Algerian banks call farmers' loans

29/06/2008

Just as Algerian farmers are dealing with this year's reduced harvest, they are now facing pressure from banks to repay some 37 billion dinars in loans. Without swift action by the lenders or the government, many farmers could soon face bankruptcy.

By Achira Mammeri for Magharebia in Algiers – 29/06/08

[Getty Images] Agriculture Minister Said Barkat said the Algerian government cannot write off farmers' debts again, saying the state has "done its duty in full".

The year ahead promises to be a difficult one for Algerian farmers, with agricultural production declining due to drought and other adverse weather conditions. But this is not the only problem confronting farmers. Banks have issued formal notices requiring them to pay off debts estimated at 37 billion dinars.

Immediate action is needed, some say, to rescue farmers from certain bankruptcy.

While negotiations are currently under way between the government and farmers' unions to help farmers find a way out of the financial crisis, Algerian officials and banks agree: there is no question of the debts being written off.

"Five years ago, the Algerian government wrote off farmers’ debts [but] we cannot do this again now," Agriculture Minister Said Barkat told Magharebia.

Barkat is calling on farmers to negotiate with banks directly to find a solution to the problem. "For over a decade we have supported farmers through subsidies and direct aid. The state has done its duty in full," the minister maintained.

In the meantime, draft laws on agricultural development and the promotion of pastoral farming now under consideration by the People's National Assembly (APN) will take all concerns of farmers into account, Barkat added.

Whether by the government or the banks, farmers’ debt repayments need to be restructured, argues National Algerian Peasants’ Union (UNPA) Secretary-General Mohamed Alioui. The UNPA has asked banks such as the BADR (Agriculture and Rural Development Bank) to try to find common ground with the embattled farmers.

"[Farmers] can’t pay off their debts," Alioui told Magharebia. "The last two years have been very hard for them. Drought and natural disasters have had a direct impact on harvests," he commented.

He believes a Supreme Agricultural Council accountable to the prime minister should be created. A governmental entity of this kind "will be a means of focusing attention on all the problems faced by the sector and putting forward solutions and proposals to strengthen the role of agriculture in the national economy and rural development," he said.

Alioui forecasts that corn production will fall sharply this year to 2.2 million tonnes from 4.3 million in 2006. Paradoxically, he estimates that 1.6 million hectares of cornfields are lying fallow.

Drought is only one of the setbacks to improving agricultural production. Another is the issue of fertilisers. Because fertilisers can be used to make bombs, the Algerian government carries out rigorous monitoring of fertiliser distribution.

"Contrary to what the government says, this problem has not been solved completely. Many farmers are having difficulty in buying this essential item," he says.

As unionists and politicians debate how to best resolve the crisis, banks began sending formal demands to farmers on June 16th asking them to pay off their loans, Algerian newspaper Echourouk reported.

The banks seem reluctant to offer a blanket solution. BADR chief executive officer Boualem Djebar said, "Each case will be treated on its individual merits."

There are growing fears that farmers will eventually throw in the towel and turn their backs on their profession. Hamid Ait Amara, an expert on agriculture, does not rule out the possibility of a food crisis as a result: "Algeria only cultivates 57% of all its farmland. This is having direct repercussions on the amount of money this country spends on food each year, which rose from $5 billion in 2007 to $7 billion in 2008."

By 2010, Amara believes, food costs will reach $15 billion.

"Algeria's oil revenues have saved it from hunger riots," he says.