Required Report - public distribution

**Date:** 10/31/2005

**GAIN Report Number:** AG5006

AG5006

**Algeria**

**Dairy and Products**

**Annual**

**2005**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

Nabila Hales

**Report Highlights:**

Despite high world prices, imports demand for raw dairy material remains
strong because of the numerous processing plants operating in Algeria.
U.S. origin dairy products totaled \$20 million and represented about 16
percent of U.S. agricultural exports to Algeria during the first 8
months of the year. Trade in dairy products will be affected by the
Algeria-EU trade agreement, which entered into force September 1, 2005.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Algiers \[AG1\]

\[AG\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Production 3](#production)

[Production Subcategory 3](#production-subcategory)

[Consumption 3](#consumption)

[Consumption Subcategory 3](#consumption-subcategory)

[Trade 4](#trade)

[Trade Subcategory 4](#trade-subcategory)

[Stocks 4](#stocks)

[Stocks Subcategory 4](#stocks-subcategory)

[Policy 5](#policy)

[Policy Subcategory 5](#policy-subcategory)

[Marketing 6](#marketing)

[Marketing Subcategory 6](#marketing-subcategory)

# Executive Summary

# Production

According to Ministry of agriculture recent declaration, dairy
production is still insufficient and remains well short of the need that
is estimated to about 3 million MT.

Even though, the new agriculture development program (PNDA) that was
launched in 2000, focused on the improvement of dairy production, the
latter reached only 1.9 million MT in 2004 of which 80 percent is of
bovine origin while the balance is provided by goats, sheep, and camels.
Algerian dairy production could benefit from improved management and
better coordination of the milk collection network. Only 108 million
liters of fresh milk were collected in 2004, which go generally to
production of Camembert cheese or Brie.

The Algerian dairy sector relies on reconstituted milk. Fluid milk is
produced from blended imported non-fat dry milk with anhydrous milk fat
and sold in small plastic bags as pasteurized milk with 24h shelf-live.

State-owned group Giplait remains the leader in the pasteurized
reconstituted milk market with 33 percent share; the rest is shared
among about 30 private creameries. Since 2001, new creameries have
specialized in the production of Ultra-High-Temperature treated
reconstituted milk.

The private sector has typically been more dominant in the production of
processed dairy products (yogurt, cheese, butter, sour milk, and dairy
desserts). Because of the low price fixed by the government for
pasteurized fluid milk, the private sector would rather produce these
more profitable products. The consumer price is still fixed by the
Ministry of Commerce to 25 AD (\$0.31) per liter (last revision in
February 2001).

## 

## Production Subcategory

GOA fixed sales price for fluid milk is very low compared to production
costs and generates an imbalance between domestic demand and local
production, and has a big impact and direct consequence on private
companies and Giplait group operations. Some companies will stop
operation if fixed price is not adjusted.

## 

# Consumption

According to an international bureau of study, the consumption per
capita in Algeria reached 110 liter. With the increasing number of dairy
plants and the availability of various dairy products, consumption of
dairy products has increased compared to past years, and currently
Algeria is considered as first dairy consumer in the Maghreb.

Fluid milk is sold on the local market under three kind of products;
pasteurized reconstituted milk in small bags of one liter with 24h
shelf-life with a GOA fixed price; fresh milk produced from cows sold
directly to consumers from the farm with higher prices than the GOA and
Giplait group's; and UHT in tetra packs boxes sold by some private
processors. Whole milk powder is also imported in small boxes of 500g
for direct sale to consumers.

## 

## Consumption Subcategory

**[Table 1: Chronology of Retail Prices of Milk in Algerian Dinars
(AD):]{.underline}**

+-------+----------+-------------+----------+-------------+----------+
| **Ye  | **Farm   | **Fixed     | **Whole  | **Ultra     | **       |
| ars** | price of | price for   | milk     | High        | Exchange |
|       | fresh    | re          | powder   | Te          | Rate**   |
|       | milk**   | constituted | (0.5 kg  | mperature** |          |
|       |          | milk (1     | boxes)** |             | **(AD in |
|       | **(1     | liter)**    |          | **Treated   | \$1)**   |
|       | liter)** |             |          | re          |          |
|       |          |             |          | constituted |          |
|       |          |             |          | milk (1     |          |
|       |          |             |          | liter)**    |          |
+-------+----------+-------------+----------+-------------+----------+
| 1999  | 40       | 20          | 120      | \-          | 68       |
|       |          |             |          |             |          |
| 2000  | 40       | 20          | 120-140  | \-          | 78       |
|       |          |             |          |             |          |
| 2001  | 45       | 25          | 120-140  | \-          | 76       |
|       |          |             |          |             |          |
| 2002  | 45       | 25          | 140      | 50          | 80       |
|       |          |             |          |             |          |
| 2003  | 50       | 25          | 120-140  | 50          | 77       |
|       |          |             |          |             |          |
| 2004  | 50       | 25          | 148      | 48          | 72       |
|       |          |             |          |             |          |
| 2005  | 60       | 25          | 170      | 45          | 73       |
+-------+----------+-------------+----------+-------------+----------+

Source: Ministry of Commerce and Local Market

## 

# Trade

Algeria is a major importer of dairy product.

