A number of driving forces are behind Algeria’s efforts to boost domestic agricultural output and cut the food import bill. First, the country is looking to diversify away from its dependence on hydrocarbons revenue, given fluctuating international oil prices; second, the population is forecast to rise by 25% to nearly 50m people by 2030, thus substantially increasing food demands; and third, Algeria faces serious side effects from climate change – including heat waves – which means maintaining food security is a priority.
Food production improved between 2007 and 2018 thanks to efforts to clear some of the obstacles that have traditionally hindered the sector’s development, such as financing, legislation, insufficient infrastructure and land ownership. The authorities are currently enforcing strict new rules that allow for the re-appropriation of unused agricultural land and are investing heavily in irrigation to tackle water issues (see analysis).
The Agricultural and Rural Renewal Policy has guided the growth of the agriculture sector since 2008. The strategy aims to deliver permanent support for national food security through “the intensification of production in strategic agri-food chains, and the development of rural areas”. Meanwhile, the National Investment Development Agency, designed to facilitate foreign direct investment in various sectors, has the following policy objectives for agriculture: develop agricultural land and integrated farming; encourage public-private partnerships (PPPs) in pilot farms; develop agricultural mechanisation, irrigation systems and fertilisation techniques; create modern nurseries; grow additional greenhouse crops and forage crops; increase production of sheep, cattle, goats, white meat, fruit, vegetables and milk; promote local dates, oils and grapes; improve storage and cold storage capacity; and invest in the agri-food industry.
The Felaha 2019 initiative, published in June 2016, has revitalised existing policy by prioritising research and knowledge transfer, establishing new businesses, building partnerships with global agri-business leaders, expanding irrigated area, boosting public spending and working towards self-sufficiency in key segments like durum wheat by 2020. The initiative targets annual sector growth of 5%, AD4.3trn (€35.2bn) of output value and 1.5m new agricultural jobs by the end of 2019.
The new model is based on private investment as the principal engine for growth, as well as a more integrated structuring of the sector that allows for an improved value chain. The government has also banned a number of food imports to stimulate domestic production, and is offering low-interest loans to farmers and free vaccinations for livestock. As of February 2018, 22,253 micro-enterprises had been established as part of the farm support scheme, although policy measures also aim to develop large-scale, intensive farming.
Agriculture contributes over 10% to GDP and employs more than 25% of the working population. The value of the sector rose from AD359bn (€2.6bn) in 2000 to AD3.1trn (€22.5bn) in 2017, according to the Ministry of Agriculture, Rural Development and Fisheries (Ministère de l’Agriculture, du Développement Rural et de la Pêche, MADRP), an increase of 760%. The contribution of agriculture to GDP rose from 8% to 12.3% over those same years.
Algeria’s GDP as a whole grew by 1.6% in 2017, while agriculture grew by 4.2%. The sector continued to post impressive growth in 2018, at 8.9% in the second quarter, up from 0.7% in the same quarter of 2017. Some 1.2m jobs and 22,000 small and medium-sized enterprises have been created in the sector since 2000.
The state invested AD3trn (€21.8bn) in the sector between 2000 and 2017, according to Abdelkader Bouazghi, the minister of agriculture, rural development and fisheries. More than 12,000 proximity projects have been financed – which are rural community initiatives to develop techniques and supply chains – 1.2m rural housing units created and 500,000 farms revitalised. In addition, the draft 2019 Finance Law allocated AD265.1bn (€1.9bn) to the sector for the year, an increase of 25.2% on 2018.
The authorities’ plans include creating livestock markets in various wilayas (provinces), with veterinarians in place to oversee meat harvesting, while PPPs are actively being sought in the domain of large-scale farming. For instance, public agricultural group Gvapro managed 74 new pilot farms as of late 2018, 35 of which were structured as PPPs with foreign firms, according to information provided by Gvapro.
Algeria has also begun to discuss the idea of offering foreign investors concessions for farmland. Under the plan, actors from abroad would need to work in partnership with the state or a private Algerian firm under the 51:49 investment law, which caps the foreign investor’s share at 49%. By November 2018 there was no specific information published about which farmland would be offered or how concessions would be granted. These details will be outlined in separate legislation, according to Reuters. The move comes within the context of a country known for inefficient bureaucracy and other hurdles to investment, such as the aforementioned 51:49 rule. Many local operators have expressed concern that the stipulation deters serious foreign investors, thus inhibiting technology and knowledge transfer to the domestic market.
In 2010 Algeria passed a law permitting local private firms to lease government-owned farmland for 40 years, and those companies could then enter into partnerships with foreign operators. Foreign investors were not allowed to directly hold a concession, however. The initiative has not yet provided a substantial boost to development, thus this new legislation is hoped to jump-start farming operations on the 3m ha of suitable land that lays vacant around the country.
