January 27, 2011

 

Algeria to speed up wheat imports

 

 

Algeria is to urgently speed up wheat imports in a move to put out potential unrest over food prices, at a time protests are sweeping North Africa, which also helped oust Tunisia's leader.

 

Prime Minister Ahmed Ouyahia issued the instruction to the state grain agency to speed up imports of soft and durum wheat, a government source said Wednesday (Jan 26).

 

Algeria has bought more than one million tonnes of wheat so far in January, a tumultuous month in North Africa which has seen Tunisia's President Zine al-Abidine exile himself to Saudi Arabia and rare protests break out at home and in Egypt.

 

The rise in food prices in Tunisia combined with high unemployment and a widening gap between rich and poor to help spark deadly riots which brought down the ruling regime.

 

Concerns that other regimes in North Africa and the Middle East may suffer a Tunisia "contagion" have helped send wheat prices spiking to multi-year highs on international markets.

 

Wheat futures in Chicago rose to the highest levels in nearly 2-1/2 years on Wednesday (Jan 26) in anticipation of increased demand for US wheat from key importers nervous about food security and shrinking world supplies.

 

CBOT wheat for March delivery climbed to a peak of US$8.48-1/4 a bushel, up more than 1% on the day and the highest level for the benchmark front month since August 2008.

 

The UN Food Agency said on Wednesday (Jan 26) that new price shooks have raised serious concerns about implications for food markets in vulnerable countries with prices close to levels that triggered food riots in 2007/08. "It looks like Algeria is coming into the market to prevent the 'Tunisia virus' spreading," one German trader said. "Keeping food prices down is one way of keeping your people happy."

 

Rising food prices sparked days of rioting in several Algerian towns including the capital earlier this month. Two people died and hundreds were injured during clashes between rioters and police, officials said.

 

To calm the situation, Algeria has decided to cut the cost of some foodstuffs and to increase by 18% the amount of soft wheat it supplies to the local market each month. Other countries in the region have this month either relaxed food taxes or duties on food imports or cut prices of staple foods.

 

In remarks attributed to Ouyahia a government source stressed the urgency of the grain import programme and emphasised the move was firmly aimed at ensuring food security.

 

"I want you urgently to order the OAIC (state grain agency) to speed up the pace of imports of soft wheat and durum wheat. The government expects the imports to guarantee all the needs of the people for this commodity," said Ouyahia.

 

Analysts were quick to make the link to food security at a time when wheat supply has tightened after weather related problems, including last year's drought in the Black Sea and flooding damage in Australia which has hit crop quality.