

Risks To Outlook
With Chávez in February 2009 winning a referendum to scrap the term limits for presidents, he could be
in power for some time to come. The government's highly interventionist stance towards food production
and supply in Venezuela means that meat production will be highly dependent on government policy. If

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prices are subjected to further controls as Venezuela's economy contracts, production could fall further as
more operators leave the sector. Another factor that will have a great influence over demand for livestock
is the price of oil. With Venezuela so reliant on its hydrocarbons exports, funds for government schemes
to increase production and provide affordable meat to the masses will be dependent on oil revenues being
sufficient. If the price of oil falls again, demand for meat would likely be hit.

Venezuela Grain Outlook
BMI Supply View: Venezuela is a major net importer of grain. Though production rose rapidly through
the first decade of the 21st century, consumption has also risen, fuelled by oil-driven economic growth.
Corn is Venezuela's major grain crop, with the vast majority grown in the central states of Barinas,
Portuguesa and Guárico. While the area planted to corn has risen by around 50% since the end of the
1990s, Venezuela's agricultural sector remains relatively undeveloped, and there is still plenty of room for
further expansion. Around 65% of the area planted is white corn for human consumption; the remainder is
yellow corn for both human consumption and for feed. The viability of corn production in Venezuela is
heavily dependent on government policy. In the 1980s, the country's agricultural sector was heavily
regulated, and high tariffs were imposed on grain imports. This saw corn production more than double in
the second half of the 1980s. With little competition from imports, however, productivity remained low.
When the market was opened up in the 1990s, domestic farmers found it hard to compete with imports,
and production fell.
The most severe droughts seen in 37 years hit the 2009/10 harvest, and production was also affected by
regulated farmgate prices and retail prices (see below for further comment). Land expropriations and the
seizure in October 2010 of Agroisleña, the main private sector distributor of agricultural inputs,
agricultural services and financing, have added to the difficulties facing producers.
Following droughts, heavy rains in December 2010 hit the 2010/11 harvest. In response to the widespread
flooding, in January 2011 President Hugo Chávez unveiled the Gran Misión Agro Venezuela (Great
Venezuelan Agricultural Mission), which formed part of his government's two-year plan for the
agricultural sector, the Plan Bienal para la Producción de Alimentos 2011-2012. The plan set out
ambitious plans for agricultural production, including boosting white and yellow corn by 61% and 110%
respectively over the course of two years.
The goals for the first year of the project were not met, however. Further rains caused damage to crops,
and the sector has continued to be held back by shortages of technical staff and equipment, delays in
financing to farmers and inefficient production techniques. In 2010/11, we estimate that corn production
rose by just 4.7% year-on-year (y-o-y) on the low 2009/10 harvest to 1.71mn tonnes. In 2011/12, we see
production increasing by 4.5% y-o-y to 1.79mn tonnes as the area harvested increases to a forecast
450,000 hectares.

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Out to the end of our forecast period in 2016, the level of production will be highly reliant on the
government's ability to support the agricultural sector. Without continued support, much of the newly
opened farmland will very likely return to fallow. Despite this risk, we expect output to continue to rise
and forecast production to grow by 27.4% on the 2011 level to reach 2.18mn tonnes.
Wheat production in Venezuela is negligible, as the country does not have a suitable climate for growing
wheat. Venezuela is therefore reliant on imports to meet domestic demand, with the majority coming
from the US and Canada. Venezuelan wheat imports totalled an estimated 1.47mn tonnes in 2011. In
March 2011, wheat was added to the list of goods classified by the government as essential or staple,
which will expedite import procedures.
BMI Demand View: Demand for feed corn has risen rapidly since the economic recovery began in 2004.
Through the end of the 1990s and the first couple of years of the 21st century, demand for corn shot up,
driven by the expansion of the poultry sector. As the economy went into meltdown in 2002, however,
demand for corn collapsed as poultry output fell almost 25% in the space of a year. Since then, feed
consumption has climbed back up. Demand for corn for food has also risen strongly in the past few years
as Venezuela's economy has grown. Corn is a staple food in Venezuela, and corn flour is used to make
arepa, a flat unleavened bread. Total corn consumption rose by an estimated 97.1% from 2006 to 2011,
outstripping growth in production and leading to a surge in imports from the US.
In 2010/11, we estimate that corn consumption registered an increase of 1.5% y-o-y to 3.45mn tonnes,
owing to stronger demand from the livestock sector. We forecast that demand will grow at a similar rate
in 2011/12 to reach 3.51mn tonnes. Out to 2016, we believe consumption will continue to increase, as
corn is one of the cheapest foods available and the price is kept down by government price controls.
Growth will, however, be more moderate than during the previous five-year period; out to 2016 we

