New Market Research Report: Greece Agribusiness Report Q3 2011

June 19, 2011 - PRLog -- BMI View: With Greece set to endure a third straight year of recession in 2011, as fiscal consolidation takes its toll, the impact on the agricultural industry is set to remain pronounced. Weak investment and credit availability will weigh on the viability of smaller-scale producers, while double-digit unemployment and rising inflationary pressures will severely weigh on consumer demand, reducing the motivation to produce. The bleak economic picture is factored into our agribusiness forecasts. However, there remains a risk that, on the back of the sovereign debt default that we expect to occur in some form, a poorly executed restructuring could see both supply and demand woes linger for the Greek agricultural industry well beyond 2012 (where we currently forecast a return to economic growth).

Key Industry Forecasts:

* To 2014/15, Greek poultry and pork production are forecast to increase by 4.1% and 1.7% respectively; weak growth reflects the investment and growth challenges facing smaller producers in particular.
 *  To 2014/15, Greek corn and barley production are forecast to contract by 10.2% and 13.5% respectively. The declines will reflect the relatively weak performance of the livestock sector, which is reliant upon grain for feed.
 *  To 2015, wheat will outperform the other grains (both in supply and demand growth terms) owing to its use as a foodstuff, rather than as animal feed. Although similarly hit by weak consumer demand, daily basics that utilise wheat will hold up slightly better than meat products.
 *  Over the forecast period to 2015, supply and demand growth for both milk and butter will be quite flat. Cheese will be the outperformer among dairy, production increasing by 6.2% to 2014/15 thanks to stronger export demand.

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Industry Developments

Having existed on life support for the last year, Greece shows few signs of emerging from its economic nightmare. Back when the bailout package was put together by the IMF and eurozone states in May 2010, opinion was mixed on whether or not a sovereign default and restructuring would transpire. We took the side of the bears and have seen no reason to change our outlook since. Fast forward to today and the consensus has shifted markedly in favour of this scenario. The economy contracted by a hefty 4.8% during the first quarter of 2011 compared to the same period a year earlier. Though the rate of decline has slowed somewhat from the 7.4% plunge of the previous quarter, we expect the depression to continue throughout the year. Indeed, by the time the economy tentatively returns to positive growth by 2012, Greece is set to have endured three years of depression. The impact on domestic demand, and in turn production, has been significant.

Given high unemployment and weak household spending, we expect the outperformance of cheaper agricultural items over their relatively expensive alternatives. This explains our more favourable (albeit still very poor) outlook for corn production over barley, and our stronger forecasts for poultry than for beef. Long term, we would expect the latter trend to reverse, as consumers gradually reintroduce more red meat and more expensive products into their diets, but this is beyond our current forecast period.

Our favourable (relatively speaking at least) cheese production forecast is based upon the export potential of Greece's speciality feta cheese. Currently demand for feta cheese is largely confined to developed states and increased demand from these markets is already factored into our forecasts. However, in line with increasing affluence and the growth of western influences on emerging market diets, we would anticipate import demand for Greek feta from emerging markets to increase substantially over the long term. We currently see this trend as occurring beyond the existing forecast period, and yet a recent agricultural cooperation agreement, signed between Greece and China - which is primarily focused on food safety, but which also has a promotional element - could be a sign of this trend accelerating and potentially having to be factored into our medium-term output forecasts.About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets.  BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports.  Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports.  View more research from Business Monitor International at http://www.fastmr.com/catalog/publishers.aspx?pubid=1010

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.