Algeria Agribusiness Report Q3 2009

Algeria, the second largest of Africa's economies, has increasingly struggled with food security in recent years. A dry and arid climate, limited water resources and an inability to procure adequate fertiliser volumes are just some of the factors affecting production. Meanwhile, an increasingly affluent society with burgeoning consumption demand has compounded Algeria's position as a net food importer. The latest Algeria Agribusiness Report considers the potential for Algerian agriculture as diminishing petrodollars accelerate state plans for economic diversification.

Improving the productivity of the country's agricultural sector remains a priority concern for the Algerian government as the subject of food self-sufficiency becomes a regional obsession for countries in the Middle East and North Africa (MENA) region with limited farming potential. Earlier in 2009, the Arab Centre for the Studies of Arid Zones and Dry Lands (ACSAD) held its first conference for developing agricultural research and co-operation in the region, which, alongside the privatisation of various stateowned production units, is hoped to encourage a greater degree of private sector market participation.

The government has sought to initiate agricultural reforms in order to help producers gain the best possible yields from the sector. Fundamentals concerning food safety, productivity and relevant seed/crop types are among some of the areas that have been targeted. The dairy industry in particular is seen as the sub-sector holding the most potential in terms of domestic and export demand and the state has been keen to improve the scale and quality of the industry, particularly as the EU - where Algeria sources nearly two thirds of its dairy imports - is likely to have less white goods for exports as it exercises its attempts to streamline the industry by phasing out production quotas.

To this end, Algeria has been less than shy in seeking production tips from some of the world's agricultural big hitters. For example, Brazil, from which Algeria is one of the biggest importers of milk powder, is being enlisted to help the MENA nation improve its dairy outlook. An Algerian delegation recently visited Latin America to open talks with dairy officials regarding the prospect of technical assistance with dairy production in return for concessions on Algerian fossil fuels. Similarly so with grains production, where Brazil has successfully adopted the use of seeds with attributes potentially suitable for cultivation in the arid deserts of Algeria.

For the last couple of decades the state has provided subsidies and aid to farmers in order to encourage production. Furthermore, food subsidies have been given to those in society less able to afford staple consumption goods, although this dynamic is coming under pressure as the economic rationale of continued subsidies is being questioned.