forecast demand rising by 12.7% on the 2011 level to take consumption to 3.90mn tonnes.
Wheat has gained in popularity since the beginning of the 21st century, as Venezuelan consumers have
had more money to spend on food. Consumption of both bakery goods and pasta has been rising. Price
controls mean pasta has become far more affordable and per capita consumption has now risen to around
14kg. The majority of pasta produced is lower grade and must be sold at a government-set price. Some
high grade pasta is also produced which can be sold at market prices. As a result of rising wheat prices on
the international market, we estimate that consumption declined by 3.2% y-o-y in 2011 to 1.50mn tonnes.
We forecast growth will pick by up 2.0% in 2011/12 to 1.53mn tonnes as prices fall back. Out to 2016,
we see consumption growing by 17.1% on the relatively low 2011 level to reach 1.76mn tonnes.

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Table: Venezuela Wheat Production & Consumption, 2011-2016

Wheat Consumption,
1
'000 tonnes
f

2011

2012

2013

2014

2015

2016

1,500.0

1,530.0

1,582.0

1,639.4

1,697.5

1,756.2

1

Notes: BMI forecasts. Sources: USDA.

Table: Venezuela Corn Production & Consumption, 2011-2016

Corn Production, '000 tonnes

1

Corn Consumption, '000 tonnes
f

1

2011

2012

2013

2014

2015

2016

1,710.0

1,786.3

1,872.3

1,973.6

2,075.9

2,178.3

3,450.0

3,505.2

3,592.5

3,699.4

3,798.8

3,889.8

1

Notes: BMI forecasts. Sources: USDA.

Chávez Government Enters Gruma Partnership
In early December 2011, the Chávez government announced that it would enter into partnership with
Mexican firm Gruma, the world's largest producer of corn flour for tortillas. The Venezuelan government
had previously stated its intention to nationalise the assets of Gruma subsidiary Monaca. The
announcement, which resulted from a meeting between Chávez and his Mexican counterpart Felipe
Calderón, will see the establishment of two joint ventures, one focusing on the production of corn flour
and rice, and the second producing pasta, wheat flour and oatmeal. The move was welcomed by Calderón
as providing a stronger legal platform for encouraging other Mexican firms to invest in Venezuela.
The relationship between the Venezuelan government and Gruma was a turbulent one throughout 2010.
In January of that year, Chávez announced that his government would temporarily take control of
Gruma's unit, following the arrest of one its major shareholders under charges of financial irregularities.
Subsequently, in May 2010, the government announced the expropriation of Monaca following
accusations that Gruma had refused to sell flour during a national shortage the previous month. The move
came as the Chávez government tightened its control on the supply chain in the face of national shortages
and rocketing inflation. However, in July 2010, the government retracted and announced that rather than
seizing Gruma's assets, it was considering forming a joint venture with the Mexican company.
Gran Misión Agro Venezuela Programme Fails To Deliver

In January 2011, Chávez's government launched Gran Misión Agro Venezuela, a new programme
designed to support the country's agricultural production as part of a two-year plan for the sector. The
programme aims to boost domestic production and lessen reliance on imports, thus improving