According to Algerian Customs data, the import bill for dairy products
reached \$808 million (23 percent of total agricultural imports) in
2004. The bill increased 55 percent comparing to 2003, due mainly to the
increase of the world price for dairy products on one side and to the
numerous dairy-processing plants demand for raw material in the other
side.

Imports of dairy products From January through August 2005 reached \$475
million of which \$300 million for whole milk powder and \$175 million
for non-fat dry milk.

The numerous demands for raw material (whole milk powder and non- fat
dry milk as well as cheese for processing) will still remain important
for upcoming years, since most of new processors are operating now, they
need to supply their plants even if prices are high. Again in 2004, for
total butter and anhydrous milk fat imported, only 20 percent was
butter, 80 percent was anhydrous milk fat destined to the production of
reconstituted milk. Regarding cheese, 97 percent was destined to
processing.

## 

## Trade Subcategory

Origin of imports remained the same for all dairy products; most of the
whole milk powder is imported from France, Argentina, Belgium, and New
Zealand. Non-fat dry milk is also imported from the same countries plus
the United States, Poland, and Czech. Butter and Cheese are mostly
imported from Spain, Netherlands, New Zealand, Ireland, Australia and
France.

U.S. origin imports of dairy products increased in 2004 and there is
considerable interest in purchasing from the United States.

# Stocks

Enter stocks text here

## Stocks Subcategory

Enter stocks subcategory text here

# 

# 

# 

# Policy

Some changes will occur on Algeria's dairy products imports from EU,
following the implementation of EU trade agreement that went into effect
on September 1, 2005;

\- The temporary duty will be eliminated by January first, 2006 for EU
origin dairy products: (fluid milk and cream non-concentrated and
sweetened, yogurt, butter, cheese (grated, powdered, veined, spread or
others).

-Duties are reduced or eliminated for some products within limits of
quotas; e.g. for concentrated and sweetened milk powder or granulated or
other forms and cream containing no more than 1.5% fats, duties are
eliminated for a quota of 30,000 tons. For non-sweetened milk powder or
granulated or other form as well as cream containing more than 1.5% of
fats, duties are also eliminated for a quota of 40,000 tons.

Regarding cheese for processing, duties are 50 percent reduced for 2,500
tons. (Duties for processing cheese are currently 30 percent). Duties
for other cheese are eliminated for 800 tons. (See table below).

## Policy Subcategory

### 

### [Table: Regulation Regarding EU dairy products imported to Algeria]{.underline} 

+--------+------------------------------------+-------+-------+-------+
| NC     | Designation of merchandises        | Ap    | C     | Pr    |
|        |                                    | plied | ustom | efere |
|        |                                    | c     | Duty  | ntial |
|        |                                    | ustom | Redu  | T     |
|        |                                    | Duty  | ction | ariff |
|        |                                    | (%)   |       | Q     |
|        |                                    |       | (%)   | uotas |
|        |                                    |       |       |       |
|        |                                    |       |       | (     |
|        |                                    |       |       | Tons) |
+--------+------------------------------------+-------+-------+-------+
|        |                                    | a\)   | b\)   | c\)   |
+--------+------------------------------------+-------+-------+-------+
| 0402   | Non fat Dry Milk powder            | 5     | 100   | 3     |
| 10     |                                    |       |       | 0.000 |
+--------+------------------------------------+-------+-------+-------+
| 0402   | Whole milk powder                  | 5     | 100   | 4     |
| 21     |                                    |       |       | 0.000 |
+--------+------------------------------------+-------+-------+-------+
| 0406   | Cheese for Processing              | 30    | 50    | 2.500 |
| 90 20  |                                    |       |       |       |
+--------+------------------------------------+-------+-------+-------+
| 0406   | Other Cheese                       | 30    | 100   | 800   |
+--------+------------------------------------+-------+-------+-------+

For EU origin products listed above, Algerian import custom duties are
not higher than those indicated in column a, reduced in indicated
proportions in column b and within the limits of the tariff quotas
indicated in column c.

