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4. Algeria: Agriculture and industry
The Algerian economy: development choices
Industrialization: Effects on agriculture
Agriculture and industry: Interaction
Hamid Aït Amara
The objective of providing full employment for the population has profoundly affected the basic options in the development of the Algerian economy. It led to stress on the rapid expansion of industry in order to create conditions for modernizing agriculture. By creating jobs in the secondary and tertiary sectors it was hoped to gradually reduce unemployment and under-employment and to have a significant impact on the size of the agricultural population in order to reduce pressure on the land.
The stress on industry, in an initial phase of development, gave ample scope to the building-up of the sectors producing the production goods necessary for the modernization of agriculture, principally machinery, chemicals and petrochemicals. In a second phase, agriculture would become more integrated into the economy, and increase its capacity to develop its purchases from industry and its deliveries of agricultural raw materials to processing industries.
Such a pattern of autocentred development is built on the hypothesis of a growth in peasant incomes fuelled by the growth of agricultural productivity, which was necessary 1) to raise the standard of living in the rural areas, and 2) to finance agriculture's demand from industry.
To carry out such a process of growth and intensify relations between agriculture and industry requires three major conditions:
1) That the global growth of agricultural production must be more than proportional to that of the numbers employed in agriculture. In other words, there must be net growth per person employed, and this is the source of improvements in incomes, ensuring a rise in both the standard of living of agricultural workers and agriculture's demand for industrial goods.
2) It must be possible to carry through the modernization of agriculture in conditions of productivity in the employment of the factors that ensure a minimum of profitability to capital invested. In other words, agriculture must be able to pay for what it buys from industry, not artificially, through continually rising agricultural prices, or subsidies from the state, but through the advances it achieves in productivity.
3) Finally, what is produced must be at price levels sufficient to meet the needs of extended reproduction, but also compatible with consumers' purchasing power. If the opposite happens, the state is forced to act massively to keep consumer prices up at the expense of investment.
To make agriculture meet these three conditions may require phasing. Distortions may appear that must be corrected to enable agriculture gradually to adjust its relations with the rest of the economy but, in due course, agriculture must satisfy these key variables of the dynamic of its relations with industry.
The first variable is largely dependent on the pace of job creation outside agriculture, the capacity of industry and services to absorb the rural labour surplus. The quantities produced may have no effect on labour productivity if they are accompanied by a proportionate increase in the population employed in agriculture.1
In Algeria, the increase in output per worker cannot be obtained by increasing the area cultivated per unit of labour, as was partly the case in Europe, but must be the fruit of an improvement in the physical yields of crops and livestock farming. In that way the profitability of investment in production factors will be assured and hence that of backward-linked industrial sectors. In fact, as analysis of the Algerian case shows, in an autocentred development model, the growth of yields is the key to the whole dynamic of relations between agriculture and industry.
In the absence of advances in agricultural productivity, the rise in agricultural prices consequent upon the global stagnation of agricultural production may still fuel agriculture's demand for industrial goods, but at the price of a fall in real wages and the standard of living of the great mass of urban workers. To avoid this spiral, the state has to import food products that are in short supply on the market and subsidize producer prices for commodities in order to protect agriculture from external competition.
The evolution of agricultural productivity rests essentially on agronomic and technical advances, the improvement of animal and plant species, and the introduction of new production methods. It requires that the state not only has the capacity to develop agronomic research and agricultural education and training programmes successfully but also be able to define and establish the social forms of agricultural modernization: in short, to define a path to the modernization of agriculture that meets the conditions of development.
The Algerian economy: development choices
The fact that there are too many people engaged in agriculture and that it has little natural potential led to the emphasis in development choices on an initial phase of intensive industrialization. The priority thus given to industry was based on the hypothesis that no significant progress was possible in agriculture without an industrial policy to provide the motive force of the whole development dynamic. Industry was both to provide agriculture with the material means for its modernization (capital goods and intermediate products), and, over a long period, absorb the net increase in the agricultural population.2
The first development plans of 1967, 1969 and 1970-73 aimed at keeping, 'for as long as possible', the numbers employed in agriculture at their 1966 level of about one million workers (1966 general population census). It was estimated that the total number of work-days supplied by agriculture was equal to some 700,000 full-time jobs only, meaning an under-employment rate among the agricultural population of about 30%. The analyses concluded that in order to improve productivity and incomes it was necessary to increase the number of work-days per worker.