In addition to efforts to bring in capable foreign players, Algerian farmers themselves benefit from various forms of state aid, such as the provision of quality seeds and other inputs, as well as support in times of natural catastrophe. During the 2017/18 harvest campaign, for example, some 13,500 farmers received credit totalling AD6bn (€43.6m), Bouazghi told local media in September 2018. Support is also coming in the form of government investment in agricultural programmes via the university system and other training avenues. Not only will this educate more citizens on the latest farming techniques and technologies, but it will also serve to attract a greater amount of young people to a sector whose participants are ageing.
The MADRP has issued 180,000 concessions for 219,406 registered farms between 2000 and early 2018, and is prioritising supporting producers based in the Hauts Plateaux and southern regions of the country. However, of the more than 8m ha that comprise Algeria’s arable land, 3m ha are going unused, and only 30,377 of the 830,600 recipients of state aid have added value to their lands, according to Bouazghi.
The authorities are currently reclaiming unused land to address this issue. Committees at the wilaya level have been set up on an ad-hoc basis to supervise the reclamation process. Approximately 250,000 ha of 800,000 ha were recuperated by February 2018, with the plots to be redistributed to other, more serious investors who will develop the land in a substantial way.
In addition to instances of underutilisation, Algeria’s farmland is especially vulnerable to heat waves. In the summer of 2018, for example, higher-than-normal temperatures caused heavy losses. Peach, melon, grape and lemon were among the crops worst affected, with poultry farms also taking a hit. The southern wilayas of Illizi and Ouargla registered record high temperatures of 51°C in July.
The situation reopened debates about Algeria’s lack of insurance coverage for the agriculture sector. Farmers typically rely on government intervention to compensate for losses when natural disasters strike, which makes the state the sector’s de facto insurer. Of the country’s 900,000 farmers, only 75,000 have farm insurance, according to the General Federation of Algerian Farmers. This is mostly because insurance rates are expensive, with multi-hazard policies costing between AD6000 (€43.56) and AD8000 (€58.08) per ha per year, an unaffordable amount for many farmers.
Climate Change Adaptation
Heat waves are more likely to occur in regions particularly susceptible to climate change, such as North Africa, the Horn of Africa and the Persian Gulf, according to the International Institute for Applied Systems Analysis (IIASS). Harsher dry seasons and a loss of precipitation invariably disrupt working conditions and agricultural practices. Indeed, during the summer of 2018 farmers in the southern wilayas changed their working hours from 6:00am to 1:00pm as a way of adjusting to the heat wave; productivity was negatively affected during those months.
As part of wider efforts to mitigate the effects of climate change, Algeria has specific plans to expand its irrigation network (see analysis). This will be extremely beneficial in the future, as scientists at the IIASS predict that global temperatures will increase by an average of 2°C by the end of the 21st century.
With the effects of climate change, fluctuating hydrocarbon revenues and a devaluing currency, being dependent on food imports seriously undermines Algeria’s food security. The country is currently one of the world’s largest grain purchasers, with 8.4m tonnes of cereals bought in 2017 at a cost of $1.7bn, according to Reuters. To bridge this gap, sector officials aim to boost production of wheat from 3.5m tonnes in 2017 to 5.3m tonnes by 2022, along with doubling the output of potatoes, milk and meat.
A break came for the country in the form of the 2018 cereals harvest: the largest the republic has ever seen. Some 6.05m tonnes were collected as opposed to 3.4m tonnes in 2017, an increase of 78%. In value terms, these figures translate to AD220.3bn (€1.6bn) and AD135.3bn (€982.3m), respectively, a 63% increase in 2018. The harvest comprised 3.1m tonnes of durum wheat, 1.9m tonnes of barley, 700,000 tonnes of soft wheat and 350,000 tonnes of oats. “This historic harvest was the end result of years of government policy supporting the segment. Seed quality has seen notable improvements,” Reda Hachelaf, director of private food group Couscous Mama, told OBG. “Algerian durum wheat is also very competitive, costing AD45,000 (€327) per tonne, a price fixed many years ago. I think the goal of reaching self-sufficiency in durum wheat is highly realistic and likely to be reached within a few years.” Favourable rains also helped the record harvest, while the MADRP noted the effective mobilisation of material and human resources, rigorous monitoring carried out by sector managers at the central and local levels, and the involvement of wilaya leaders.
Average yield improved from 1.5 tonnes per ha in 2017 to 1.9 tonnes in 2018 across an estimated 3.5m ha engaged in cereals farming. In certain pilot farms, productivity reached 7 tonnes per ha. Tiaret was the most productive wilaya, with a harvest of 500,000 tonnes.
Indeed, cereal variates are among Algeria’s main crops, as are vegetables – in the form of both small-scale market gardening and industrial farms – and dates. Dates are among the country’s top-10 exports by value, and are largely bought by France, Russia, Senegal and Belgium.