Algeria gives two kinds of preferential duties to EU products entering
Algeria. First list represents immediate concessions; fats and oils
(vegetal or animal origin), extracts, pasta, and infantile preparations
are exempted. Dairy products are included in a second list that
represents recorded concessions scheduled to start 5 years after the
implementation of the treaty; as yogurt, sour milk, butter and dairy
spreads.

Regarding Algerian products entering EU, duties are eliminated for a
quota of 1,500 tons for all sour milks, and yogurts.

Tariff dismantlement and quotas system applies only on EU origin
products. The latter require a certificate of circulation called "EUR1"
that attests the origin of the products. For recalling, 60 percent of
Algeria's imports come from EU (\$10 billion).

# 

# 

# Marketing

Since the Algerian economy was liberalized, many market development and
business opportunities have arisen. Many U.S. suppliers are not aware of
the market possibilities or shy away from the market because of unrest
during the past ten years, and many Algerian buyers are not acquainted
with U.S. products because of competition from EU that is intense due to
geography.

Enter marketing text here

## Marketing Subcategory

On the business side, the number of private processors continues to grow
and many processing plants appear to demand imported raw material and
process it locally. **U.S. suppliers can play a major role in fulfilling
the demand for regular quantities of raw materials.** Many opportunities
are opening in high value products sector as well, with the numerous
small supermarkets and store that grown since the end of the monopoly of
the state-owned distributions chains, and which are currently filled
with European high value products.

On the program development side, Ministry of Agriculture development
program (PNDA) had the main objective of increasing and improving
agricultural productions of which dairy production had a large focus; -
the GOA reopened the imports of heifers from Europe after a ban of three
years because of the BSE disease. There should be opportunities for U.S.
dairy genetics (embryos and semen).

  --------------- ---------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **Commodity**   **Dairy,                                                  (1000 MT)                    
                  Dry Whole                                                                              
                  Milk                                                                                   
                  Powder**                                                                               

                  2004       Revised           2005       Estimate          2006       Forecast          UOM

                  USDA       Post              USDA       Post              USDA       Post              
                  Official   Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                  \[Old\]                      \[Old\]                      \[Old\]                      

  **Market Year              01/2004                      01/2005                      01/2006           MM/YYYY
  Begin**                                                                                                

  Beginning       9          9                 30         30                40         30                (1000 MT)
  Stocks                                                                                                 

  Production      0          0                 0          0                 0          0                 (1000 MT)

  Intra EC        0          0                 0          0                 0          0                 (1000 MT)
  Imports                                                                                                

  Total Imports   150        161               150        160               0          160               (1000 MT)

  TOTAL Imports   150        161               150        160               0          160               (1000 MT)

  TOTAL SUPPLY    159        170               180        190               40         190               (1000 MT)

  Intra EC        0          0                 0          0                 0          0                 (1000 MT)
  Exports                                                                                                

  Total Exports   0          0                 0          0                 0          0                 (1000 MT)

  TOTAL Exports   0          0                 0          0                 0          0                 (1000 MT)

  Human Dom.      129        140               140        160               0          160               (1000 MT)
  Consumption                                                                                            

  Other Use,      0          0                 0          0                 0          0                 (1000 MT)
  Losses                                                                                                 

  Total Dom.      129        140               140        160               0          160               (1000 MT)
  Consumption                                                                                            

  TOTAL Use       129        140               140        160               0          160               (1000 MT)

  Ending Stocks   30         30                40         30                0          30                (1000 MT)

  TOTAL           159        170               180        190               0          190               (1000 MT)
  DISTRIBUTION                                                                                           

  Calendar Yr.    0          0                 0          0                 0          0                 (1000 MT)
  Imp. from U.S.                                                                                         

  Calendar Yr.    0          0                 0          0                 0          0                 (1000 MT)
  Exp. to U.S.                                                                                           
  --------------- ---------- ----------------- ---------- ----------------- ---------- ----------------- ---------

  --------------- ---------------------------------- ------------ ---------
  **Import Trade                                                  
  Matrix**                                                        

  **Country**     Algeria                                         

  **Commodity**   Dairy, Dry Whole Milk Powder                    

  Time Period     January                            Units:       MT

  Imports for:                                                    **1**

  U.S.            487                                U.S.          

