Boston, MA -- (SBWIRE) -- 07/20/2012 -- BMI View: The expectation for a strong grain harvest in Algeria in 2012/13 has not mitigated concerns over food price inflation, which reached 14% year-on-year (y-o-y) in March. That said, much of this inflation is due to rising prices for meat, legumes and fish; grain price inflation had only approached 6% y-o-y in March. Ultimately, the country's food security is likely to remain fairly stable once the harvest comes online in June. Over the long term, we expect Algeria to remain a large player in the wheat import market, as a growing population means that average consumption will most likely outpace production growth. We expect most of these imports to be supplied by the 27 European Union member states and countries from the Black Sea region.
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- Wheat production growth to 2015/16: 14.1% to 3.5mn tonnes. Strong demand for wheat will contribute to a persistent supply shortfall. As a result, we expect wheat imports to continue on their strong growth trajectory for the duration of our forecast period.
- Milk consumption growth to 2016: 27.3% to 1.9mn tonnes. Enhanced consumer purchasing power and the growing prevalence of savvy marketing initiatives from firms such as French dairy giant Danone and Scandinavian company Arla will help to support growth in dairy consumption.
- Corn consumption growth to 2015: 15.4% to 3.1mn tonnes. Barley and corn are mainly used for animal feed, although it is consumed as food in some rural areas. The expansion of local poultry production is likely to drive an increase in corn consumption.
- 2012 real GDP growth: 3.1% (up from 2.5% in 2011; predicted to average 3.9% over 2012- 2016).
- Consumer price inflation: 12% y-o-y in March 2012 (up from 2% y-o-y in March 2012).
We have revised up our 2012/13 forecast for Algerian wheat production to 3.9mn tonnes owing to record plantings and favourable soil conditions. The country's Agricultural Ministry announced recently that plantings have reached 3.3mn hectares for the 2012/13 season (for which harvest starts in June), a record compared with the 10-year average of 1.9mn hectares. Climatic conditions are aiding the development of the crop, with sufficient precipitation resulting in good soil moisture levels. We also expect yields to stay at average levels on the back of greater use of certified seeds and fertilisers. Durum wheat continues to account for the biggest portion of the country's wheat plantings in 2012/13.
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