Algeria: Taking the reins
Investment in agriculture will be a priority for Algeria in 2012 as the state looks to reduce its import dependency, which stretched upwards of €6.8bn last year according to the Algeria Press Service. The continuing shift towards self-sufficiency will be helped in large part by increased production levels of several of the country’s key crops, including marginal improvement for cereals and noticeable rises for potatoes.
While it has not slowed import growth, grain planting is slightly ahead of last season, due partly to favourable weather conditions. The national press reported last month that 2.9m ha have been sown so far in the 2011-12 season. By mid-December, 490,000 ha of land had been fertilised, up from 456,000 ha at the same point last year.
The state reported that the amount of quality seeds – as certified by the Ministry of Agriculture – it provided to farmers increased by 16% year-on-year (y-o-y) from 130,000 tonnes to 150,000 tonnes in 2011, which the government hopes will allow farmers to reap greater rewards while improving crop robustness.
Of all the aspects of improving the country’s food self-sufficiency, boosting local cereal production is particularly important for Algeria, for if it is unable to do so, the country’s exposure to global commodity volatility will remain high. The national cereals consumption is high, estimated at 7m tonnes per year. A bumper harvest in 2009 produced a record 6.1m tonnes, but dropped to 4.5m in 2010 and 4.2m in 2011.
As a result, the country imported record levels of wheat last year, reaching 7.42m tonnes, a y-o-y increase of 41.5%, in an effort to increase stocks following protests over the rising price of basic goods – an issue that contributed in part to greater political unrest in nearby Egypt. Higher import levels are continuing into 2012 as Algeria imported 450,000 tonnes of European wheat in the second week of January.
But where wheat is struggling, other segments are growing: the country’s potato cultivation has seen particularly good results in recent years. National output rose for the fourth consecutive year in 2011 to reach 3.8m tonnes, a 19% increase y-o-y. Output has expanded rapidly from 2.2m tonnes in 2008, and sector officials estimate that Algeria will be able to produce 5m tonnes by 2014. The head of the Potato Trade Association (Conseil Interprofessionnel de la Pomme de Terre), M Séraoui, stated in the local press that the industry is capable of 20-30% annual growth in the next few years.
Citrus is another key crop for Algeria, although national output is expected to decline slightly to 1.05m tonnes in the 2011-12 season. Of the 32 wilayas (provinces) that produce citrus fruits, seven contribute 80% of the national total. Of these only the Alger and Relizane wilayas recorded a 15% increase in production y-o-y in 2011. Blida, the highest-producing wilaya, which contributes 33% of the national output, saw its production drop from 100,000 tonnes in late 2010 to only 60,200 tonnes in 2011.
However, while current levels have dropped modestly, Algeria’s citrus production has seen steady growth in preceding years. Production rose from 780,000 tonnes in 2008-09 to 850,000 tonnes in 2009-10. The 2010-11 season saw a record production of 1.16m tonnes, a 41% increase y-o-y. Growth in recent years has largely been due to favourable climate conditions, aided by government incentives encouraging producers to replace older, lower-producing trees.
The government is also beginning to open agriculture to foreign investment in an effort to boost sector activity. In September 2011, Algeria offered its first formal invitation for expressions of interest from companies looking to engage in pilot agricultural operations. In 2010, parliament approved a law allowing private firms to lease public land, also a first.
The sector also stands to benefit from a state initiative to expand the country’s irrigation systems. Unpredictable rainfall, combined with poor water management, has been a persistent obstacle to the development of agriculture. The government plans to increase the country’s irrigated surface area from 400,000 to 1m ha by 2015. The National Office of Irrigation and Drainage launched projects in mid-2011 to irrigate 8815 ha of the Oued Sahel Valley and El Asnam plateau, as well as the M’Léta plain. The project is expected to create 8300 jobs and increase agricultural production in the area by a factor of four.
Cultivation has not been the only area of focus for the government, and Algeria has moved to increase local production of milk, with the long-term goal of replacing powdered milk imports with locally produced raw milk. Powdered milk imports registered at $800m in 2010 and continued through 2011. Dairy producers have benefitted from tax exemptions and government-led training programmes in an effort to boost production from approximately 2bn litres per year closer to national consumption at 3.3bn litres.
Dairy farmers produced 572m litres of raw milk in 2011, a 46.7% increase y-o-y. The Ministry of Agriculture and Rural Development reported to the local press that sector sales reached AD146bn (€1.5bn) in 2011. Output has risen steadily from 290m litres in 2009, and the ministry hopes to see raw milk production reach 700m litres in 2012.
The National Dairy Office (Office National Interprofessionel du Lait, ONIL), which oversees sector development, has entered into agreements with 114 dairies, of which the majority are private. ONIL provides powdered milk for pasteurised milk production in exchange for dairies’ commitment to integrate raw milk into their operations.
Should the auspicious weather continue, the government should be able to consolidate the gains of recent years in cultivation, which will help improve overall self-sufficiency. However, the country’s import dependency will continue as long as cereal production fails to meet demand and irrigation remains limited.