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Algeria Agribusiness Report Q4 2009Published by: Business Monitor International Published: Sep. 4, 2009 - 35 Pages Table of Contents
AbstractAlgeria is the second largest country in Africa and one of the largest in the world, with a population of34mn, of which a quarter of the population is employed within the agricultural sector. As the governmenthas strove to diversify the economy away from an overwhelming reliance on the services and energysectors, this drive has become more and more difficult, owing to various separate, yet mutuallyexacerbating factors; some external, some domestic. BMI's Algeria Agribusiness Report Q4 2009 takes alook at industry fundamentals as securing food supplies throughout the Arab world increasingly focusesthe attention of state leaders.Prior to the severing of French stewardship in 1962, Algerian agriculture was heavily comprised ofEuropean owned farms, while Muslim farm labourers accounted for 87.5% of the farm population. During this time Algeria was virtually self-sufficient in cereal crops, yet this rapidly deteriorated once thelast colonial managers had left the farms, which were subsequently run as state-owned enterprises. Moreover, the rise of the hydrocarbons industry, namely natural gas and oil, was a major contributingfactor in soil erosion and neglection of the farming industry, which has led the industry to its currentdynamic where import dependency, food subsidies and input shortages are a mainstay of the economy. Improving rural productivity has become more pertinent to policy-making decisions in recent years, asfood security concerns have heightened. A new law was implemented in 2007 with the intention tomaximise the potential of the sector by realigning policy orientation. The programme focused on suchareas as improving food safety frameworks; the efficient use of natural resources; a central feature of theprogramme has been intensifying and improving the performance of the dairy industry, throughsupporting small producers to enhance yield volumes, as well as quality and storage facilities. Thisinitiative, in accordance with the Agricultural Development Programme (PNDA), has helped theproducers of fresh milk improve fundamentals, enabling production growth to keep pace with localdemand. Continuing the positive 16.58% growth recorded from 2004-2008, we foresee milk production continuingto flourish through to 2013. The low prices currently hindering dairy farmers across the globe is havinglittle effect in Algeria; the country produces only for domestic consumption and local demand shows littlesign of waning. This underpins our assertion that y-o-y growth will be recorded in each and every year ofthe forecast period starting in 2009. However, the dairy processing subsector, despite the growingpopularity of such products within households, is failing to keep pace with the development of the wholemilk industry. This will result in a widening deficit as imports continue to flood the economy. Theadoption of modern technology and processes largely hold the keys to improving the outlook of processeddairy goods, as well as effective marketing and distribution channels. Of the grains, wheat production will rise massively by over three quarters to 2013 from the low of 1.6mntonnes harvested in 2008. Better weather will play a major part in the positive outlook, as will the abilityof farmers to secure greater access to the seeds, fertilisers and such inputs that will raise productivity.Despite such strong output expansion, the domestic deficit is set to swell to 2013, as consumption growth,starting from a higher position, also posts double-digit growth. Consumption will be supported by thegovernment subsidy scheme which enables the staple food crop to be affordable to even the poorest insociety. The major caveats to growth in Algeria, aside from poor climatic and agronomic fundamentals, are likelyto be felt mainly by the scattered smallholder farms. Credit is often disbursed in accordance with titledholdings, something which small farms are often prevented from owning. As such, most of theproductivity growth that will be achieved during the course of the outlook will increasingly be attributableto larger producers, as the industry landscape becomes more consolidated.Consequently, we have a mixed outlook on Algeria over the course of our forecast. Overall, the countrywill remain a net importer, although with improved productivity in some staple foodstuffs. Get Full Details About This Report >> |
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