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Venezuela's food security. Misión Agro Venezuela was designed to provide low-interest loans, machinery
and technical assistance to the country's agricultural producers - from small to large-scale landowners.
VEF9.9bn (US$2.3bn) was committed to the programme.
During 2011, data from the Ministry of Agriculture and Lands indicate that 75,000 producers received
VEF2.7bn (US$627.9mn) in order to boost production. However, data also showed that the Gran Misión
had failed to reach its objectives for its first year of operation with regards to grain production. Yellow
corn production reached only 62.1% of the target of 1.39mn tonnes for 2011, and white corn production
hit only 50.0% of official targets.
Agricultural production in 2011 was hard-hit by heavy rains which caused significant damage to both
crops and infrastructure. However, in addition to extreme weather conditions, Chávez's Gran Misión Agro
Venezuela has also been held back by shortages of technical staff and equipment, delays in financing to
farmers and inefficient production techniques.
Despite the plan's failure to reach its first-year targets, in late January Chávez announced the relaunching
of the Gran Misión Agro Venezuela on his radio and television show 'Aló, Presidente'. Chávez called for
the cooperation of local government to bring disused agricultural land back into production. He also
promised a further VEF114mn (US$26.5mn) in investment to improve the agricultural transport network.
Coca Growing Hits Corn Production
The diversion of fertiliser from legal crops to coca growing is damaging Venezuelan corn production,
according to a December 2010 report by the Miami Herald. Urea, the nitrogen-rich fertiliser used to grow

corn and other agricultural produce, is being sold through the black market to coca growers. As a result,
farmers say, they do not have sufficient fertiliser, particularly during the main planting season beginning
in May. On paper, Venezuela produces at least twice as much fertiliser it needs, with the government
subsidising its use to the tune of US$100mn per year, according to a Miami Herald report. However,
farmers in the main growing regions of Portuguesa and Guárico say that a lack of access to fertiliser is
damaging their harvest. The negative impact of the drugs trade upon grains production is a further
obstacle to Venezuela's corn producers, who have also been hampered by land expropriations, farmgate
prices and extreme weather conditions in recent years.
Government To Centralise Wheat Imports
In March 2011, the Venezuelan Ministry of Food requested private companies to provide information
about their requirements for wheat for the subsequent nine months in order to authorise imports. Requests
totalled 1.40mn tonnes. The move is part of the government's plan to centralise imports of a number of
food products, including raw milk, wheat, sugar and oil. The decision has been criticised by the industrial
sector, with some arguing that the government's priority should be revising food price controls which are
impacting heavily on profitability as input costs continue to rise. Many sectors of Venezuelan

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agroindustry are becoming increasingly reliant on imports to meet domestic demand as production
continues to fall in the face of lack of investment, poor management and high production costs.
Chávez Authorises Further Corn Price Increase
In May 2011, the Venezuelan government approved a 30% increase in the farmgate prices of corn, rice
and soybeans, which will come into effect on August 15. Producers' associations had been petitioning the
government to raise the controlled prices since the beginning of 2011 in order to counter the rise in input
costs that have hit farmers. The price of white corn will rise from VEF1.15 to VEF1.50 per kilo, while

yellow corn will increase from VEF1.02 to VEF1.33 per kilo.
However, the increase has not been sufficient to satisfy producers. In July 2011, Lorenzo Mendoza, the
owner of Empresas Polar, Venezuela's largest food and drinks company, called for the government to
increase corn flour price caps by 40% to keep pace with the rising cost of corn. Previously, in September
2010, the government announced that it would authorise increases in the price of corn, rice and sunflower
seeds at the production stage in order to encourage planting of these crops for the 2010/11 harvest. The
move came following sustained complaints from Venezuelan agricultural producers that the regulated
farmgate prices had not been adjusted in line with rising costs, which had been driven upwards by high
inflation. On September 1, the price for a kilogram of yellow corn increased by 27.5% from VEF0.80 to
VEF1.02, while a kilo of white corn rose by 27.8% from VEF0.90 to VEF1.15.
Government Sparks Empresas Polar Controversy
In September 2011, Empresas Polar, Venezuela's largest food and drinks company, struck back at
government accusations that its Harina Pan pre-cooked corn flour is no longer a Venezuelan brand. José
Villalba, the president of the Autonomous Service for Intellectual Property, a government office which
registers trademarks and invention patents, had previously stated that the Harina Pan brand, which is
emblematic of the production of the traditional arepa dish, is no longer Venezuelan, as the company had
sold the rights to the Canadian firm Deutsche Tran Trustee Inc.
In response, Empresas Polar published a press release countering the claim and stating that, 'Harina Pan
has always been and always will be a Venezuelan product'. The company claimed that the government
was seeking to create confusion among the product's customers in order to detract attention from the
problems facing the producers of white corn, who are struggling to source domestic raw materials, as well
as the difficult situation facing manufacturers of pre-cooked corn flour, who are incurring losses as a
result of the government's price controls. The dispute highlights the widespread discord surrounding the
lack of profitability resulting from the fixed price regime, as well as the politics of nationalism that
continue to exert a strong force over the agro-industrial sector.
Government Seizes Agroisleña
In late September 2010, the government of Hugo Chávez announced the seizure of Spanish-owned
Agroisleña. Agroisleña was the largest private agricultural supply distributor in Venezuela, with a large

