Required Report - public distribution

**Date:** 10/20/2004

**GAIN Report Number:** AG4004

AG4004

**Algeria**

**Exporter Guide**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Michael FAY

U.S. Embassy

**Prepared by:**

Nabila Hales

**Report Highlights:**

Liberalization of the Algerian food Processing sector provides U.S.
suppliers opportunity to sell agricultural products to the growing
Algerian economy. In some cases processors seek direct contact with U.S.
suppliers. A growing number of supermarkets can provide outlets for
imported high value products.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Algiers \[AG1\]

\[AG\]

**SECTION I. MARKET OVERVIEW**

Algeria is the second largest country in Africa (the tenth largest in
the world), and is one of the largest importers of agricultural products
in Africa, thus make it an enticing market. The energy sector provides
most of its economic livelihood, accounting for more than 90 percent of
export earnings, 30 percent of GDP, and 60 percent of government
revenue. It is the world's second largest exporter of liquefied natural
gas.

Agriculture represents less than 12 percent of Algeria's GDP and
provides a means of livelihood for at least 20 percent of the Algerian
population. The country's arable land or useful agriculture land is
about 8 million hectares, which is about 3 percent of its total area
(238 million hectares).

Largely desert, Algeria will never be self sufficient in food, and
imports account for 75 percent of total needs. Agriculture is a
rainfall-dependent sector, and suffered from drought for several
consecutive years.

However, agricultural production increased by 5-10 percent in both 2000
and 2001, and by 17 percent in 2003. This is mainly due to the launch of
an ambitious plan of farmland conversion as part of the new agriculture
development program (PNDA), in order to better manage occasions of
drought. Grains production is focused in the most productive regions
(eastern and central plains with rainfall between 450mm-800mm). More
traditional dry land crops (vineyards, certain fruit trees) are being
encouraged for the regions that have less rainfall, such as the western
regions, the steppes and the Sahara regions.

Current Economic Situation: Algeria has moved from a centrally planned
to a largely

market-oriented economy, and has undertaken a far-reaching
macro-economic reform plan with the support of the International
Monetary Fund (IMF). However, economic growth is still constricted by
large unemployment (over 27.3 percent), a lack of modern financial
services and antiquated telecommunications systems. The Algerian
government started the restructuring of the latter, with liberalization
of the telephone market in summer 2001.

In the field of agribusiness, the government has committed to
disengaging itself and letting the private sector take the main role in
the economy. Since the beginning of the privatization process and
disappearance of monopolies in 1996, local private investments have
risen sharply, with the result that the private sector has taken a
substantial share of the market. The state-owned beverage and milling
sectors are scheduled to be privatized, as well as some sugar and
vegetable oil refineries. The dairy group Giplait is also scheduled for
privatization in December 2004.

**Banking System:**

The Central Bank of Algeria (Banque d'Algérie) is the monetary authority
that regulates both private and state-owned commercial banks. There are
six state-owned banks: the External Bank of Algeria (BEA), the Popular
Credit of Algeria (CPA), the Local Development Bank (BDL), the
Agriculture Development Bank (BADR), the National Bank of Algeria (BNA),
and the Algerian Development Bank (BAD).

While the lack of a modern financial services sector restricts the
growth of the economy, several private banks now operate in Algeria. The
most prominent are the American group Citibank; the French banks
Natexis, Banques Populaires and Societe Generale; and the Arab group
ABC. Reforming the state-owned banks is long overdue and a priority for
the GOA.

**Key Demographic Developments:** Algeria has slightly more than 31
million people. Sixty percent of the population lives in cities, 20
percent in semi-built-up cities and 20 percent in rural areas. The
capital Algiers, with 3 million people, is the nation's largest city,
followed by Oran with 1.5 million people. Industry and services employ
half of the country's working population

Algeria's official language is Arabic but Amazigh (a Berber language)
and French are spoken throughout the country. The prevailing religion is
Islam.