Low agricultural potential
With 7.5 million hectares of usable agricultural land, Algeria is poorly endowed with arable land, 0.3 hectare per inhabitant, and, given the high rate of population increase from now to the end of the current decade, the area available will not exceed 0.25 hectare per person. Much less than for Egypt in 1980, if account is taken of the double cropping in that country and bi-annual cropping in Algeria where cereal-fallow rotation occupies 80% of cultivated land. In fact 4.5 million hectares only are cultivated each year by one million workers, the remainder being rested.3
In assessing the productive agricultural potential, account must also be taken of the importance of natural constraints on production and the low productivity of the soils.
It is estimated that land in the plain or on slight or average slopes (less than 12.5%) with sufficient annual average rainfall, (higher than 500 mm per annum) to obtain relatively regular and satisfactory yields, occupies barely 2.7 million hectares or slightly more than one-third (36%) of cultivable areas and less than 10% of northern Algeria. Furthermore, even on this land, rainfall is both irregular from year to year and unevenly distributed over the year, control of water being generally essential to intensifying crops and ensuring regular production.4
As always with high population density, cropping limits are largely exceeded if account is taken of the need for good soil conservation. In numerous regions, this density is excessive and leads to heavy soil degradation. As a result of the climate and slopes, erosion, both wind- and rain-induced, is considerable and the action of man on the environment simply accentuates a process which has doubtless been developing for centuries. Soil and productivity losses due to erosion are considerable and numerous cultivated areas ought urgently to be replanted with trees. An FAO study estimates that 30% of agricultural areas need protection works. It is estimated elsewhere that three million hectares need reforesting and a total of five million hectares need tree-planting in the north, as against a current rate of less than 10%.5
Woodland, the other aspect of agricultural natural resources, is also seriously threatened with destruction. It covers only three million hectares of which only 2.3 are subject to forestry regulations. The reforestation programmes have so far been just sufficient to replace the areas destroyed by forest fires each year, but very much less than would be necessary to undertake to protect the most threatened areas effectively.
The quantity of sediments discharged into the sea each year amounts to 120 million metric tons, or the equivalent of several tens of thousands of hectares (50-60,000). Hydraulic features considerably increase the costs of bringing surface water into use, and reduce the life of dams.
In semi-arid regions where rainfall is regularly less than 500 mm, the inadequacy and irregularity of rainfall strongly influence yields, and conditions for a better economic use of land are closely dependent on irrigation. In Algeria, while potential water resources may appear relatively high, exploiting them proves to be limited and costly, as a result of the difficulties of the terrain and the narrowness of the coastal plains.6
The bulk of the run-off in the northern parts of the country, 12 billion m3/year, simply flows into the Mediterranean.7 The drainage basins of the highlands (100,000 km2) and the Saharan regions (100,000 km2) with 0.7 billion m3 each, run off only a little more than 10% of total rainfall. To surface water must be added exploitable subsoil resources, 1.7 billion m3/year in the north, 2 billion m3 in the Saharan regions. But these are only rather rough estimates, no complete inventory having so far been carried out and these figures probably do not reflect the real level of mobilizable resources and possibilities of exploitation, if one thinks of the reduction of available water stocks, the fall in ground water tables, the depletion of wells, and so on, observed in recent years.
Exploitation of this potential is uneven, depending on the region and the nature of the water resources.
In the northern areas, only 5% of surface water is regulated with 0.6 billion m3/year exploited, and 80% of ground water, with 1.3 billion m3 exploited. In the Sahara. 30% of ground water is mobilized. 0.7 billion m3 (50,000 hectares irrigated).8 There is also small-scale irrigation, surface water and off-takes from rivers, amounting to 0.9 m3, but this figure seems too high.
In all, only some 3.5 billion m3/year is available, a very inadequate volume compared to other countries in the region. For example, Morocco has 10 billion m3/year (800,000 hectares irrigated) and Saudi Arabia some six or seven billion m3/year. Egypt 55 billion m3.
Agriculture receives about three-quarters of the available water, 2.6 billion m3 for 260.000 hectares irrigated (95% in Morocco). The areas of the large, irrigated perimeters have remained unchanged for the last two decades, and the increase is essentially due to cheap small-scale irrigation projects: surface wells, hillside lakes, drawing water in the Oueds which further throws doubt on the figure for irrigated areas used in the statistics.
Drinking-water supplies (one household in two has running water) is the second biggest user with 760 billion m3. Industry consumes only 4% of the total water available, far less than agricultural and human uses.
The additional irrigation of 300,000 hectares planned by the year 2000 would require the mobilization of a further three billion m3 or the building of 60 new dams and the digging of three million linear metres of wells - the cost would thus be very high.
Agricultural natural resources are, however, not limited to cultivable land. Algeria has vast areas of land, some 15 to 20 million hectares, situated between the 100 and 300 mm isohyets, devoted to livestock, essentially goats, which should be included in the country's production potential.
