Algeria's Milk Production Is Expected To Continue Flourishing Through To 2013

Algeria is the second largest country in Africa and one of the largest in the world, with a population of 34mn, of which a quarter of the population is employed within the agricultural sector. As the government has strove to diversify the economy away from an overwhelming reliance on the services and energy sectors, this drive has become more and more difficult, owing to various separate, yet mutually exacerbating factors; some external, some domestic. The Algeria Agribusiness Report Q4 2009 takes a look at industry fundamentals as securing food supplies throughout the Arab world increasingly focuses the attention of state leaders.

Prior to the severing of French stewardship in 1962, Algerian agriculture was heavily comprised of European owned farms, while Muslim farm laborers accounted for 87.5% of the farm population.

During this time Algeria was virtually self-sufficient in cereal crops, yet this rapidly deteriorated once the last 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 contributing factor in soil erosion and neglection of the farming industry, which has led the industry to its current dynamic 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, as food security concerns have heightened. A new law was implemented in 2007 with the intention to maximize the potential of the sector by realigning policy orientation. The programme focused on such areas as improving food safety frameworks; the efficient use of natural resources; a central feature of the programme has been intensifying and improving the performance of the dairy industry, through supporting small producers to enhance yield volumes, as well as quality and storage facilities. This initiative, in accordance with the Agricultural Development Programme (PNDA), has helped the producers of fresh milk improve fundamentals, enabling production growth to keep pace with local demand.

Continuing the positive 16.58% growth recorded from 2004-2008, we foresee milk production continuing to flourish through to 2013. The low prices currently hindering dairy farmers across the globe is having little effect in Algeria; the country produces only for domestic consumption and local demand shows little sign of waning. This underpins our assertion that y-o-y growth will be recorded in each and every year of the forecast period starting in 2009. However, the dairy processing subsector, despite the growing popularity of such products within households, is failing to keep pace with the development of the whole milk industry. This will result in a widening deficit as imports continue to flood the economy. The adoption of modern technology and processes largely hold the keys to improving the outlook of processed dairy goods, as well as effective marketing and distribution channels.