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Algeria: Economic Recovery, Agricultural Strategy and Strengthening Trade Ties with Russia

The People's Democratic Republic of Algeria is the largest African country by area, covering nearly 2.4 million square kilometers, with a population of approximately 46.7 million people. The country’s economy is heavily reliant on gas and oil extraction, which accounts for about 60% of total exports and more than 97% of export revenues. Algeria maintains close trade relations with the European Union, the United States, China, and Russia. It is also a member of the African Continental Free Trade Area (AfCFTA), providing the country with significant export advantages in an integrated market with a population of 1.3 billion people.

The agricultural sector contributes about 13% of Algeria's GDP and is considered a priority development area by the government, as the country depends on imported food for over 45% of its needs. By 2029, the size of the agribusiness market in Algeria is projected to reach USD 6 billion, with an annual growth rate of 4.65%. For 2024, the market size is estimated at USD 4.86 billion.

Algeria's potential for grain production is estimated at 30 million tons per year, with export potential of 21 million tons.

The year 2025 has been declared a milestone for achieving self-sufficiency in durum wheat and reducing its imports. In September this year, Algeria's Ministry of Agriculture announced that about 3 million hectares will be allocated for grain in the 2024/25 season, including 1.6 million hectares for durum wheat and 1 million hectares for barley. The remaining land will be dedicated to soft wheat and oats. The government also has a long-term plan to expand grain cultivation areas. By 2028, more than 1 million hectares of land in the southern provinces will be developed, including 0.5 million hectares for wheat and barley, 0.22 million hectares for corn, and 0.02 million hectares for legumes.

Despite efforts to improve food security and reduce import volumes, Algeria is currently unable to meet its domestic food needs, particularly for grain, independently. A poor grain harvest in the 2023/24 season has exacerbated the challenge of building sufficient grain reserves. Annual wheat consumption in Algeria is closely tied to population growth at 1.5% annually. In the 2024/25 season, domestic demand for wheat is expected to reach approximately 11.95 million tons (+3% compared to 2023/24), while total production will amount to 3 million tons (+11% compared to 2023/24). As a result, wheat reserves in the country are projected to increase to 6.9 million tons (+10% compared to 2023/24). Algeria's Ministry of Agriculture has previously outlined plans to expand grain storage capacity to 9 million tons by the end of 2024. Wheat imports are forecasted to reach 9 million tons (-5% compared to 2023/24).

Notably, while Algeria ranked 40th among importers of Russian grain and its products with 140,000 tons in 2014, it climbed to 9th place in 2023, importing 2.6 million tons, of which 2.5 million tons were wheat (+90% compared to 2022). By mid-October 2024, Russia had supplied Algeria with 2 million tons of grain, including 1.8 million tons of wheat. The significant growth in Russian grain exports to Algeria is due to increased Russian presence in the Algerian market. Algeria’s state grain agency has consistently expressed satisfaction with the quality of Russian wheat, noting its higher protein content and specific weight compared to wheat supplied by the EU. Although Bulgaria (1.76 million tons in 2023, +34% compared to 2022) and Romania (1.2 million tons in 2023, +38% compared to 2022) remain the primary suppliers of wheat to Algeria, the EU’s market share is expected to decline due to competition from Russia. For instance, France’s wheat exports to Algeria have significantly decreased from 2.2 million tons in 2022 to 0.6 million tons in 2023 (-72% compared to 2022). Additionally, the decline in EU supplies has been partially offset by increased imports from Canada (1.25 million tons in 2023, +118% compared to 2022), the U.S. (331,000 tons in 2023, +288% compared to 2022), Turkey (272,000 tons in 2023, +100% compared to 2022), and Australia (82,000 tons in 2023, +57% compared to 2022). Russia predominantly supplies soft wheat, while Canada and Turkey export durum wheat, according to Ruslan Khasanov, Director of the Federal State-Funded Institution "Grain Quality Assessment Center."

Khasanov emphasized that Algeria is Russia’s second-largest trade and economic partner on the African continent after Egypt. Russia has enjoyed a competitive advantage in the Algerian market since both nations embarked on diversifying their economies and trade relations.

In 2023, trade turnover between the two countries grew 2.2 times, reaching over USD 3.7 billion. To expand its supplier base, Algeria reduced the acceptable rate of grain contamination by stink bugs to 1% in 2022. Despite such favorable measures for trade relations, Algeria maintains stringent requirements for the quality and safety of imported grain.

In October this year, Algeria's state grain agency excluded French companies from a wheat import tender due to declining quality and high prices of French wheat. Russian suppliers offered more competitive prices. If the ban on French wheat remains in place, Russia could supply up to 3 million tons of wheat to Algeria this year. This opportunity should not be overlooked by Russian exporters.

Another key grain crop in Algeria is barley, primarily used as feed for livestock. Since 2023, Russia has resumed barley exports to Algeria, becoming the leading supplier with export volumes exceeding 146,000 tons by mid-October 2024 (+25% compared to 2023). Russia's main competitors in this segment are Germany and Romania, which supplied 123,000 tons and 90,000 tons, respectively, to Algeria in 2023. However, while Romania’s barley exports increased by 53% compared to 2022, Germany’s exports declined by 3%. Recently, barley exports from France, Poland, Spain, and other EU countries to Algeria have sharply decreased, in some cases to zero, Khasanov noted.

Algeria is currently experiencing strong economic growth. The country’s policies and programs aimed at boosting domestic production, privatizing the seed sector, and investing in agricultural infrastructure are major drivers of its economy. Algeria's trade policies also include protectionist measures, such as high tariffs, customs duties, and bans on the import of certain goods, including semi-finished products and components.

In 2023, Algerian President Abdelmadjid Tebboune and Russian President Vladimir Putin met in Moscow, where they signed a Declaration on Deepened Strategic Partnership, expanding the scope of cooperation beyond the 2001 agreement. The new declaration includes enhanced military collaboration, support for the use of national currencies in trade, and coordination in international energy organizations.

Source: Official website of the Federal State-Funded Institution "Federal Center for the Safety and Quality Assessment of Grain and Grain Products"
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