Grain stocks hit by drought in North Africa

RABAT - Drought is taking its toll on North Africa with top grain buyers Algeria and Morocco set for their biggest shortfall in five years, official and industry sources say.

The drought encompassing much of Southern Europe and North Africa has so far spared Tunisia, but farmers in Algeria and Morocco are clamouring for help, while governments are steeling themselves to bump up imports to feed the population.

"The government must take urgent measures to help over 2.5 million farmers be ready for the next season. We have got drought, and most of our people are pessimistic about the future," National Union of Algerian Farmers' president Mohamed Alioui said.

In Morocco the harvest has slumped by 57 per cent to 3.6 million tonnes. This has resulted in a 33 per cent rise in import needs for the June 2005-May 2006 business year to 4.9 million tonnes -- 2.3 million tonnes of it as soft wheat used mainly in bread making.

The rising imports have added to an already ailing trade balance, while the harvest's fall has contributed heavily to a recent sharp downward revision in the country's economic growth forecast for 2005.

Agriculture accounts for 14 per cent of the US$49-billion economy but employs 40 per cent of the 10-million workforce. The sector produces mainly subsistence crops.

A poor farming year often widens poverty, increases urban drift and heavier spending by a cash-tight state to keep farmers on the land.

Morocco has so far dedicated 7.0 billion dirhams (US$778 million) to alleviate the impact of this year's drought on farmers.

"This is to cancel debts of 100,000 farmers and to fund the conversion of cereal-planted areas into less vulnerable cultures like olive and fruits," a Moroccan Agriculture Ministry spokesman said.

Local farmers are paid up to 2,700 dirhams per tonne for soft wheat nearly three times the price of imported wheat.

In neighbouring Algeria, officials have not yet announced a harvest estimate for this year but industry sources expect it to be 2.5 million tonnes, down 37.5 per cent from the 4.0 million tonnes of the previous campaign.

Algeria, one of the biggest purchaser of cereals in the world bought five million tonnes last year and is expected to increase its imports this season to meet its annual needs estimated at seven million tonnes. Two-thirds of last year's imports were in durum wheat and a third in soft wheat.

Agriculture accounted for about 10 per cent of its US$82-85 billion gross domestic product (GDP) in 2004 and employs 25 per cent of the active population.

Mustafa Azouz, a 52 year-old farmer in the region of Ain Defla 120 km west of the capital Algiers, told Reuters: "I invested all the money I got a year ago from a bank loan in my small cereal field. I lost everything and now I must start reimbursing the loan." But Agriculture Minister Said Barkat rejected the farmers' union demand for drought compensation and pledged instead easier access to loans from the largely state-controlled banking system. The government previously said it will spend over 300 billion Algerian dinars from 2005-2009 to support this sector.

Mohamed Chokri Ayachi, head of the Tunisian state cereals authority Office des Cereales told local newspapers recently the harvest is expected to reach 2.3 million tonnes.

"It will be the first time in Tunisia's recent history that we have a good crop for the third year in a row," Agriculture Ministry senior official Badr Ben Ammar told Reuters.

Officials expected imports to be about the same as last year and the harvest to be over 2.0 million tonnes, but below the record 2.9 million tonnes posted in 2003. Tunisia grows mainly durum wheat, used for making cous cous and pasta, and to a lesser extent soft wheat and barley.

Tunisia looks unlikely to import any durum wheat needed to feed its 10 million population as it is largely self-sufficient. It will need to import about 900,000 tonnes of soft wheat, officials said.

Agriculture accounts for 12 per cent of GDP and is the country's biggest employer.

- REUTERS