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UNCLAS SECTION 01 OF 03 ALGIERS 000143 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR ECON ETRD PGOV PREL AG
SUBJECT: STALE BUT NOT YET ROTTED: AGRICULTURE IN WESTERN 
ALGERIA 
 
REF: A. ALGIERS 3 
 
     ¶B. 07 ALGIERS 1214 
     ¶C. 07 ALGIERS 367 
 
¶1.  SUMMARY:  Algeria's agriculture sector has been stagnant 
for years because of a combination of factors that includes 
decades of Soviet-style government agrarian policies, 
underdeveloped industrial transportation systems, drought, 
and terrorist activity that disrupted business and distracted 
government.  Nonetheless, we have found examples of food 
producers on the cusp of expansion that could spur economic 
development in Algeria's western provinces, add to 
Algeria's non-hydrocarbons exports, and open new markets for 
the sale of American machinery and services.  Producers of 
olives, fish and wine are looking for new niche markets, but 
modernization remains slow, and large-scale production would 
likely require significant foreign investment.  END SUMMARY. 
 
CAPACITY PROBLEMS PLAGUE ALGERIA 
-------------------------------- 
 
¶2.  Algeria's agriculture sector has been stagnant, if not 
decaying, for many years.  As we have previously reported, 
Algeria imports a significant volume of the food it consumes, 
and will spend an estimated nine percent of its 2008 budget 
on food imports (ref A).  In recent years Algeria has 
privatized many aspects of its food production and import 
system, but continues to manage supply shortages and price 
fluctuations with Soviet-era product boards and commissions 
(refs A, B, C). 
 
AIN TEMOUCHENT: ORGANIC BY DEFAULT 
---------------------------------- 
 
¶3.  Producers and government officials in both Algiers and in 
the western wilaya (province) of Ain Temouchent told us 
recently that Algeria requires new technologies and 
strategies for mass production to modernize its agriculture 
sector effectively.  Yet, there are examples in Ain 
Temouchent and the surrounding region that point to potential 
market expansions.  According to Houari Otmane, Director of 
Agriculture in Ain Temouchent, the region is ranked 13th in 
Algeria for agricultural production in general, and first in 
wine.  The majority of the region's population is linked to 
agriculture, including production of cereals (durum wheat, 
soft wheat, and chickpeas), livestock (150,000 sheep and 
12,000 beef cows) and wine.  Agriculture in the region is 
essentially organic by default, because farmers cannot afford 
to buy large quantities of pesticides and fertilizers. 
Nonetheless, Otmane and others involved in agriculture told 
us that they would prefer to see investments in large-scale 
agribusiness rather than efforts to prop up small farms. 
 
FISHING FOR NEW MARKETS AND TECHNOLOGY 
-------------------------------------- 
 
¶4.  Ain Temouchent also produces 13 percent of the fish 
processed in Algeria.  According to Mostefa Bensahli, Ain 
Temouchent's Director of Fisheries, the biomass of fish in 
the wilaya is estimated at 60,000 tons per year, while 
production in 2007 reached 27,000 tons.  There are two 
fishing ports in the province.  Beni Saf, built in 1890, is 
the older port and boasts an annual production of 16,000 tons 
of fish.  Bouzedjar was built in 2000 and has a total 
production of 15,000 tons of fish, expected to expand to 
20,000 tons in the coming years.  The two ports combined can 
handle up to 445 fishing boats.  According to Ahmed Trari 
Tani, Director of Western Fishing Ports, ninety percent of 
Ain Temouchent's production is commercialized domestically, 
with the remaining 10 percent, including both whitefish and 
shellfish, exported to Mediterranean countries, primarily 
France, Italy and Spain.  Tani asserted that Algeria does not 
export seafood to Asian markets. 
 
¶5.  Fish from Ain Temouchent is considered to be of a fairly 
high quality, but the sector lacks freezing and storage 
capacity as well as processing plants to exploit the 
region's fishing efficiently.  Marketing remains a 
significant challenge as well: Algeria's fish products are 
all but unknown in foreign markets.  In spite of those 
 
ALGIERS 00000143  002 OF 003 
 
 
hurdles. two pilot projects are underway in the region to 
develop modern aquaculture.  The projects, one located in 
Tafna and the other in Bouzedjar, utilize sea cages for 
sea-beams and wolf fish.  Similar projects are under 
development.  In addition, a pilot project for freshwater 
aquaculture, mainly for carp, is in development in the wilaya 
of Saida.  Tani added that the fishing sector is open to 
foreign investment and partnership. 
 
¶6.  In addition to fish production, the region supports 
related economic activities such as shipbuilding, but that 
sector is in sharp need of modernization.  According to Tani, 
at least 11 shipbuilding workshops in the Ain Temouchent 
region use traditional building methods.  Local officials 
told us they would prefer to maintain the region's skill and 
experience in wood shipbuilding while upgrading equipment and 
developing new skills through training across the sector. 
They want to adopt new fishing technologies, including the 
use of steel and fiberglass construction, and the use of GPS 
for safer and more efficient boat operations.  Both Benshali 
and Tani told us that they would welcome partnerships, 
exchanges and cooperation in order to develop the region's 
fishery.  (NOTE:  We have an exchange project under 
consideration in the area of wooden shipbuilding, with two 
proposed candidates from Ain Temouchent.  END NOTE.) 
 