For the most part, Algerians have traditional cooking habits, but
changes are occurring in the cities where the tendency of young
households is to adopt the western lifestyle. As the number of working-
women has increased, habits have started to change, and consumers are
turning to ready-for-use or semi-processed products. Some consumers buy
home-made products directly from non working women who sell their
products in order to help the family income.

+----------------------------------------+-----------------------------+
| Total Population (2002)                | 31.2 million                |
|                                        |                             |
| Population Growth Rate (2003)          | 1.53 %                      |
|                                        |                             |
| Labor Force Growth Rate (1998)         | 4.4 %                       |
|                                        |                             |
| Percentage of Population under the Age | 32 %                        |
| of 15 (2003)                           |                             |
|                                        | 23.65 - 40.27 %             |
| Illiteracy Rate Men/Women (1998)       |                             |
|                                        | 41 %                        |
| Population Living in Rural Areas       |                             |
| (1998)                                 | 6.5                         |
|                                        |                             |
| Average Number per household (1998)    |                             |
+----------------------------------------+-----------------------------+

**Consumer Spending:** Since the economy was liberalized in 1997, the
number of private importers has risen sharply, and consumers have become
more accustomed to seeing imported products and semi-processed products
sold in little stores and small private supermarkets. The former
state-owned distribution chain (ONACO) was restructured in 1980 to form
ENAPAL, with wholesale units linked directly to the state supermarket
company (SNGA). The latter was closed in 1996, and some important
private businessmen have bought some of the old state supermarkets in
order to re-open them as local private chains. Consumers can find bulk
and packaged products and now, high value products, both local and
imported, even though the latter are expensive for some households with
low income, in many different stores and small supermarkets that are
growing very fast.

  ----------------------------------- -----------------------------------
  **Advantages**                      **Challenges**

  Local production is heavily         Geographical disadvantage, due to
  dependent on rainfall and meets     proximity with Europe.
  only 25% of the need.               

  American products are always        Algerian importers usually do
  appreciated as good quality for     business through Europe
  Algerian.                           

  The local food processing industry  No direct shipping lines, making
  is improving and upgrading, and is  transit from Europe necessary.
  mostly based on imported raw        
  materials.                          

  Distribution sector needs to be     Custom duties on high value
  improved, with need for American    products
  know-how.                           

                                      Traditional distribution network
                                      still predominant

                                      French continues to be predominant
                                      business language.
  ----------------------------------- -----------------------------------

**SECTION II. EXPORTER BUSINESS TIPS**

-   Standards are same as Codex Alimentarius standards. Some American
    grades and standards are being introduced into regulations in the
    field of quality control of grains and pulses.

-   To clear customs some sanitary certificates are required (depending
    on the products), such as dairy products.

-   Imported goods are subject to custom duties, VAT, and some local
    specific taxes. Some customs dues fees of 2 percent and custom
    processing fees of 0.4 percent have to be added to the applied
    tariffs.

With an economic reforms program, starting from July 2001 Algeria
replaced some specific taxes for high value products. The old \"Valeur
administree\"\-- a local tax arbitrarily decided upon by authorities and
paid in Algerian dinars--has been replaced by a new temporary additional
duty (DAP), which decreases 12 percent each year to become 0 in 2006.
(It is 24 percent in 2004.) The TSA (additional specific tax) has been
replaced by TIC (domestic consumption tax), some products are affected
by this tax; edible fruits (chapter 8), coffee- tea & spices (chapter
9), meat, fish and seafood preparations (chapter 16), beverages, alcohol
and vinegar (chapter 22). The products affected by this tax are
considered as luxury goods.

-   In addition, custom duties (which used to range from 5 to 45
    percent) were reduced and are now 30 percent.

-   The VAT (value added tax) was reduced from 14 to 21 percent to range
    now from 7 to 17 percent.

-   Algeria uses the metric system for measurement.

-   French is still the predominant business language. French
    promotional materials will definitely have an advantage in dealing
    with importers.

-   Most importers are located in the large cities and import through
    the main active ports (Algiers, Oran, Bejaia, and Jijel). They
    import both bulk and packaged products. The products are distributed
    to wholesalers in wholesale markets, then sold in small stores,
    supermarkets and open markets.

