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Algeria: Algeria Agribusiness Report Q2 2012




Algeria Agribusiness Report Q2 2012

With annual food imports amounting to an estimated US$3.3bn, or 15% of the country's in general import bill, Algeria is of the major importers of agricultural goods in Africa. Besides traditional sources such as European suppliers, Algeria is increasingly expanding trading links with nations such as Brazil and India for products like diary and beef. While increased private investment in the sector, especially in the dairy segment, will no doubt boost productivity in the long run, we believe Algeria will continue to expand its world trading routes to hedge against geography-specific risks such as poor weather.

Key Forecasts

Barley production increase to 2016: 24.9% to reach 1.88mn tonnes. Although we predict positive production increase for Algeria's barley sector over the next few years, our estimate errs on the side of caution. Our caution is based on the fact large changes to the size of the harvested area from year to the next are a fairly regular occurrence in Algeria, reflecting the limited availability of water and irrigation.

Wheat production increase to 2015/16: 21.3% to 3.54mn tonnes. Strong request for wheat over our estimate period will contribute to a persistent supply shortfall. As a result, we expect wheat imports to continue on their strong increase trajectory for the duration of our estimate.

Whole Milk Powder consumption increase to 2016: 3.1% to just over 179,700 tonnes.

Algeria is already of the major markets in the region for whole milk powder and we estimate consumption of retailed, packed, branded powder to remain relatively stable through to2016. 2012 real GDP increase: 2.2% (up from 1.3% in 2011; predicted to average 2.7% from now until 2016).Consumer price inflation: 3.0% in 2012 ave. (down from 4.0% in 2011)

Industry Developments

In a bid to quell growing domestic protests and rioting over high food prices, the Algerian government allowed wheat imports to reach record levels in 2011. Indeed, soft and durum wheat imports were the highest since Algeria won independence from France in 1962, according to figures from the UN food agency. Soft and durum wheat imports into Algeria increased 41.5% year-on-time(y-o-y) to 7.42mn tonnes in 2011, reports Reuters, citing customs data. Soft wheat import volumes increased 39.23% to 5.55mn tonnes, compared with 3.98mn tonnes in 2010, while durum wheat procurement grew 48% to 1.85mn tonnes, up from 1.24mn tonnes in 2010. The increase came as Algeria aims to expand its stocks.France was the major supplier of soft and durum wheat to Algeria, with 4.5mn tonnes and 1.1mn tonnes million tonnes respectively. Algeria's domestic cereal harvest fell again in 2011 to 4.2 mn tonnes, with agriculture ministry officials blaming poor weather conditions.

As a testament to the growing ties between Brazil and Algeria, the Cooperativa Central Gaúcha Ltda

(CCGL), a group of 39 cooperatives based in Cruz Alta, in the national of Rio Grande do Sul, has reported it exported 1,000 tonnes of powdered milk to the Algerian market in 2011.

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