Leading countries of North Africa, Algeria and Morocco have milling industries in which many mills are in operation. In Algeria which is estimated that nearly 10,2 million tons of wheat will be consumed in 2015/16 season, there are around 430 mills, according to the estimates. In Morocco which is one of the top 15 wheat consumer country, there are nearly 200 member mills in Morocco National Federation of Milling.
Two leading countries of North Africa: Algeria and Morocco… Algeria which is the fourth largest economy of African Continent is located on North Africa, Mediterranean cost and between Morocco and Tunisia. 80 percent of the country’s land is in Sahara which has mostly semi-desert features. Grain, wine, olive and fruit production is supported in the northern, fertile region of the country which covers 10 percent of the country’s land. With 37-million-population, Algeria is one of the leading wheat and corn importers in the world.
Having coasts to Atlantic Ocean and Mediterranean, Morocco is located between Algeria and Western Sahara. Although arid and desert areas are sparsely populated, plains around Mediterranean regions and northern parts near Atlantic Ocean are densely populated. Having 33-million-population, Morocco is a significant wheat producer and importers as its consumption is far above the production rate.
GENERAL ECONOMIC OUTLOOK
Having the most important lands of Africa, and significant natural gas and oil reserves, Algeria is the fourth largest economy in the world following after South Africa, Nigeria and Egypt. Despite the significant natural gas and oil sources, the country is counted as middle income country. While economy of the country is dependent on energy industry, hydrocarbon products provide 97 percent of the country’s export revenue; 45 percent of GNP and 2/3 of income. This dependency causes the country to be highly influenced by fluctuating oil prices.
Starting privatization in with its commercial policies in 1990s, Algeria can adopt significant inward-oriented or protective policies. With these policies, against the import lobbies which are influential in determining the commercial policies in the country, ideas to form a national industry become prominent. One of the most interesting information about Algeria is that purchasing power of the population remains low despite high subvention in basic consumption goods (wheat, sugar, oil etc.), energy in particular.
Economic growth of Algeria highly depends on oil prices and rainfall. According to IMF data, GDP will grow 3,7 percent on average until 2018 and exceed 238 dollar in 2018 in terms of ruling prices due to the fact that hydrocarbon industry in the country has been growing steadily.
Having the largest phosphate deposits in the world, Morocco keeps its economy lively through agriculture, production, fishery and tourism industry as well as foreign currencies brought by Moroccans working in foreign countries. By 1980s, Morocco has been in successful economic reform process incorporation with IMF and World Bank. By this means, foreign trade regime became liberal; a new investment law, privatization program and bank system have been improved. While dependency of Moroccan economy on agriculture and phosphate industries has been decreasing in the last 10 years, the share of production and service industry in GDP has increased. Two third of GDP which change depending on agricultural performance by years are based on service industry. Production industry forms 13 percent of GDP; agricultural forms 12 percent of GDP. Mining industry also forms 4 percent of GDP. It is estimated that GDP grows annually 4,7 percent on average between 2011 and 2015.
Counted as middle income country, Morocco has not been influenced by global economic crisis much as its burden of debt is not much also. It is expected that its economy will gain strength in the medium term.
THE PLACE AND IMPORTANCE OF AGRICULTURE
Algeria is a huge market as for domestic demand of its 37-million population and its closeness to many Mediterranean and African countries. Thanks to bio-diversity resulted from its climate (Mediterranean climate in the North and desert climate in the South); it has a wide range of products. Using less chemical inputs created a quality product range in terms of quantity and quality.
Grain production amount in the country is 4,5 million tons and import value is 3 billion 275 million dollars. 8 million ton production is forecasted by 2015. To meet this consumption amount, at least 260 thousand hectare of land should be irrigated and in order to meet all of them, 510 thousand hectare of land should be included.
Share of agriculture in GDP in Algeria is around 9 percent. Despite this, it is estimated that 14 percent of total population is employed in agriculture. By 2000s, share of agriculture in the country’s economy has been decreasing gradually. Domestic agricultural production which cannot meet increasing domestic demand makes the country foreign-dependent in half for its food requirement. With increasing number of large malls set up recently, it is expected that mass production will increase and agricultural production will improve in terms of amount, price, quality and diversity. However, there has been a significant lack of investment, technology and experiment in this area.
