Prioritizing SDGs, the case of the Algerian dairy sector
Alberto Menghi, CRPA & Dorothee Boelling, IFCN | 22 October 2024
In the last few decades, Algerian governments have decided to stimulate milk consumption by setting a low affordable “political price” for most of the citizens/consumers. The result is a relatively high annual consumption per capita of about 147 kg of Milk Equivalent (ME), trend increasing trend, much higher than neighbouring countries such as Tunisia with about 90 kg of annual ME consumption, or Morocco with about 66 kg of annual ME consumption, as reported in the IFCN Dairy report 2023. This strategy of stimulating milk consumption is fitting the SDG1 Zero Hunger well. In particular, it helps to achieve several specific targets:
- end hunger and ensure access to food (milk) to all people, in particular the poor and people in vulnerable situations, including infants; access to safe, nutritious and sufficient food all year round
- end all forms of malnutrition, including the internationally agreed targets on stunting and wasting in children under 5 years of age (including achieving these targets by 2025), and addressing the nutritional needs of adolescent girls, pregnant and lactating women and older persons
Subsidized milk consumption contributed to reaching these targets, and it was also possible to redistribute profits from crude oil extraction in Algeria.
Considering the supply side, Algeria cannot be considered a favourable country in terms of natural conditions for forage production, considering its dry climate. Only 20% of the land can be cultivated and a limited part is dedicated to forage production, leading to high fodder costs. For this reason, dairy production faces specific constraints, and the annual production is 2,5 million tons of milk (increasing trend). However, national milk production is able to cover only 56% of self-sufficiency. To cover the remaining part of milk consumption, Algeria would have to double its dairy production.
Further, the competitiveness gap in terms of costs of production is high compared to other key exporting countries. Most competitive farms in European countries, such as France or Germany, were producing milk in a range of about 43-50 €/100 kg milk (2022). As for another important trade partner like Argentina, large farms (about 400 cows) can produce milk at a production cost of about 24 €/100 kg milk (2022). In Algeria, milk is mainly produced in small size farms (up to 18 cows) and the most competitive ones can produce milk at a cost of 80,8 €/100 kg of milk produced. This cost gap is very high, if the government were to stimulate local milk production.
Only 5-7% of milk consumed in Algeria is fresh and sourced from local producers, the rest is reconstituted milk powder imported from all over the world. About 419.000 tons of Milk Powder has been imported by Algeria in 2022. The high quantity of imported dairy products is putting pressure on the local dairy market limiting the evolution of the dairy sector. This expensive strategy to subsidize milk consumption by using imported milk powder, is also a way to redistribute profits coming from other national resources. However, in terms of SDG’s this strategy is conflicting with SDG 8 (decent work and economic growth).
Besides the dairy import strategy, the Algerian government supported several milk-related programmes to increase national milk production. On the one hand, farmers were supported either by raising their own heifers or by importing female calves from Europe. As a consequence, a large number of heifers were imported mainly from EU countries to increase the national dairy herd, but in many cases it was more convenient to slaughter the animals after 1-2 lactations given the good prices for beef in the local market. This resulted in high costs of cattle purchases, but in even higher returns for slaughter animals. On the other hand, milk production is subsidised by the Algerian government on a per litre basis. Given the market structure with high beef prices and high feed costs, all these different programmes have not yet contributed satisfactorily to a higher self-sufficiency in milk consumption. Many other aspects are related to the strategic choice of importing commodities versus increasing local production in order to fill the consumption gap. Among them are negative environmental impacts generated by long distance transport of dairy products from New Zealand, Argentina or Europe, thereby affecting aspects related to SDG 13 (Climate Actions).
In sum, the Algerian case is key to understanding that sustainable trade in dairy products is related to several economic, environmental and social aspects that need to be considered at different levels, yet these aspects can conflict with the political priorities and decisions of national governments, resulting in very different impacts on Sustainable Development Goals.
Source: IFCN Dairy Report 2024 and Case Study 13