It is of course true that degradation of pastures has by now gone very far and the average number of cattle per hectare cannot be more than one goat for five hectares (in some regions it is much lower than that - one goat for 10 hectares) with the result that the total number of goats that can be fed from the steppe's own resources is no more than four or five million head, with a net meat production in the region of 25 to 30,000 metric tons, indicating a very low productivity of soils and flocks.
Environmental degradation is the consequence of replacing the old social forms of rangeland by ranching that facilitates rapid, intensive exploitation of resources for the market, which has led to the gradual impoverishment of small herdsmen and their eviction from the pastoral areas. The evolution towards higher meat prices has led to a heavy concentration of the flocks in the hands of dealers who control the sheep market, and the decline of direct forms of exploiting flocks. The reduction of natural forage resources is leading to the clearing of the best soil for speculative barley-growing intended for feeding flocks.
Yet despite the importance of the agro-ecological constraints, scope for agricultural progress does exist. The cropping system has remained extensive, mobilizing only limited land and labour resources, for yields per hectare that are excessively low. It is estimated that by bringing fallow land into production some two million hectares, 40% of the area cultivated each year, could be cropped. In addition, mobilization of water resources could significantly increase irrigated areas, thereby creating conditions for more intensive cropping.
In the steppe, experiments have shown the possibilities of increasing forage production. Quite striking results have been achieved by setting aside areas closed to grazing animals covering 10,000 or 20.000 hectares. Forage production has thus been doubled or tripled and the number of livestock per hectare has moved in the same proportions; extending these results requires settlement of the problem of the customary use of rangelands prior to the introduction of techniques of regenerating vegetation and maintaining grazing areas.
Such a level of exploiting agricultural resources implies a heavy recourse to industrially produced factors of production to update equipment and cultivation methods.
Character and scale of industrialization
In the autocentred model of development, agriculture constitutes both a market for industrially produced capital and intermediate goods and a supplier of products for the foodstuff sector. Industrial development is thus governed by an internal dynamic and is not simply a means of maintaining the external balance or a supplement to the export economy (as in the cases of Tunisia and Morocco).
Algerian exports of manufactured or intermediate goods are in fact virtually non-existent - less than 2% of exports, comprising almost entirely hydro-carbons, which account for 98% of external receipts.
Ranking of industrial projects by type
|First tranche||Second tranche||Estimated third tranche|
|Valves and pumps|
|Intermediate agricultural goods:|
|Nitrogenous fertilizers||Plastic film products|
|PVC tubes||Plant protection products|
|Steel tubes||Drawn wire|
|Equipment goods for construction & public works:|
|Lorries||Cranes||All surface vehicles|
|Public works appliances|
|Intermediate goods for construction & public works:|
|Bricks||Steel (long products)|
|Steel (flat)||Sanitary ware|
|Standard machine tools||Construction||Heavy electro- mechanical equipment|
|General engineering||Hollow-ware||Applied research|
|MV LV electric|
|Industrial intermediate goods:|
|Steel (flat)||Steel (long products)||Special steels|
|Natural gas||Basic chemicals||Pig iron|
|Gars Djebilet mines|
|West steel mill|
|Manufactured consumer goods:|
|Textiles||Gas bottles||Private vehicles|
|Schools items||Radio & TV|
|Metal food||Paper industry packaging|
|Natural gas network|
Source: A. Thiery (J.P.) La Crise du Système Productif Algérien, IREP, Grenoble 1982.
Industrialization programmes have given ample scope to sectors capable of supplying agriculture with the goods necessary to modernize its techniques and improve its productivity. As Table 4.1 shows, priority has been given to the agricultural equipment industries since the earliest phases of industrialization:
A look at the dates when industrial projects were launched shows that most of those concerned with agricultural demand were initiated during the first phase of industrialization, 1966-71: agricultural machinery, fertilizers, irrigation equipment and so on.
Agricultural demand concerns a wide variety of branches of industry: upstream, steelworks and metal processing industries, metallurgical industries and machine industries (tractors, valves, pumps, transport equipment' agricultural implements), electrical industries (motors, cables for electrification) and finally chemical industries (fertilizers, chemical products, plastic items).
Throughout the 1970s, the establishment of a wide range of industries (including hydro-carbons) took a large share of total investment: 55% for each period 1967-69 and 1970-73; 58% for 1974-77: 56.1%, 1978-79 and 32.6%, 1980-84, Agriculture's shares were: 16%, 1967-69; 14.8%, 1970-73; 11%, 197477; 8.55%, 1978-79; and 5.2%. 1980-84.9
Throughout the period, industrial investment narrowly defined amounted to approximately 28% of investments, the remainder (28-30%), more or less the same proportion, was absorbed by the hydro-carbon sector. It was thus a relatively modest percentage' compared to those of partly industrialized countries today (Yugoslavia. Mexico' Brazil).