  Others                                             Others       

  Argentina       40177                                            

  France          38010                                            

  New Zealand     23691                                            

  Belgium         17372                                            

  Ukraine         6980                                             

  Ireland         5990                                             

  Indonesia       3599                                             

  Russia          2821                                             

  Brazil          2646                                             

  Poland          2574                                             

  Total for       143860                                          0
  Others                                                          

  Others not      17022                                            
  Listed                                                          

  Grand Total     161369                                          0
  --------------- ---------------------------------- ------------ ---------

  --------------- ------------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **PSD Table**                                                                                             

  **Country**     **Algeria**                                                                               

  **Commodity**   **Dairy,                                                     (1000 MT)                    
                  Milk, Nonfat                                                                              
                  Dry**                                                                                     

                  2004          Revised           2005       Estimate          2006       Forecast          UOM

                  USDA Official Post              USDA       Post              USDA       Post              
                  \[Old\]       Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                                                  \[Old\]                      \[Old\]                      

  **Market Year                 01/2004                      01/2005                      01/2006           MM/YYYY
  Begin**                                                                                                   

  Beginning       10            10                10         10                10         10                (1000 MT)
  Stocks                                                                                                    

  Production      0             0                 0          0                 0          0                 (1000 MT)

  Intra EC        0             0                 0          0                 0          0                 (1000 MT)
  Imports                                                                                                   

  Total Imports   100           90                100        100               0          100               (1000 MT)

  TOTAL Imports   100           90                100        100               0          100               (1000 MT)

  TOTAL SUPPLY    110           100               110        110               10         110               (1000 MT)

  Intra EC        0             0                 0          0                 0          0                 (1000 MT)
  Exports                                                                                                   

  Total Exports   0             0                 0          0                 0          0                 (1000 MT)

  TOTAL Exports   0             0                 0          0                 0          0                 (1000 MT)

  Human Dom.      100           90                100        100               0          100               (1000 MT)
  Consumption                                                                                               

  Other Use,      0             0                 0          0                 0          0                 (1000 MT)
  Losses                                                                                                    

  Total Dom.      100           90                100        100               0          100               (1000 MT)
  Consumption                                                                                               

  TOTAL Use       100           90                100        100               0          100               (1000 MT)

  Ending Stocks   10            10                10         10                0          10                (1000 MT)

  TOTAL           110           100               110        110               0          110               (1000 MT)
  DISTRIBUTION                                                                                              

  Calendar Yr.    0             0                 0          0                 0          0                 (1000 MT)
  Imp. from U.S.                                                                                            

  Calendar Yr.    0             0                 0          0                 0          0                 (1000 MT)
  Exp. to U.S.                                                                                              

                                                                                                            
  --------------- ------------- ----------------- ---------- ----------------- ---------- ----------------- ---------

  ---------------- ----------------------------- -------------- ----------
  **Import Trade                                                
  Matrix**                                                      

  **Country**      Algeria                                      

  **Commodity**    Dairy, Milk, Nonfat Dry                      

  Time Period      January                       Units:         MT

  Imports for:     2004                                         **2005**

  U.S.             18                            U.S.            

  Others                                         Others         

  Poland           20331                                         

  Belgium          13953                                         

  Argentina        9859                                          

  France           8943                                          

  Germany          8303                                          

  Czech            5925                                          

  New Zealand      5212                                          

  Ukraine          4626                                          

  GreatBritain     1535                                          

  Spain            1213                                          

  Total for Others 79900                                        0

  Others not       10502                                         
  Listed                                                        

  Grand Total      90420                                        0
  ---------------- ----------------------------- -------------- ----------

  --------------- ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **Commodity**   **Dairy,                                                   (1000 MT)                    
                  Cheese**                                                                                

                  2004        Revised           2005       Estimate          2006       Forecast          UOM

                  USDA        Post              USDA       Post              USDA       Post              
                  Official    Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                  \[Old\]                       \[Old\]                      \[Old\]                      

  **Market Year               01/2004                      01/2005                      01/2006           MM/YYYY
  Begin**                                                                                                 

  Beginning       1           1                 1          1                 1          1                 (1000 MT)
  Stocks                                                                                                  

  Production      13          13                13         13                0          13                (1000 MT)

  Intra EC        0           0                 0          0                 0          0                 (1000 MT)
  Imports                                                                                                 

  Total Imports   21          24                21         24                0          24                (1000 MT)

  TOTAL Imports   21          24                21         24                0          24                (1000 MT)

  TOTAL SUPPLY    35          38                35         38                1          38                (1000 MT)

  Intra EC        0           0                 0          0                 0          0                 (1000 MT)
  Exports                                                                                                 

  Total Exports   0           0                 0          0                 0          0                 (1000 MT)

