Algeria is among the largest consumers of wheat in the world. Although domestic production has improved over the years, it remains weather-driven, and does not meet domestic demand. Therefore, Algeria continues to import wheat. USDA estimates Algeria’s wheat imports at 8.3 MMT for the 2022/23 season.
Algeria is the largest country in Africa with more than 43 million people and vast natural resources. Algeria’s land mass is 2,381,741 sq. km. The desert covers more than four-fifths of the country. In addition to its impressive size, Algeria has the fourth-largest economy in Africa, and it is one of the continent’s most competitive. The country is the hub of many multinational corporations’ francophone operations in northwestern Africa.
The Algerian economy remains dominated by the oil and gas sector, which accounted for 19 percent of GDP, 93 percent of product exports, and 38 percent of budget revenues between 2016 and 2021. After contracting by 5.1 % in 2020, Algeria’s GDP rebounded by 3.5 % in 2021, supported by a robust oil and gas output rebound.
The agriculture sector is one of the priority sectors for the Algerian government in its efforts to diversify the economy and attract foreign and domestic investment outside the energy sector. After hydrocarbons, agriculture is the country’s second-largest GDP contributor, at around 10%, with 25% of the population employed in the sector. Algeria has 8.5 million hectares of arable land.
The Algerian government encourages modern industrial agriculture using satellites, digitization, and other innovative tools, especially regarding renewable energies. Additionally, to increase agriculture development, the government plans to intensify agricultural production, revitalize natural resources, and improve water resources use. The new development policy prioritizes investment in agricultural products ensuring food security in Algeria. The government encourages large-scale agricultural investments in the Highlands and the “Sahara” (South of Algeria). In addition, the development strategy promotes foreign direct investments and partnerships, particularly in the field of cereals, oilseeds, and sugar production. The development strategy also encourages crushing and refinery projects that support processing to stimulate the processing industry. Such projects include supporting increased storage capacity, increased cold chain infrastructures, and packaging projects.
The government divested itself from agricultural production and processing allowing the private sector to take the lead. The private sector is comprised of wheat and feed millers, dairy processors, vegetable oil refiners, sugar refiners, beverage producers as well as canners, and a pastry industry. Although the local food manufacturing industry is improving, the sector is fundamentally dependent on imports of ingredients and raw materials. In addition, population increase, growing demand for convenient processed foods, as well as improved production capacities favor the expansion of the food processing industry.
A MAJOR CONSUMER OF WHEAT
Algeria has one of North Africa’s highest per-capita expenditures on food thanks to relatively high disposable incomes and consumers’ strong preference for convenient, quality, and premium food and beverages. Algerian households devote 42 percent of their annual expenditure to food needs. Consumer tastes and preferences are changing, especially in the cities where young homemakers tend to be more active, and the number of working women has increased. As a result, consumers are turning to ready-to-eat or semi-processed products.
WHEAT PRODUCTION OUTLOOK
Algeria is a major consumer of cereals and considers wheat as the major staple food. Wheat is used mainly for bread and couscous. Algerian wheat consumption has risen slightly in the past years as a result of increased urbanization, population growth, and increased milling capacity. The North African country is one of the world’s largest importers of wheat. Although domestic production has improved over the years, it remains weather-driven, and does not meet domestic demand. Therefore, Algeria continues to import wheat.
In its latest report released on 30th September, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) post in Algiers forecasts the 2022/23 season wheat harvested area at just over 2 million hectares (ha). “Despite, the government making pledges to expand cereal production, Post believes that due to the adverse effects of the pandemic, farmers likely did not expand their operations in a meaningful way,” USDA reports. Post forecasts 2022/23 wheat production at 3.3 million metric tons (MMT), and barley at 1.2 MMT.
Over the last several years, the government of Algeria has repeatedly proclaimed the increase in agricultural production, specifically highlighting wheat, as a national priority. In 2021, the Minister of Agriculture (MoA) Abdelhamid Hemdani announced plans to expand Algeria’s wheat-planted area to 3.5 million ha. The government had previously indicated that it had surveyed the identified favorable agricultural land to cultivate durum wheat nationwide, particularly in regions with high rainfall.
In Algeria, grain harvest season begins at the end of April through early May in the southern Saharan regions, while in the Northern areas, the harvest starts later in May and gathers steam through July and August. Harvests in these areas started with favorable forecasts for cereals, including durum wheat, bread wheat, barley, and corn. Starting last year, the Ministry of Agriculture initiated preparations for the planting campaign in July, instead of September as used in previous years. Plantings were brought forward from October to September. This decision was undertaken in anticipation of benefiting from possible early rains. As usual, the MoA made available treated seeds and fertilizers particularly, bread wheat and durum wheat, barley, and certain legumes seeds such as lentils and chickpeas.
Furthermore, the ministry pursues the program to strengthen surface irrigation to develop cereals in the south and supplemental irrigation in the north to counter the lack of rainfall and improve cereals production.
Algeria is among the largest consumers of wheat in the world. Wheat is the major staple food and represents 60 percent of the food ration in Algeria. However, the government is encouraging consumers to decrease their consumption of bread to avoid waste and decrease the demand for bread (common) wheat thus reducing imports. Wheat consumption will remain relatively stable in the near future. USDA’s post forecasts wheat consumption at 11.15 MMT for 2022/23 season.
Barley is consumed mainly as a grain in animal feed by sheep, cattle, and camels, with small amounts consumed as green fodder, and minor amounts used for traditional foods. Barley consumption is a function of weather-related pasture conditions—in general, bad pasture conditions result in increased demand for barley. Post forecasts barley consumption at 1.950 MMT for the 2022/23 season.
ALGIER DIVERSIFIES WHEAT SUPPLIERS
Algeria is one of the world’s largest importers of wheat. In 2021, cereals represented about a quarter of Algeria’s total food import bill of $9 billion, along with being the top food import. Algeria does not release the results of its tenders and reports are based on trade estimates. Traders’ reports indicate that the Algerian office of Cereals (OAIC) has been purchasing bread wheat on the international market throughout 2022. Traders’ reports indicated that OAIC booked up to 720,000 MT of bread wheat in the August tender and purchased wheat from different sellers for shipments through September-October. According to these reports, most of these amounts are expected to be sourced from France. Reuters and other news reports indicated that Algeria said to buy Russian wheat. The articles reported that OAIC bought an unknown volume of milling wheat in an international tender at the end of August cheaper than EU wheat to be shipped to two ports in Algeria. Trade reports indicate that the shipments would be most likely to be sourced from Russia for delivery during the second half of September and October. Given the ongoing purchases, USDA’s Post estimates wheat imports at 8.3 MMT.
Algeria’s imports from Ukraine and Russia represent only 4% and the war has not had an impact on Algeria’s imports. Algeria has always relied primarily on imported wheat from France, Germany, Spain, Canada, the United States, Argentina, Uruguay, and Mexico. However, the import figures show an increase in imports from Ukraine in 2022. OAIC is adopting a policy of diversification for its commercial partners. The new specifications open the door of competition to several foreign suppliers. Russia resumed wheat exports to Algeria in June 2021 after a five-year break after the North African country raised the threshold for corn bug damage in wheat imports it allows to 0.5% from 0.1%.