As the Algerian state looks to tighten spending in the face of declining revenues resulting from the fall in oil prices, plans to curb the country’s import bill have become more pressing than ever. Imports have met with increased scrutiny, and in an attempt to promote local production, a rising number of goods are now subject to quota restrictions and tax hikes.
Rise Of The Mega-Farm
To bring Algeria closer to achieving this target, Ismail Chikhoune, president and CEO of the US-Algeria Business Council, told OBG it is time for the sector to move away from its traditional small-scale farming methods, and shift towards larger-scale projects to speed up development in the face of population growth and rising demand. Several initiatives to that end have been launched in recent years. These include Algeria’s Lacheb Group, which in 2015 signed an agreement with the American International Agriculture Group (AIAG) to establish a $100m joint venture (JV), El Firma, in the wilaya (province) of El Bayadh, to develop a range of projects in irrigation, livestock farming and the dairy industry.
In early 2017 the AIAG signed another $300m deal with Algerian Tifra Lait, establishing a JV in a variety of segments including cereals, potatoes, dairy and animal feed. Spread over 25,000 ha of land in the southern wilaya of Adrar, these projects are expected to yield 22,000 tonnes in cereal output, 105,000 tonnes of animal feed, 190m litres of milk and 20,000 tonnes of red meat annually. Adrar is also expecting another major project by the end of 2017: the AD21bn (€174.2m) Ennahda project is being developed on 30,000 ha of land, to be divided between a variety of crops such as durum, corn, soya and dates.
Projects in the south of the country should help breathe new life into a region where attempts to develop agricultural activities since the 1980s have met with only moderate success. Home to abundant groundwater and large swaths of uninhabited land, the region is an attractive one for those looking to establish mega-farms. However, according to local media reports, sector operators have voiced their concern about the potential environmental impact such activities could have on water resources and have called for cautious development. Transportation and distribution costs, as well as the availability of workforce, are other challenges that need to be addressed.
Emphasis On Technology & Know-How
The strategy to engage foreign stakeholders has so far been a welcome move. “Large-scale farming is a major development for a country like Algeria, and JVs constitute a key opportunity to bring in foreign know-how,” Chikhoune told OBG. However, the scale of these projects means Algeria will need to continue to rely – at least in the short to medium term – on imports of certain goods and services dedicated to this type of development, including machinery and equipment.
Despite the challenges, investors have forged ahead with their projects, and other JVs involving foreign investors are also expected to come on-line soon. “Algeria should invest more in large-scale projects in partnership with foreign investors both for the credibility it provides in the eyes of financial institutions, but also to help achieve food self-sufficiency and potentially develop our export capacities,” Chikhoune added. With adequate access to financing and land, by Chikhoune‘s estimates, the country could achieve food self-sufficiency as soon as 2027.
According to Umberto Torresan, senior business development manager at DuPont Sustainable Solutions, precision agriculture projects that increase farm efficiency and yield would be a game changer in Algeria. “Through wireless remote censors that provide data about soil composition, irrigation, temperature and historical weather patterns, farmers could make the most out of their land and even triple their harvests,” Torresan told OBG. “The country would not only ensure self-sufficiency, but become a pioneer in the region, exporting a larger part of its agricultural production.”
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