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Algeria Agribusiness Report Q1 2012
Business Monitor International, Nov 2011, Pages: 51
Business Monitor International's Algeria Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Algeria's agribusiness service.
BMI View: While an increase in private investment into Algeria's agriculture sector will allow it to meet some of the country's growing needs in the long term, BMI believe it will remain increasingly dependent on imports of agricultural goods. Indeed, food imports account for close to 15% of the country's total import bill. As such, strong opportunities present themselves to European players especially in the dairy sector.
Key Forecasts
- Wheat production growth to 2015/16: 1.6% to 3.54mn tonnes. Strong demand for wheat over their forecast period will contribute to a persistent supply shortfall. As a result, BMI expect wheat imports to continue their strong growth trajectory for the duration of their forecast.
- Barley consumption growth to 2016: 28.6% to reach 1.78mn tonnes. Over their forecast period, BMI expect demand for barley to outpace production; this should progressively lead to a worsening trade balance for the grain. Over the next few years, BMI expect rising barley consumption to be almost entirely lead by the demands of the livestock industry, as rising disposable incomes lead to increased demand for meats.
- Milk consumption growth to 2016: 11.0% to 1.72mn tonnes. This will be due to enhanced consumer purchasing power and the growing prevalence of savvy marketing initiatives from firms such as French dairy giant Danone and Scandinavian company Arla.
- Whole Milk Powder consumption growth to 2016: 1.3% to just over 181,700 tonnes. Algeria is already one of the largest markets in the region for whole milk powder and thus BMI forecast consumption of retailed, packed, branded powder to remain relatively stable through to 2016.
- 2012 real GDP growth: 3.6% (up from 2.7% in 2011; predicted to average 4.0% from now until 2016).
- Consumer price inflation: 3.6% in 2012 ave.
Industry Developments
BMI have revised down their 2010/11 estimates for Algeria's grains production in line with official estimates. Indeed, with the country's grains harvest ending in September, BMI have lowered their estimates for 2010/11 grains output 7.0% to 4.3mn tonnes, after droughts affected the main grains growing areas and resulted in the loss of 400,000 of the 3.30mn hectares planted. BMI now predict that wheat output will remain flat at 2.9mn tonnes in the 2011/12 crop year.
Nestlé opened a new milk powder factory in the city of Oued Smar, 20km south-east of capital city Algiers in October 2011. It will supply Nespray and Gloria packaged products to the rest of the country. This is the second Nestlé factory in Algeria after the Nestlé Waters factory was opened in 2005. This new factory follows a commitment by the Algerian government to open up trade and encourage international companies to establish its presence and help boost local production.
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