Recently released market study: Algeria Agribusiness Report Q1 2014

With wheat and dairy production consistently short of consumption, Algeria is a major importer of food products. However, the government's new emphasis on the improvement of food self-sufficiency is helping the grains and dairy sectors to rebound. Increases in government support will be positive for productivity and product quality in the medium term. However, the country will remain a key importer of wheat and dairy products in the coming years. Algeria is increasingly expanding trading links with countries such as Brazil and India, especially for dairy and beef products, and away from its traditional suppliers such as France.

Key Views

* Wheat consumption growth to 2017: 13.3% to 10.1mn tonnes. Wheat consumption will be mainly supported by population growth.
* Milk production growth to 2016/17: 19.1% to 3.8mn tonnes. Our projections are based on the government's support for the sector and its plan to develop it by improving breeding methods as well as restructuring and further privatising segments of the agriculture industry.
* Barley production growth to 2016/17: 50.0% to 2.0mn tonnes. Our forecast errs on the side of caution. Significant changes to the size of the harvested area from one year to the next are a fairly regular occurrence in Algeria, reflecting the limited availability of water and irrigation.
* BMI universe agribusiness market value: US$2.47bn in 2014 (growth to average 4.0% annually between 2013 and 2017).
* 2014 real GDP growth: 4.4% (up from 3.2% in 2013; predicted to average 3.4% over 2013-2017).
* Consumer price inflation: 6.2% in 2014 (up from 5.5% in 2013; predicted to average 5.1% over 2013-2017).

Full Report Details at
- http://www.fastmr.com/prod/723564_algeria_agribusiness_report_q1_2014.aspx?afid=301

Key Developments

Laiterie Soummam, one of the leading dairies in Algeria, plans to phase out its use of imported milk powder and use only domestically produced liquid milk by 2016. According to the company, which started to collect milk from producers in 2009, liquid domestic milk accounts for 40% of the total amount used in its products, with the rest coming from imported milk powder. We see this goal as overly optimistic and believe Algeria's imports will remain significant on the back of robust growth in dairy demand, especially for dry whole milk powder and non-fat dry milk powder.

The government will continue to provide economic and technical assistance and incentives to improve grain yields and quality in 2013/14. Assistance includes interest-free loans for seeds, irrigation, equipment and other inputs. Government efforts to increase yields have proven effective; however, current Algerian wheat yields still lag significantly behind some other producers in the region, such as Egypt and Zambia.

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