Algeria cereal crop seen down 40 pct after drought –farm union

By Hamid Ould Ahmed ALGIERS (Reuters) - Algeria's cereal crop is expected to drop by 40 percent this harvest after the worst drought in decades, the head of the country's farmers' union said on Thursday. The fall in cereal output comes as OPEC member Algeria seeks to reduce imports to offset a sharp decline in its energy earnings that has hit state finances. Drought has mainly affected the southern provinces of the North African nation, where agriculture relies heavily on rainfall due to its underdeveloped infrastructure, the farmers' union chief Mohamed Alioui told Reuters. "This was the worst drought in about 50 years," he said. Output in the central areas was weak but better in the east, he added. "Overall production has fallen by around 40 percent. Imports are likely to increase next year by the same level to offset the domestic output drop," Alioui said. The harvest campaign is over and final figures on production will be available within days, he said. Algeria's cereal imports reached 9.25 million tonnes in 2015 after weak domestic output of 3.77 million tonnes in the previous year. It imports mainly soft wheat, with France the top supplier. The cereal harvest rose 14.3 percent to 4 million tonnes in 2015. The agriculture ministry is hoping to increase wheat and barley output to 6.7 million tonnes by 2019, as part of a plan to cut food imports. To reach that goal, the government has been providing financial incentives to farmers, including interest-free loans. The government plans to raise total the irrigated area to 2 million hectares from 900,000 hectares now. The share of irrigation for cereals is expected to reach 600,000 hectares in 2019, up from 60,000 hectares currently. "Cereal production was excellent in irrigated areas," Alioui said. Government measures to boost crops coincided with a fall in energy earnings, which account for 60 percent of the state budget and 95 percent of total exports. With the oil price starting to fall in mid-2014, Algeria took its first steps to reform the farming sector by opening it up to foreign firms willing to invest in grain, vegetables and fruit farms. (Writing by Patrick Markey, editing by Jason Neely and David Evans)