Algeria plans sharp cut in wheat purchases to curb import bill

TUNIS (Reuters) - Algeria is targeting a sharp reduction to its wheat imports as it tries to rein in its costly subsidized bread programme in the face of popular protests against the ruling elite.

The North African country has decided to cap soft wheat imports at 4 million tonnes a year, down from 6.2 million tonnes, the government said in a statement late on Wednesday.

The move is designed to “preserve foreign currency and reduce Algerian imports of cereals, especially soft wheat”, it said.

The import ceiling reflected a government estimate of the actual needs of the domestic market for soft wheat at 4 million tonnes.

The change will take effect immediately, a government source said.

Algeria is among the world’s biggest wheat buyers, sourcing most of its supply from France. It spent about $3 billion on wheat imports last year, including durum wheat, flour and semolina.

However, hit by lower oil prices since 2014, it is trying to reduce its imports.

Mass protests this year, which led to the departure of longstanding President Abdelaziz Bouteflika, have also pushed the interim government to target corruption.

Grain traders said the import ceiling is in keeping with other moves this year.

In July the government removed the head of state grains agency OAIC after a corruption investigation and has also closed some of the country’s 500 flour mills.

After the closure of 45 mills, more than 300 others are under investigation, an agriculture ministry source said.

OAIC also refrained from any wheat imports in October, breaking with its usual practice of holding tenders every calendar month.

“They are showing they want to curb abuse and mismanagement,” one European trader said.

However, traders remained sceptical about Algeria’s ability to reduce wheat imports so steeply, given low domestic production and the importance of its subsidized bread programme.

OAIC held an import tender for soft wheat on Wednesday, with traders reporting that the agency bought about 500,000 tonnes at $223-$224 a tonne including freight.

Reporting by Lamine Chikhi; Additional reporting by Gus Trompiz in Paris; Editing by Clarence Fernandez and David Goodman