Agricultural and rural development targets and policies set as solutions to these problems aim at using new technologies more in this industry by increasing quality labor force. Moreover, the country’s being self-sufficient is one of the primary targets.
Coastal regions of Morocco have climate and land type suitable for agriculture. Fishery is a significant income item. Efficiency of agricultural production is highly related with climate conditions. Agriculture industry include 40 percent of labor force (60 percent of woman labor force) and 11-18 percent of the country’s GDP in the recent years. Cultivated area of Morocco is 8,7 million hectares. There are modern and large-scale farms making export-oriented production. These modern farms meet 15 percent of wine and citrus fruits production. Primary agricultural products are grains, legumes, olive and citrus fruits. As the industry is dependent on rainfall, efficiency of agriculture can change from season to season. Especially low mechanization rate, fertilizer usage and frequent droughts affect agriculture industry negatively. Agriculture industry is also the one for which the country took protection measurements most.
Moroccan agricultural products are in rivalry with agricultural products of Greece, Spain and Turkey which provide more quality products to EU market.
GRAIN PRODUCTION AND CONSUMPTION IN ALGERIA
According to the data of United States Department of Agriculture (USDA), leading products in Algerian grain production are wheat and barley. Producing 2-3 million tons of wheat in 2003/04 and 2007/08 seasons, Algeria had a large decrease in wheat production in 2008/09. Decreasing to 1,6 million ton in this season, wheat production reached to 3,5 million tons in 2009/10 season. Following this production amount which is the highest of the last 10 years, production remained between 2,9 and 3,4 million tons between 2010/11 and 2013/14 season. Algeria had a significant decrease in 2014/15 season and wheat production remained as 1,9 million tons. Wheat consumption increases steadily in comparison to wheat production. Being one of the top 15 countries in global wheat production, Algeria has a consumption amount which is 3-4 times of its production. According to data of USDA, wheat consumption of Algeria which was 7 million tons in 2003/04 season reached to 8 million tons in 2007/08, 9,4 million tons in 2012/13 season and 10 million tons in 2014/15 season. The forecasted consumption amount for 2015/16 season is around 10,2 million tons again.
Barley is the second most produced product after wheat. As it is in wheat production, barley production shows an unsteady graphic in relation with weather conditions. Remaining above 1 million tons in 2003/04 and 2004/05 seasons, production amount decreased to 400 thousand in 2005/06 and remained under 1 million ton in the following 3 seasons. Production amount in barley has largely increased in 2009/10 season as it is in wheat and reached the last 10 years’ highest production rate with 2,4 million tons.
In 2010/11 and following seasons, barley production remained around 1 and 1,5 million tons. Barley consumption has also been on rise for the last 5 seasons. Barley consumption of Algeria which was around 1,1 million tons in 2007/08 and 2008/09 seasons reached 2 million tons in 2012/13 season and 2,1 million tons in 2014(15 season.
Corn is a very rare grain product in Algeria. Although any production activity is not recorded corn consumption in the country is rising. Corn consumption of Algeria which is 1,8 million ton in 2003/04 season reached to 2,1 million tons in 2005/06 season. Increasing consumption amount in the following seasons reached to 3 million tons in 2012/13 and 4,1 million tons in 2014/15 season.
GRAIN PRODUCTION AND CONSUMPTION IN MOROCCO
Morocco has a significant wheat production amount in comparison to African countries except Egypt, and it is one of the biggest 15 wheat producers in the world. However production depends on weather conditions as in Algeria and this cause instability in production. According to the data of USDA, production amount of Morocco which is 5,1 million tons in 2003/04 season reduced to 1,5 million ton, the lowest amount in the last 10 years. The production amount increased in the following seasons and reached to 6,4 million tons. However, it couldn’t maintain this level in the following 3 seasons. Producing 4,8; 5,8 and 3,8 million ton production relatively in 2010/11, 2011/12 and 2012/13 seasons, Morocco reached to 7 million tons in 2013/14 season, which is the highest production amount in the last 10 years. In 2014/15 season, production has decreased to 5,1 million tons again. Wheat production also shows a steady chart. Wheat consumption of Morocco which was 6,4 million tons in 2003/04 season reached to 7,2 million tons in 2006/07, 8,8 million tons in 2011/12 and 9 million tons in 2014/15 season. With this consumption amount, Morocco becomes one of the top 15 wheat consumer countries.