Agricultural investment was around 10% of the total throughout the period,10 but a considerable proportion of industrial investment in the first and second phases of industrialization was devoted to the production of goods intended for agriculture. It should also be pointed out that the fall in industrial investment in the 1980s has not necessarily meant a shift to agriculture in relative terms; agriculture's share fell back by two or three points during the period 1978-84 compared to 1967-77.
The number of large production complexes set up to produce equipment and intermediate goods for agriculture is evidence of the stress put on the priority satisfaction of the needs of the agricultural sector; the tractor factory at Constantine (8.000 tractors a year), the agricultural machinery factory at Bel Abbes, the pump and valve factory at Médéa, the diesel motor factory at Tizi Ouzou, the water pipe factory at Réghaia, and so on.
In petro-chemicals in particular, two large chemical fertilizer complexes were completed: one at Arzew (nitrogenous) and one at Annaba (phosphate), the operation of which required the building of several independent plants to manufacture intermediate products.
The Annaba complex includes a plant producing sulphuric acid with a capacity of 1.500 metric tons per day and one producing 500 metric tons per day of phosphoric acid. Two other plants producing multi-nutrient fertilizers at a rate of 500.000 metric tons per annum are in production in the same region and proposals to expand them during the period 1981-84 led to the creation of two new plants for nitric acid (400 metric tons per day) and ammonium nitrate (500 metric tons per day).
In plastics, the completion of a methanol complex in 1971 and a synthetic resin plant at Arzew, and a plastics complex at Skikda made it possible to create units producing sacks and sheets for agriculture. Production capacity is currently 100.000 metric tons per annum, with consumption for crops under plastic and packaging for irrigation pipes absorbing 31% of total production.
After a decade end a half of industrialization, the greater pert of agricultural demand for equipment and intermediate goods is being met by local production. Finally, for chemical products, an average of 90% of demand is met: phosphate fertilizer, 286.000 metric tons, and ammonium nitrate 170.000 metric tons.
Agriculture's productive consumption of industrially produced goods has increased much faster than these industries' production capacities. Contrary to widespread ideas about Algeria' demand has constantly outstripped projections. As F. Yaçhir points out' this is true whichever industrial sector one looks at. Recourse to imports is still necessary because local supply is insufficient.
Projections in the 196911 industrial programmes on the needs of agriculture up to 1980 were easily surpassed by the consumption levels between 1970 and 1985. Agriculture more than doubled its equipment and purchases of intermediate goods between 1976 and 1985, compared to the periods 1966-75 and 1953-62. The total number of tractors in the country increased from 23,484 units in 1962 to 25,122 in 1973 and 60,000 in 1984. Fertilizer use has risen on average by 9.5% p.a. since the beginning of the 1970s: from 100,000 metric tons in 1970 to 205.000 metric tons in 1983-84.12 The use of minor irrigation equipment, in the motor-pumps groups, also rose fivefold during the 1976-85 period, absorbing all local production.
Domestic supply is inadequate not only in terms of quantity, but agricultural equipment is often unsuitable and there is little variety of supporting equipment. Fertilizers and pest control products too, are not quite what the crops need.
Investments in sectors producing agricultural goods have thus been insufficient, judging from the high level of additional imports and the potential demand that programmes to step up agricultural production will create. In fact, despite the marked increase in intermediate consumption, the quantity of industrial inputs used falls far short of the technical norms deemed necessary.
The use of industrial inputs, especially fertilizers and agricultural machinery, compared to those of countries with intensive agriculture in the North, or a country such as China, is still relatively low. In Algeria, there is one tractor (60 hp) for 182 hectares and one combine harvester for 500 hectares.
The Ministry of Agriculture estimates that the use of fertilizers is only 44% of the quantities recommended to secure a marked increase in yields. The supply of agricultural equipment has grown by 6% to 8% p.a., but shortfalls are estimated to be 43% for tractors' 38% for combine harvesters and 65% for ploughing equipment.
Those responsible for agricultural development emphasize the important role of chemical fertilizers, mechanization, selected seeds and irrigation in raising yields, but this introduction of modern means requires changes in cropping methods and action by engineers and skilled workers to promote the use of new production factors.
The objectives of the four-year plans were to spread the use of herbicides on cereals and pulses, develop soil disinfection and intensify treatment with insecticides and fungicides in fruit-tree growing, but use of these products has reached only 40% of the recommended amounts.
To meet the demand from agriculture thus requires increased production of agricultural machinery, particularly low-powered tractors for smallholdings in the mountainous areas, and the diversification in supply of equipment and intermediate goods to meet the needs of diverse agricultural conditions.
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