NEW HOPE FOR OLD VINEYARDS 
-------------------------- 
 
¶7.  Seventy percent of Algeria's wine industry is controlled 
by the state-owned company ONCV (National Office of Wine 
Cultivation).  Created in 1968, it has ten subsidiaries and 
employs some 6000 workers.  While ONCV has vineyards across 
Algeria, roughly a third of its operations are centered in 
the west, where three-fourths of AlgeriaQ,s wine is produced. 
 Eighty-five percent of ONCV wine is consumed domestically, 
and 15 percent (approximately one million bottles per year) 
is exported to Europe and South Africa. 
 
¶8.  As with most of Algeria's agriculture sector, the wine 
industry has suffered over the years since independence.  In 
1961, Algeria cultivated 360,000 hectares of vines and was 
the sixth-largest producer of wine in the world.  Today, with 
only 85,000 hectares in cultivation, Algeria is ranked 19 
among global wine producers.  According to ONCV CEO Madjid 
Ameziani, Algeria has a program to plant 5,000 new hectares 
of vines with an eye toward varietals popular in world 
markets, such as merlot.  He said ONCV is also moving away 
from producing ordinary table wines and turning toward more 
prestigious varieties of higher quality.  Ameziani noted that 
ONCV is slated for privatization and/or partnerships, and 
hopes that new capital will help the industry meet its 
greatest challenges, packaging, branding and marketing. 
 
SPICING UP THE OLIVE MARKET 
--------------------------- 
 
¶9.  In addition to wine, the Mascara region of western 
Algeria hosts olive production around the community of Sig. 
According to olive processor Ali Elagag, the Sigoise olive 
was world reknowned from the 1950s to 1970s, when production 
dropped as trees were not replanted.  Since the 1980s drought 
has been a problem.  Elagag said that olive trees should be 
irrigated five times a year but the region is now considered 
dry.  Still, 90 percent of Algeria's commercial olive 
production is based in the west, specifically Sig and the 
farm belt outside the port city of Oran.  Elagag said that 
Algerian olive producers are not competitive and need to 
develop their equipment and intensify production in order to 
gain market share in the intense Mediterranean olive oil 
market.  In fact, Algerian producers find it difficult to 
compete with Spanish olives even within the domestic market. 
Elagag lamented that Algerian olive producers lag behind 
their neighbors to the west, because in Morocco the sector is 
developed in partnership with Spanish and French experts and 
investors. 
 
¶10.  Elagag owns a large plant that processes olives grown by 
both commercial olive producers and small-scale harvesters. 
He noted that olive production remains largely a part-time 
 
ALGIERS 00000143  003 OF 003 
 
 
activity as growers have turned to full-time employment away 
from the groves in order to make ends meet.  According to 
Said Bakhtaoui, an olive oil producer from Oran, investment 
is needed to transform Algeria's olive industry into a 
viable agribusiness.  Bakhtaoui produces an olive oil tested 
in the United States and found to possess several properties 
favorable to good health.  Still, he has found it difficult 
to market the specialty oil without greater capitalization. 
Even with a government program to plant 3500 hectares of 
olive trees since 2000, Bakhtaoui told us that private 
foreign investment is needed in the Oran region to bring 
olive production to scale, including the construction of an 
irrigation system based on desalinization in order to weather 
periods of drought. 
 
CONCLUSION: REAPING WHAT HAS BEEN SOWN 
-------------------------------------- 
 
¶11.  Algeria's agriculture sector has declined dramatically 
in the decades since independence and the discovery of large 
hydrocarbon deposits.  But the sector has not completely 
withered on the vine.  Some areas, properly encouraged, could 
provide growth for Algeria's economy in areas outside oil and 
gas.  Potential niche markets exist for Algerian wines, olive 
oil and fish, although traditional inefficient, state-run 
management controls remain a significant obstacle.  If 
Algeria expands its privatization program, foreign capital 
and expertise might flow into the sector and allow for 
production on a scale necessary for market expansion. 
Opportunities do exist not only for American agri-investors, 
but for equipment and technology producers.  Japan's 
commercial attache in Algiers told us that Japanese companies 
are expanding exchange programs in the fishing industry, and 
are looking to Algeria for both new supplies of fish and new 
markets for Japanese boat technology.  But, as our contacts 
have told us, efficient processing, packaging, and effective 
marketing remain the greatest challenges to Algerian 
producers, even in the domestic marketplace.  For the time 
being, and despite glimmers of hope, Algerian agriculture 
continues to stagnate, consistently outperformed by its 
Mediterranean neighbors in quality, price and supply. 
FORD