The second important grain product in Morocco as in Algeria is barley. The country produces 2,1 million tons of barley every year on average. The production, however, is not steady. The lowest production amount in the last 10 years was 763 thousand tons in 2007/08. The highest one was 3,8 million tons in 2009/10 season. The consumption is nearly the same with production and the average of the last 12 years is 2,4 million tons.
Corn of which production amount changes between 50 and 300 thousand tons shows increase in consumption. According to the data of USDA, corn consumption of Morocco which was 1,3 million tons in 2003/04 season reached to 2 million tons in 2010/11.
According to the data of USDA, corn consumption of Morocco which was 1,3 million tons in 2003/04 season reached to 2 million tons in 2010/11 season. Corn consumption which reached to 2 million tons in 2013/14 season continued to increase and was recorded as 2,4 million tons in 2014/15 season.
GRAIN TRADE IN ALGERIA
Unsteady and inadequate grain production of Algeria cause import-based grain trade to be inevitable; particularly for wheat and corn… Wheat production cannot meet increasing wheat consumption anymore and so import rate increases gradually. Moreover, the country is the 3rd wheat importer in the world. According to the data of USDA, wheat import amount of the country which was 3,7 million tons in 2003/04 season has been above 6 million tons for the last 5 seasons. Algeria’s wheat import amount which was around 5,1 million tons in 2009/10 season increased to 6,5 million tons in 2010/11 and 2011/12 seasons, and reached to 7,4 million tons in 2013/14 season. Being 7,1 million tons in 2014/15 season, import amount is expected to reach 7,7 million tons in 2015/16 season.
Corn is one of the other mostly imported products. Corn import of Algeria which is 1,9 million tons remained between 2 and 2,5 million tons in the following 3 seasons. Reducing again to 1,9 million tons, corn import continued to increase in the following seasons and reached to 2,9 million tons in 2011/12, 3,7 million tons in 2013/14 and 4,2 million tons in 2014/15 season.
GRAIN TRADE IN MOROCCO
As it is in Algeria, grain trade is mostly related with wheat and corn import in Morocco too. According to the data of USDA, wheat import of Morocco which was 2,3 million tons in 2003/04 season reduced to 1,8 million ton with a sharp decrease in 2006/07 season. However it increased to 4,1 million tons, the highest level of the last 10 years’, with a sharp rise in the next season. Wheat import of the country which remained as 3,7 million tons in 2008/09 season reduced to 2,3 million tons in 2009/10 season and it increased above 3 million tons by rising again in the following seasons. When the last 3 seasons’ import amount considered, it seems like these: 3,8 million tons in 2012/13, 3,9 million tons in 2013/14, and 3,4 million tons in 2014/15.
Another leading product in grain trade of Morocco is corn; and its import amount is parallel with corn consumption. Corn import of Morocco which was 1,1 million ton in 2003/04 season, remained under 2 million tons until 2013/14 season. Rising to 2 million ton in 2013/14 season, import amount reached to 2,3 million tons in 2014/15 season.
FLOUR MILLING IN ALGERIA AND MOROCCO
The president of Morocco National Federation of Milling (FNM), Abdullatif IZEM stated in an interview we made in the previous months that only the federation has around 200 members and 140 of these members grind wheat, soft wheat and corn, 60 of them grind barley and durum wheat. More than 80 of these mills use Swiss technology. Turkish companies and their technologies have been used for 6 or 7 years. IZEM states that Turkish technologies have become more prominent thanks to investments made in the recent years. Production capacity of these mills is higher than required amount in the country. This over capacity amount causes a serious rivalry in the market. However, millers in Morocco make production mostly for domestic usage. As a result of the fact that all the countries in Africa set up their own mills and more advantageous rivals, millers making export to some countries in Africa now make limited export to some countries like Indonesia and Thailand.
With expansion to different markets and privatization, many wheat and flour mills have been opened in Algeria. Although these investments slowdown in time, it is known that there are around 430 mills operating in the country. Despite privatization works, most of the flour produced in the country is held by ERIAD, a state owned company.