**SECTION II. MARKET SECTOR STRUCTURE AND TRENDS**

The limiting factor to increasing demand for consumer-oriented products
is still the combination of low incomes and high consumer prices for
imported products. During the period of state monopoly, imported
products were supported by the state and their prices were lower, so
more Algerian consumers were able to purchase them. Since privatization,
however, products are sold at their real prices.

With the processing sector improving, many food processors can offer
products with lower prices by importing the raw material and processing
it locally. For example, the milling sector can offer cheaper semolina
and flour produced locally from imported wheat, and dairy processors
offer dairy products processed locally from imported milk powder or
cheddar cheese.

The adjustments in customs duties and taxes allow consumers to purchase
some luxury goods at lower prices. For example, bananas used to be sold
at 450 Algerian Dinars per kilogram (about \$6), whereas now consumers
can buy them for only 80 AD (\$1) per kilogram. Hopefully, these
adjustments will help to encourage Algerian consumption of
consumer-oriented products, although other problems (long shipping times
and lack of direct shipping lines) continue to face U.S.
consumer-oriented products.

**High value Products for Food Processing Sector:**

> With local processors becoming numerous and quality conscious, U.S.
> suppliers can play a major role in fulfilling the demand for regular
> quantities of raw materials. Important processing sectors include the
> dairy-processing sector and the milling sector (with about 250 mills
> currently operational) are expecting U.S. suppliers to meet demand.
> Some important processors prefer to import their raw materials
> directly rather than buying them locally from importers, because their
> market is not regularly supplied. Some are interested in developing
> relationships directly with U.S. suppliers.
>
> With the numerous small supermarkets and stores that grown since the
> end of the monopoly of the state-owned distributions chains, many
> opportunities are opening for high value products sector. Currently,
> these stores are filled with European high value products.

**Export of Seafood Products to Algeria:**

Algeria is looking for partners in order to improve the seafood and
fishing sector. Algerian consumes 3.2 kg of fish products per year per
capita, and produces 70,000 - 100,000 tons of fish per year (compared
with Morocco, which produces about 1 million tons per year). Algeria has
15 ports for fishing and 50 percent of the flotilla is 20 years old. In
the markets, seafood is very expensive and out of reach of many
households. For example, prawns cost at least 500 AD (\$6.50) per
kilogram, and the most popular and cheapest seafood, sardines, cost 100
AD (\$1.30) per kilo. Most canned tuna sold in supermarkets is imported,
as well as frozen fish and seafood. Fresh fish is only sold in open
markets. Some private canners are beginning operations and need raw
materials.

**SECTION IV. BEST HIGH VALUE PRODUCT PROSPECTS**

-Pulses (lentils, peas, chickpeas, beans)

-Dried fruits (dries prunes, dried raisins)

-Dried Nuts (Almonds, peanut, pistachio)

-Canned fruits (tropical)

-Canned corn

-Confectionaries

-Honey

-Whisky

-Cereal derivatives

-Skimmed Milk powder

-Sauces (ketchup\...)

**SECTION V**. **KEY CONTACTS AND FURTHER INFORMATION:**

The Office of Agricultural Affairs at the American Embassy Algiers
provides trade servicing and information about Algerian market. The
service provided by the office includes market briefing, market tours,
lists of importers, setting up agendas, meetings and hotel reservations.

