In addition to the military, humanitarian and geostrategic fallout from the war in Ukraine, the world is also concerned about its economic consequences. Algeria, which is not immune to these consequences, should learn from this conflict where agriculture is proving to be a formidable strategic weapon.
The two belligerents are large suppliers of the planet in energy and basic food products, whose prices, already on the rise for a few months, soared after the launch of the Russian military operation, Thursday, February 24.
Oil is at its highest since 2014 and wheat has surpassed its 2012 highs.
Russia is one of the most important players in the global energy market. It alone supplies a third of Europe’s gas needs.
Soaring oil and wheat prices
Even before the outbreak of the war, Algeria was mentioned among the alternatives to deal with possible disruption of the supply of Europe and in the long term, to get out of this dependence vis-à-vis Russia. Close to Europe and with significant reserves and infrastructure, Algeria is mainly linked to the continent by numerous gas pipelines.
On the very day of the outbreak of hostilities, the President of the Republic Abdelmadjid Tebboune recalled these strengths and reiterated Algeria’s readiness to contribute to the energy security of its partners “through securing the supply of hydrocarbons, in particular, natural gas “.
While the new situation presents itself as an opportunity to first take advantage of higher prices and then further develop the national hydrocarbon industry and transport and export capacities, its food spillovers are less beneficial for Algeria.
Wheat, which is one of the biggest importers in the world, has reached highs, up to 340 dollars per ton. The same is true for other food raw materials that Algeria does not produce in sufficient quantities, or not at all, such as oilseeds.
Algeria’s already large food import bill will be even higher. But there too, things present themselves as an opportunity to develop all agriculture, the cereal sector in particular.
It is a question of taking example from Russia which knew how to make of one of its weaknesses vis-a-vis the Westerners, a major asset, in addition of course to the firepower of its army. In 2014, after the annexation of Crimea, Russia suffered sanctions from the West which had painful consequences on the supply of its population with basic food products. It was then a net importer of many products, including wheat, meats…
A trend reversed in a few years
This episode prompted the Russian authorities to invest massively in agriculture to achieve food self-sufficiency. A total of $52 billion has been invested in the sector. Admittedly, climate change has been a favorable factor since vast frozen lands have become cultivable, but what the Russians have done is akin to a small miracle. In seven years, Russia has become self-sufficient in pork and poultry meat (thanks to intensive farming) and above all a major player in world wheat production.
It now exports half of its production and represents between 17 and 20% of world exports. With Ukraine, which holds 12%, almost a third of the planet’s wheat comes from this region.
With the ongoing war and the very likely control of Ukraine or part of its territory, Russia could get its hands on a significant part of the world’s wheat trade. Analysts also suspect it of seeking to control Ukrainian Black Sea ports from which wheat is shipped to the main buyers, countries in North Africa and the Middle East.
Agriculture in Algeria: significant investments
Algeria has also tried to develop its agriculture, with just as substantial investments, but the results are not as resounding. Since 2000, the various agricultural support programs have swallowed up at least 30 billion dollars according to various estimates, and two decades later, the country is worried about its food because of a war that is taking place thousands of kilometers from its borders.
Algerian agriculture produced 25 billion dollars in 2021, but Algeria remains a net importer of cereals, milk, meats, sugars, and oils, i.e. all the products in the index basket. United Nations Food Organization (FAO).
The investments made have only made it possible to increase arable land by one million hectares (from 7.5 million hectares in 1998 to 8.5 million in 2018). Cereal cultivation, which is nevertheless a priority, performs very precariously because of its very strong dependence on rainfall. In 2017-2018, 6.5 million tons were produced, against forecasts of less than 3 million tons for the current year.
The example of Russia, which has used oil revenues to create another inexhaustible resource, must be pondered. Algeria’s potential is enormous with areas of arable land that can reach up to 30 million hectares and some of the largest underground water reserves in the world. The window of opportunity offered by the current rise in hydrocarbon prices must be seized to develop all agricultural sectors, especially the most sensitive.