According to figures released by the MADRP in April 2018, date production rose from 1.03m tonnes in 2016 to 1.06m tonnes in 2017. Market gardening output fell from 13.1m tonnes to 13m tonnes, and potatoes dropped from 4.78m tonnes to 4.61m tonnes. Production from the industrial tomato segment dipped slightly from 1.24m tonnes in 2016 to 1.21m tonnes in 2017. Livestock and related products, for their part, saw marginal changes in 2017. Red meat production rose from 537,000 tonnes to 544,000 tonnes, and white meat 520,000 tonnes to 530,000 tonnes. Milk production was 3.6bn litres in 2016 and 3.5bn litres in 2017. Published with cereal harvest figures in September 2018, dried vegetables – specifically chickpeas and lentils – saw production rise dramatically from 77,000 tonnes in 2017 to 130,000 tonnes in 2018. Output of this segment barely reached 40,000 tonnes in 2008.
The government wants domestic production to account for 90% of cereals consumption in light of its hefty import bill, thus large private fields have been established for durum wheat in the southern part of the country. These plots have back-up irrigation and are supported technically and materially by the Algerian Interprofessional Cereal Office (Office Algérien Interprofessionnel des Céréales, OAIC) in conjunction with Mustapha Stambouli University. According to Mohamed Belabdi, CEO of the OAIC, self-sufficiency in durum wheat should be reached in 2021 or 2022. The government is also looking to support cultivation of a special variant of durum wheat that is adapted to the Algerian climate, the market value of which is twice that of ordinary durum wheat.
In the first seven months of 2018 Algeria accumulated a food import bill worth $5.24bn, up slightly from the $5.19bn recorded in the same period of 2017, despite government-imposed restrictions on certain products beginning in January 2018. Large savings were seen in the sugar and confectionery products category, with a 25% year-on-year (y-o-y) reduction, and in meat, down 18%. However, imports of cereals, the target of intensive growing campaigns, rose by 11%.
According to the report “Statistics of External Trade” for the year 2017 by the National Centre for Information and Statistics, food imports totalled $8.4bn in 2017 and $8.2bn in 2016. Both years saw this category account for roughly 18% of all imports. Cereals, semolina and flour made up the largest share of food purchases in 2017, costing $2.8bn, or one-third of the total, followed by milk and milk products at $1.4bn (16.7%), and sugars and sweets at $1bn (12.3%). Coffee and tea, dried vegetables and meat round out the categories that together sum 75% of all food imports.
While food exports as a whole is not a line item listed in the report, the top-10 export categories include sugarcane and sugar beet, and dates. Sugarcane and sugar beet exports fell from $231.2m in 2016 to $225.5m in 2017, while date exports grew from $37.5m to $51.4m.
An emphasis on large-scale, intensive farming that utilises the latest machinery is a key axis in plans to boost domestic output and – in the long term – increase food exports. More than 10,000 combine harvesters were used in the 2018 cereals harvest, 1200 of which belonged to the Cereals and Dried Vegetable Co-operative, while transport cooperatives provided 800 trucks to ensure smooth movement from farm to storage or milling facilities. Permanent storage capacity was 3.1m tonnes, with additional sites available on an as-needed basis. Some 550 collection points located in and around production areas were equipped with handling and weighing machinery. Teams worked seven days per week to facilitate the collection of grain, with payment to producers to be sent within 72 hours of drop off. In addition, 109 seed milling stations were operational, 22 of which were newly acquired, allowing for a total daily machining capacity of 3400 tonnes.
To help speed up the mechanisation process nationwide, the government has called on bank executives to provide incentives and access to loans that will encourage farmers and investors to acquire modern machinery. The OAIC, for its part, has plans to purchase 1500 new combine harvesters, build 39 silo docks, improve the quality of seeds and inputs, and establish 22 specialised stations around the country to provide farmers with technical and financial assistance.
Increased domestic output should naturally lead to an expansion of agri-business activity. The segment is already taking off, however, growing by 6.1% y-o-y in the first quarter of 2018. The government hopes to foster greater collaboration between farmers and the processing industry to reduce imports and strengthen the value chain, therefore officials have reserved acreage in the south for mega-projects geared towards cereals, potatoes and milk production. Some local experts have expressed concern over whether these projects are realistic, though, given their significant costs and the strained water supply (see analysis).
In terms of value-added production, the domestic cereal industry is largely centred on flour and semolina. The dairy industry, for its part, focuses on pasteurised milk in bags – producing 1.8bn tonnes per year – milk processed by the ultra-high temperature technique packaged in cartons or bottles (300m tonnes annually), instant powdered milk (30,000 tonnes per year) and cheese (85,000 tonnes per year), according to a June 2017 trade report. Algeria is looking to invest more in food oils production, with current output standing at 69,000 tonnes of olive oil per year and 700,000 tonnes of seed oils. Investment opportunities primarily lie in supplying specialised equipment, such as refrigeration units and packaging machinery, and providing transport solutions. Knowledge transfer is also an area of need.
While the record cereals harvest was a highlight of 2018, Algeria is still quite a way off significantly reducing its import bill for food products. However, great gains wait to be made with the wider application of irrigation and mechanisation, in addition to ensuring underutilised land is reallocated to players who will develop it to its full potential. Climate change is another piece of the food security puzzle, with lessons likely to shape future sector strategy and farmer education.