**US. Embassy / USDA- Foreign Agricultural Service Contacts:**

Michael FAY, Regional Agricultural Attaché (Rabat) [E-mail:]{.underline}
<AgRabat@.usda.gov>

Nabila Hales: Agricultural Marketing Specialist (Algiers) [E-mail:
Nabila.Hales@usda.gov]{.underline}

Phone: (213-21) 69-31-17

Fax : (213-21) 69-37-72

Local Address: 4, chemin Bachir Ibrahimi, Hydra, BP 408, Alger Gare,
Algeria

**[Local Contacts:]{.underline}**

**[Ministry of Agriculture.]{.underline}**

[12, Boulevard Colonel Amirouche, Alger, Algerie.]{.underline}

> [Phone: (213-21) 71-17-12]{.underline}
>
> [Fax: (213-21) 71-88-70]{.underline}

**[Direction of Plant Protection and Technical Control]{.underline}**

[Ministry of'Agriculture]{.underline}

[12, Boulevard Colonel Amirouche, Algiers, Algeria]{.underline}

> [Phone:( 213-21) 74-95-66]{.underline}
>
> [Fax : (213-21) 74-95-70]{.underline}

**[Direction of Veterinary Services]{.underline}**

[Ministry of Agriculture]{.underline}

[12, Boulevard Colonel Amirouche, Algiers, Algeria]{.underline}

> [Phone: ( 213-21) 74-34-34]{.underline}
>
> [Fax : (213-21) 74-34-34]{.underline}

**[Quality control and squad services]{.underline}**

[Ministry of Commerce]{.underline}

[Batiment Sonatrach, Boulevard Mohamed V, Alger,
Algérie**.**]{.underline}

[Phone: (213-21) 63-11-53]{.underline}

> [Fax : ( 213-21) 63-11-53]{.underline}

**[Customs services]{.underline}**

[Direction des Douanes, Centre National de l'Informatique et des
Statistiques.]{.underline}

[17, rue des Mourabitounes, Place du 1er Novembre, Alger,
Algérie.]{.underline}

[Phone : (213-21) 71-56-00]{.underline}

> [Fax : (213-21)71-56-40]{.underline}

**[HOTELS:]{.underline}**

**[Hotel El-Djazair (5 stars)]{.underline}**

[Avenue Souidani Boudjemaa- Algiers]{.underline}

[Phone : (213-21) 69-21-21 or (213-21) 23-09-33 to 37]{.underline}

[Fax : (213-21) 69-35-08]{.underline}

[(213-21) 69-27-00]{.underline}

[**Hotel El-Aurassi** **(5 stars)**]{.underline}

[Avenue Frantz Fanon- Algiers]{.underline}

[Phone : (213-21) 74-82-52]{.underline}

[Fax : (213.21) 71-72-87 or (213-21) 71-72-90]{.underline}

**[Hotel Sheraton- Club des Pins; (5 stars)]{.underline}**

[Staoueli- Algiers]{.underline}

[Phone : (213-21) 37-77-77 or (213-21) 37-88-88]{.underline}

[Fax : (213-21) 37-74-10 or (213-21) 37-77-00]{.underline}

**[Hotel Hilton (5 stars)]{.underline}**

[Palais des Expositions - Algiers]{.underline}

[Phone :(213-21) 21-96-96 or (213-21) 20-10-10]{.underline}

[Fax : (213-21) 21-06-06 or (213-21) 21-95-74]{.underline}

**[Hotel Sofitel (5 stars)]{.underline}**

[Le Hamma Algiers]{.underline}

[Phone : (213-21) 68-52-10]{.underline}

[Fax :]{.underline} [(213.21) 67-31-42]{.underline}

[**Hotel Mercure** **(5 stars)**]{.underline}

[BP 12- 5 Juillet, Bab Ezzouar- Algiers]{.underline}

[Phone : (213-21) 24-59-70]{.underline}

[Fax :]{.underline} [(213.21) 24-59-10/19]{.underline}

**[FOOD & AGRICULTURAL FAIRS:]{.underline}**

[DOMESTIC PRODUCTION FAIR: Held each year in October, this fair is the
best to reach local operators in food processing and manufacturing, as
well as institutions involved in the economic process
(banks,etc.).]{.underline}

[AGRICULTURE FAIR : Held every year during March. This fair features
farmers, breeders, food processors, producers and importers, and all
those who are directly linked to the profession ( agriculture services,
agriculture chambers, Institutes, etc.).]{.underline}

[ALGIERS INTERNATIONAL TRADE FAIR : Held each year in mid-June, it
gathers a large number of foreign participants. The U.S. has sponsored a
U.S. pavilion for the past four years, after an absence of seven
years.]{.underline}