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network of rural stores supplying pesticides, fertiliser, tools and machinery, etc. It also controls around a
third of the country's grain storage capacity. Chávez argued that Agroisleña had become an oligopoly in
the market of agriculture inputs, contrary to the provisions of the country's constitution. He stated that the
seizure would further the progress of his agricultural reform programme and would further his
government's ambitions to improve food security and lower production costs.
Following its nationalisation, Agroisleña was renamed Agrotiendas and managed by the Agricultural
Inputs, Supplies and Services Trading Company (Ecisa), which is part of the Ministry of Agriculture and
Lands. Despite Ecisa's goals to strengthen the distribution model for the agricultural sector, Ministry of
Agriculture data indicates that the Agrotiendas have been hit by limited supply, owing to lack of
transportation equipment and poor cold storage facilities. This has represented a further obstacle for
Venezuela's grain producers, who are already struggling to cope with rising prices and farmgate price
controls.
In March 2012, it was reported in the local press that the Supreme Court had granted an application
seeking to annul the expropriation of Agroisleña.
Mixed Results For Chávez's Production Drive
Since Hugo Chávez came to power in 1999, production has increased. After rising gradually in the first
half of last decade, production rose rapidly from 2005 as the oil wealth pouring into the country allowed
more investment in agriculture. From 2004 to 2008, corn production grew 56.5% to 2.00mn tonnes. This
was driven by a large increase in the area planted under the government's National Sowing Plan. Chávez's
stated aim is to not only end Venezuela's reliance on imported corn, but to build up a surplus for export.
Since coming to office, Chávez has redistributed millions of hectares of land to the poor and invested
billions of dollars in agriculture. While the rise in production shows that the policy has enjoyed some
success for grains, there are still problems. Many of the people granted rights to farmland have little
experience in agriculture. There have also been complaints that promised training and inputs such as seed

and equipment has been slow to materialise, leaving land fallow.
Another brake on the expansion of grain production is controlled farmgate prices, which have been in
force since 2003 on around 100 products considered to be basic necessities. The farmgate price of corn
was raised by 30% in April 2008, by 24% in July 2009, by 28% in September 2010 and by 30% in May
2011. Producers are also given direct subsidy payments and access to cheap fertiliser. Despite this,
farmers have long complained that the farmgate price is too low, threatening future production.
Chávez's aim to attain self-sufficiency is a long way from being realised, and Venezuela is still heavily
reliant on grain imports to fuel domestic demand, both for human consumption and for the livestock
industry. Indeed, in 2010 the government was to relax import permit procedures in order to reinforce its
'food security' policy and avoid domestic food shortages. In 2011/12, corn imports are forecast to reach at

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1.60mn tonnes, a similar total to that seen in 1997/98. In addition, Venezuela is expected to import some
1.55mn tonnes of wheat.

Table: Venezuela Wheat Production & Consumption, 2008-2012

Wheat Consumption, '000 tonnes
f

1

2008

2009

2010

2011

2012

1,500.0

1,550.0

1,550.0

1,500.0

1,530.0

2008

2009

2010

2011

2012

1,800.0

1,800.0

1,634.0

1,710.0

1,786.3

2,700.0

3,200.0

3,400.0

3,450.0

3,505.2

1

Notes: BMI forecasts. Sources: USDA.

Table: Venezuela Corn Production & Consumption, 2008-2012

Corn Production, '000 tonnes

1

Corn Consumption, '000 tonnes
f

1

1

Notes: BMI forecasts. Sources: USDA.