  TOTAL Exports   0           0                 0          0                 0          0                 (1000 MT)

  Human Dom.      34          37                34         37                0          37                (1000 MT)
  Consumption                                                                                             

  Other Use,      0           0                 0          0                 0          0                 (1000 MT)
  Losses                                                                                                  

  Total Dom.      34          37                34         37                0          37                (1000 MT)
  Consumption                                                                                             

  TOTAL Use       34          37                34         37                0          37                (1000 MT)

  Ending Stocks   1           1                 1          1                 0          1                 (1000 MT)

  TOTAL           35          38                35         38                0          38                (1000 MT)
  DISTRIBUTION                                                                                            

  Calendar Yr.    0           0.127             0          0                 0          0                 (1000 MT)
  Imp. from U.S.                                                                                          

  Calendar Yr.    0           0                 0          0                 0          0                 (1000 MT)
  Exp. to U.S.                                                                                            
  --------------- ----------- ----------------- ---------- ----------------- ---------- ----------------- ---------

  ------------------- ---------------------- ---------------- ------------
  **Import Trade                                              
  Matrix**                                                    

  **Country**         Algeria                                 

  **Commodity**       Dairy, Cheese                           

  Time Period         January                Units:           MT

  Imports for:                                                **1**

  U.S.                127                    U.S.              

  Others                                     Others           

  Ireland             6654                                     

  Australia           4216                                     

  New Zealand         2373                                     

  Spain               2037                                     

  Great Britain       1465                                     

  Belgium             1131                                     

  Netherlands         4851                                     

  Germany             540                                      

  Switzerland         417                                      

                                                               

  Total for Others    23684                                   0

  Others not Listed   316                                      

  Grand Total         24127                                   0
  ------------------- ---------------------- ---------------- ------------

  --------------- ---------- ----------------- ---------- ----------------- ---------- ----------------- ---------
  **Commodity**   **Dairy,                                                  (1000 MT)                    
                  Butter**                                                                               

                  2004       Revised           2005       Estimate          2006       Forecast          UOM

                  USDA       Post              USDA       Post              USDA       Post              
                  Official   Estimate\[New\]   Official   Estimate\[New\]   Official   Estimate\[New\]   
                  \[Old\]                      \[Old\]                      \[Old\]                      

  **Market Year              01/2004                      01/2005                      01/2006           MM/YYYY
  Begin**                                                                                                

  Beginning       1          1                 1          1                 1          1                 (1000 MT)
  Stocks                                                                                                 

  Production      0          0                 0          0                 0          0                 (1000 MT)

  Intra EC        0          0                 0          0                 0          0                 (1000 MT)
  Imports                                                                                                

  Total Imports   15         15                15         15                0          15                (1000 MT)

  TOTAL Imports   15         15                15         15                0          15                (1000 MT)

  TOTAL SUPPLY    16         16                16         16                1          16                (1000 MT)

  Intra EC        0          0                 0          0                 0          0                 (1000 MT)
  Exports                                                                                                

  Total Exports   0          0                 0          0                 0          0                 (1000 MT)

  TOTAL Exports   0          0                 0          0                 0          0                 (1000 MT)

  Domestic        15         15                15         15                0          15                (1000 MT)
  Consumption                                                                                            

  TOTAL Use       15         15                15         15                0          15                (1000 MT)

  Ending Stocks   1          1                 1          1                 0          1                 (1000 MT)

  TOTAL           16         16                16         16                0          16                (1000 MT)
  DISTRIBUTION                                                                                           

  Calendar Yr.    0          0                 0          0                 0          0                 (1000 MT)
  Imp. from U.S.                                                                                         

  Calendar Yr.    0          0                 0          0                 0          0                 (1000 MT)
  Exp. to U.S.                                                                                           

                                                                                                         
  --------------- ---------- ----------------- ---------- ----------------- ---------- ----------------- ---------

  -------------------- -------------------- ----------------- ------------
  **Import Trade                                              
  Matrix**                                                    

  **Country**          Algeria                                

  **Commodity**        Dairy, Butter                          

  Time Period          January              Units:            MT

  Imports for:                                                **1**

  U.S.                 0                    U.S.               

  Others                                    Others            

  Spain                6139                                    

  France               2108                                    

  Ireland              2083                                    

  Netherlands          1673                                    

  New Zealand          730                                     

  Belgium              848                                     

  Uruguay              216                                     

  Poland               108                                     

  Australia            100                                     

                                                               

  Total for Others     14005                                  0

  Others not Listed    995                                     

  Grand Total          15000                                  0
  -------------------- -------------------- ----------------- ------------