Boston, MA -- (SBWIRE) -- 10/07/2013 -- BMI View: 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 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. We highlight downside risks to our forecast. 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$1.98bn in 2013 (growth to average 5.8% annually between 2013 and 2017).
- 2013 real GDP growth: 3.3% (up from 2.2% in 2012; predicted to average 3.4% over 2013-2017).
- Consumer price inflation: 5.9% in 2013 (down from 8.9% in 2012; predicted to average 5.3% over 2013-2017).

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Key Revisions To Forecast

- Wheat 2013/14 production revised up to 3.6mn tonnes (compared with a previous forecast of 3.4mn tonnes), as good weather has boosted growing conditions.
- Dairy products production and consumption revised in order to be aligned with updated official historical data. Our growth forecasts remain broadly the same.
- , 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 strong on the back of robust growth in dairy demand, especially for dry whole milk powder and non-fat dry milk powder.

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