Risks To Outlook
As mentioned above, growth in Venezuela's grain production will be reliant on the continued support of
the government. With government revenues severely reduced by the fall in oil prices, funds to the
agricultural sector could dry up. This would see corn production undershoot our forecasts. On the demand
side, consumption will be reliant on the continued subsidisation of the price of staple foods and the ability
of the government to source sufficient grain supplies on the export market. If the government were to
allow grain prices to rise, consumption would be hit. On the other hand, if oil prices rise faster than we
expect, a recovery in government revenues could see increased investment in agriculture and continued
stronger-than-expected growth in both production and consumption of grain.

Venezuela Coffee Outlook
BMI Supply View: The best Venezuelan coffee comes from the Maracaibo region, in the far west of the
country, along the border with Colombia. However, as with other agricultural sectors, the failure of
government-mandated prices to keep a pace with increasing costs in the face of rocketing inflation has
hurt the profitability of coffee production in Venezuela, leading farmers to turn towards more profitable
crops. In addition, lack of producer unity and the government's expropriation of two main coffee
processors have made the sale of coffee more complicated for producers, providing a disincentive to
continue production. Producers have also faced competition from imported coffee, leading many to
abandon the sector in favour of more lucrative areas such as cattle ranching. In recent years, the number
of coffee-growing families has fallen from an estimated 80,000 to less than 50,000.

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There had been hopes that the 2010/11 harvest would see a significant increase in output; however, the
heavy rains at the beginning of 2011 disrupted the flowering process, leading to lower yields.
Furthermore, the area harvested declined by an estimated 12% year-on-year (y-o-y) to 180,000 hectares
owing to the decreased profitability of coffee production. We estimate that production declined by a
further 4.8% y-o-y to 690,000 bags, with domestic demand expected to outstrip supply for the third
successive year. The 2011/12 harvest, however, is likely to benefit from the renewal of fertilisation
programmes as part of the government's agricultural plan. We currently forecast a y-o-y increase of
16.2% to take output to 802,000 bags.
Government support for smallholder coffee growers, who make up the majority of farms, could see
production grow once again over the late years of our forecast period. In 2015/16, we currently see
production reaching 912,000 60kg bags, 32.2% higher than the low level seen in 2010/11. This, however,
will be dependent on government policy, particularly price controls. If the government relax price
controls further, interest in investing in production of Venezuela's high-quality coffee would most likely
increase, leading to greater production than we are currently expecting. Conversely, if price controls
continue to squeeze profits, farmers may switch to other less tightly controlled crops.
BMI Demand View: Coffee consumption has shown strong growth in recent years, rising by an
estimated 38.6% over 2006-2011. The vast majority of coffee consumed is roasted ground coffee, with
soluble instant coffee accounting for only around 1% of total consumption. Coffee is included in the
government's basic food basket and is available in government food stores at controlled prices. This has
allowed more low-income Venezuelans to afford it, leading to a strong increase in demand.
Demand growth has, however, at times led to severe supply shortages and a booming black market.
Wealthier consumers are able to buy their coffee at cafes or street stalls, but poorer consumers are often
unable to afford the high prices. The government has blamed the shortages on unscrupulous suppliers
hoarding their stock rather than selling it at the mandated prices. The Venezuelan Coffee Industry
Association, however, has blamed the shortages on the strict control of how much coffee roasters must

pay for beans and for how much they are allowed to sell the finished product.
Supply shortages and food price inflation saw coffee consumption fall by an estimated 14.1% y-o-y to
880,000 bags in 2010. Supply shortages were, however, eased by a sharp rise in imports to an estimated
465,000 bags in 2011, up from just 85,000 bags as recently as 2009 (see below for further analysis).
Correspondingly, we estimate that domestic consumption shot up by 38.6% to 1.20mn bags in 2011.
Imports are forecast to drop to around 350,000 bags in 2012, with domestic production unlikely to make
up the difference. As a result, we see consumption dipping by 6.6% y-o-y to 1.14mn bags in 2012. Out to
2016, we see demand growing by 8.8% on the 2011 level to 1.33mn bags.

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