FOOD SECURITY OVERVIEW
Slightly below average cereal production expected to be harvested in 2022
Wheat import requirements expected to increase
Strong economic recovery, rising price inflation
Cereal production slightly below average expected in 2022
The 2022 winter grain harvest is expected to be completed by mid-August, with upland crops maturing the latest. Most of the production, harvested from the lower egg fields, was already harvested. Being largely rainfed, cereal yields are highly variable and depend on the amount and distribution of rainfall.
After a strong start to the rainy season, cumulative rainfall amounts between November 2021 and February 2022 were around half of the average, causing widespread drought conditions across the country. However, abundant rainfall in March and April 2022, up to 40 percent above average, favored crop recovery in central and eastern regions. Consequently, growing conditions varied from region to region, resulting in near-average yields in central and eastern regions and lower production in western parts of the country.
Nationally, wheat output is forecast to be slightly below the average 3 million tonnes, but about 20 percent up from the previous year’s low wheat output. Aggregate cereal production in 2022 is estimated at 4.1 million tonnes, about 12 percent below the five-year average but 17 percent above the previous year’s harvest.
In January 2022, in response to high international prices and with the aim of increasing the level of local supply, the government increased the purchase prices for the 2022 harvest. Compared to the previous year, the price of purchase of durum wheat increased from 45,000 DZD to 60,000 DZD (equivalent to 423 USD at the official exchange rate of 142 DZD for 1 USD) per ton, soft wheat from 35,000 DZD to 50,000 DZD (352 USD) and barley from 25,000 DZD to 34,000 DSD (240 USD).
Cereal imports in 2022/23 are expected to increase
Even in years when domestic production is abundant, the country relies heavily on grain imports, soft (tender) wheat being the most important. Over the past five years, the country’s wheat import requirements have averaged about 7.6 million tonnes per year, mainly soft wheat which accounts for about 70 percent of domestic use.
Despite the expected slight recovery in the domestic harvest in 2022, the wheat import requirement for marketing year 2022/23 (July/June) is estimated at 8.1 million tonnes, about 25 percent above the previous year’s imports and 7 percent above the average. In addition, around 5 million tonnes of maize and 1 million tonnes of barley for animal feed are expected to be imported. The country imports wheat from France, Canada, Germany, the United States of America, Spain and Mexico. Although no significant amounts of wheat come from Ukraine or the Russian Federation, they together supply about 20 percent of barley imports and less than 10 percent of maize. Overall, the country imports grains from a variety of origins, making it less vulnerable to export disruptions from Ukraine and the Russian Federation.
Due to concerns about sufficient food availability in domestic markets due to rising international prices, in March 2022 the country decided to ban exports of processed foods that use imported ingredients, including sugar, vegetable oil, pasta, semolina and other wheat products.
Strong economic recovery, rising inflation
The country is heavily dependent on oil and natural gas for its export earnings. High global oil prices are fueling the country’s economic growth. The economy is expected to grow 3.9% year-on-year in 2022, compared to 3.4% in 2021. Despite high international energy prices and increased interest in the country as a supplier of natural gas as an alternative in the Russian Federation, unemployment levels prevail, affecting the purchasing power of the population.
In April 2022 (latest data available), the annual rate of general price inflation was recorded at 10%, the highest level since 2012. In the first quarter of 2022, food prices increased by 13% over year, up from levels close to 0% in the second half of 2020. Part of the rise in inflation is attributed to high international commodity prices as well as the depreciation of the national currency which, in July 2022, was equivalent to approximately 147 DZD for 1 USD, compared to 134 DZD in July 2021.
In 2021, in response to budget deficits and balance of payments problems, the country took steps to remove subsidies on cooking oil, wheat flour, cooking gas and electricity, although prices high energy products make implementation less urgent. In February 2022, the government started distributing an unemployment benefit of 13,000 DZD (about 90 USD) per month to young citizens between the ages of 19 and 40.