May 1, 2018 / 2:41 PM / 7 months ago

Volatile oil prices prompt Algerian agricultural drive

BOURKIKA, Algeria (Reuters) - Algerian farmer Hassen Miri trudges through mud to inspect his durum wheat field, helping the oil producing nation in its efforts to boost agricultural output and reduce food imports.

Cows are seen in a farm in Tipaza, Algeria April 21, 2018. Picture taken April 21, 2018. REUTERS/Ramzi Boudina

“Things are moving slowly but better than in past years,” said Miri, who has fields of cereals and vegetables in Bourkika, about 80 km (50 miles) south of the capital Algiers.

“I’m optimistic,” he said, after weeks of heavy rain relieved a long period of drought in the North African country.

Algeria, a member of Organization of the Petroleum Exporting Countries, has long neglected its farmers and focused on its oil and gas industry that generates about 60 percent of state revenues.

But a crash in oil prices from above $100 a barrel in 2014 to below $30 in 2016, left the nation struggling to fund its $50 billion annual import bill and has prompted the government to look for ways to ease the strain on its coffers.

With 20 percent of the import bill going on food, the government has launched a drive to increase local production, seeking to encourage farmers with incentives such as low interest loans and free vaccinations for livestock.

It is also expanding the use of irrigation to cover 2 million hectares in 2019 from 1.3 million hectares now, officials say, helping farmers who rely on rains that can fail.

The government is building 15 new dams to add to the 80 existing ones to water cereals covering an area of 600,000 hectares, up from just 60,000 hectares now.

“Now Algeria is offering the agricultural sector with great support, with huge funds to help the production and to provide food for all Algerians,” said Mohamed Djahed, head of the parliamentary agriculture committee.

The government wants to boost output of wheat - one of the main items on the food import bill - to 5.3 million tonnes by 2022 from 3.5 million tonnes in 2017.

Algeria, one of the world’s biggest wheat importers, is expected to consume 10.55 million tonnes of the grain in the 2018/19 season, the U.S. foreign agricultural service said.

Algeria also wants to double output for other products such as potatoes, milk and meat over four years.

In addition to promoting Algerian production, the government has drawn up a list of 851 items that it now bans from being imported, including some food products.

But government initiatives are taking time to feed through. Official figures show the overall value of food imports fell by just 0.2 percent in the first quarter of 2018 compared with a year earlier, while the value of cereal and milk imports rose.

“Algeria has all the tools needed to promote production,” said an economics professor at Algiers university, asking not to be identified. “But, as usual, the implementation will take time because of bureaucracy.”

Nevertheless, farmers are responding to the government push.

Mohamed Amine Abid, who breeds dairy cattle, has increased his herd to 70 cows from 40 since starting up in 2013, helped by state aid that included an extra piece of land.

“Our objective is to develop the Algerian cow. We want it to be born in and raised in Algeria to get used to our climate,” he said.

Slideshow (4 Images)

The state budget is still stretched, even as oil prices have been recovering, so some government initiatives have been scrapped. But Prime Minister Ahmed Ouyahia said agriculture spending, worth about $2 billion this year, would not be cut in 2019.

However, analysts say providing aid is not sufficient to achieve the government’s goal of increasing agriculture’s share of economic output from 12 percent now, as long as youths are losing interest in the land and looking elsewhere for jobs.

“We need to win the food security battle,” said 50-year-old farmer Ahmed Moussaoui.

Editing by Ulf Laessing and Edmund Blair

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