**[WORKING DAYS / HOURS]{.underline}**

[Working days in Algeria are Saturday through Wednesday]{.underline}

[Typically working hours are 8:30-12:00 and
13:00pm-16:30pm.]{.underline}

[Banks and insurance companies have different week-ends ( Friday and
Saturday)]{.underline}

[Algeria is on Greenwich Mean Time + 1 .]{.underline}

[US Embassy Algiers and FAS Office working days and hours are Saturday
through Wednesday from 8:00 -12:00 and 13:00- 5:00 pm.]{.underline}

[Most of the active population and administration close in August for
vacation]{.underline}

**[HOLIDAYS:]{.underline}**

[Religious holidays follow the lunar calendar and thus move back 10 days
every calendar year.]{.underline}

[Below are Algerian holidays for the calendar year 2005.]{.underline}

> [January 1, 2005]{.underline} [New year]{.underline}
>
> [January 24, 2005]{.underline} [Aid El Adha (Feast of
> Lamb/Pilgrimage)]{.underline}
>
> [February 13, 2005]{.underline} [Moharem (First Moslem New
> Year)]{.underline}
>
> [February 22, 2005]{.underline} [Achoura (Muslim Feast)]{.underline}
>
> [May 1, 2005]{.underline} [Algerian Labor Day]{.underline}
>
> [April 24, 2005]{.underline} [Aid El Mawlid (Prophet's
> birthday)]{.underline}
>
> [June 19, 2004]{.underline} [National Recovery]{.underline}
>
> [July 5, 2005]{.underline} [Algerian Independence Day]{.underline}
>
> [November 01, 2005]{.underline} [Algerian Revolutionary
> day]{.underline}
>
> [November 14, 2005]{.underline} [Aid El Fitr (End of the holy month of
> Ramadan)]{.underline}

**[A. KEY TRADE & DEMOGRAPHIC INFORMATION]{.underline}**

  --------------------------------------------------------- ---------------------- --------------------
  [Agricultural imports from All Countries (2003)           [2,590]{.underline}    [9 %]{.underline}
  (\$Mil.)/US. Market Share]{.underline}                                           

  [Consumer Food Imports From All Countries (\$Mil.) / US.                         
  Market Share(%)]{.underline}                                                     

  [Edible Fishery Imports From All Countries(\$Mil.)US                             
  market Share (%)]{.underline}                                                    

  [Total Population (Millions)/Annual Growth Rate           [32]{.underline}       [1.5%]{.underline}
  (2004)]{.underline}                                                              

  [Urban Population (Millions) / Annual Growth              [18]{.underline}       [1.5%]{.underline}
  Rate]{.underline}                                                                

  [Number of Major Metropolitan Areas (a)]{.underline}      [14]{.underline}       [-]{.underline}

  [Size of the Middle Class (Millions) / Growth Rate (%)    [5]{.underline}        
  (b)]{.underline}                                                                 

  [Per Capita Gross Domestic Products (\$US)                [\$2093]{.underline}   
  (2003)]{.underline}                                                              

  [Unemployment Rate (2001)]{.underline}                    [27.3%]{.underline}    

  [Per Capita Food Expenditures (\$US) (c)]{.underline}     [\$940]{.underline}    
  --------------------------------------------------------- ---------------------- --------------------

  --------------------------------------------------------- ---------------------- -----------------
  [Percentage of Female Population Employed                 [9.7%]{.underline}     [-]{.underline}
  (1998)]{.underline}                                                              

  [Exchange Rate (US \$1 is: in Algerian                    [72.607]{.underline}   [-]{.underline}
  Dinars)(2004)]{.underline}                                                       
  --------------------------------------------------------- ---------------------- -----------------

[(a) Areas which have International airports and ports with population
in excess of 600,000]{.underline}

[(b) Estimated population that can regularly purchase imported food
products]{.underline}

[(c) AgAtt Estimates.]{.underline}