ALGIERS – Algeria is taking several steps to improve its cereal production capacity in order to meet local demand for wheat and decrease its food import bill. However, the current market climate, impacted by decreased production in North America and climbing global prices, has reinforced the country's dependence on wheat imports in the short term, Global Arab Network said. The country started the year with a rosier outlook for national cereal production. Local output can range between 2 million and 6 million tons, depending on rainfall; Ministry of Agriculture officials estimate that the total grain harvest may reach 5.8 million tons in 2012, up from 4.2 million tons produced in 2011 as a result of particularly poor weather conditions. However, Algeria will remain dependent on imports in the medium term to meet the domestic demand for cereals, estimated at around 7 million tons per year. Demand for milling wheat alone is estimated at 450,000 tons per month. In line with the country's agricultural performance, the value of cereals imports was down 23 percent in the first half of 2012 compared to the same period in 2011, from €1.66 billion to €1.27 billion. Wheat imports alone dropped by 33 percent over the same period to reach $1.01 billion. The government announced in June that locally produced durum wheat would suffice to meet national demand through the end of the year. However, complications have since darkened that outlook. The Algerian Cereals Office (Office Algérien Interprofessionnel des Céréales, OAIC) confirmed in August that the durum harvest was weaker than expected, complicated by unspecified logistical difficulties in collecting the durum crop. As a result, the OAIC went against its policy objectives to purchase 500,000 tons of durum wheat at €329 per ton the week of Aug.13, sourced primarily from Canada, as well as the US. Algeria has also made major purchases of milling wheat in recent weeks to offset both insufficient national production and decreased global wheat supply in 2012. Severe drought in the US and uncharacteristically dry weather in other producer countries, such as Russia, have created concerns about global wheat supply levels and sharp price hikes as importers move to increase stocks. The OAIC purchased 350,000 tons of milling wheat on August 16 at €273 per ton, with prices varying according to the shipping period and volume sold. – Agencies
