Understanding the Multilayered ‘Social Pact’ in Algeria through the Cereals Subsidized Supply-Chain

In Algeria, the debate surrounding subsidy reform has been longstanding, with international economists and experts advocating for the transition from broad-based subsidies to targeted cash transfers. Unlike in Egypt and Jordan, where substantial reforms have been enacted, Algerian policymakers have been resistant to such changes. Despite the 2022 finance law proposing revisions to the list of subsidized products, family categories, eligibility criteria, and methods of monetary transfer, these changes were not reflected in subsequent finance laws for 2023 and 2024. Public expenditure demonstrates an upward trajectory.

This study seeks to explore the structure of subsidies in Algeria’s cereal sector by examining the direct and indirect subsidies at various stages—importation, distribution, production, and consumption. Utilizing a “sector approach,” the research maps the entire cereal supply chain, which revolves around the Office Algérien Interprofessionnel des Céréales (OAIC). Several interdependent structures are involved in the cereals supply-chain. The OAIC oversees wheat procurement both domestically and internationally, selling it at subsidized rates in Algeria. Local cooperatives (CCLS) handle collection, purchasing wheat from local producers at higher-than-market prices, which also constitutes a subsidy. The Union of Agricultural Cooperatives (UCA) manages storage, while the transport of cereals, subsidized through the “Fonds de Péréquation des Coûts de Transport,” is handled by the Société de Transport des Grains (STG) and Agro Route. Public and private mills, industries of flour and semolina, bakeries, and consumers also play roles in this interconnected supply chain.

This mapping allows us to identify the different actors in the cereals chain, their interdependencies and diverging interests, and conceptualize the sector as a field of struggle. It thereby seeks to dissect the Algerian “social pact,” and help us understand how wheat subsidies are deeply embedded in intricate socio-economic networks, power relations, and administrative structures, and how social interactions and interdependencies sustain the existence of subsidies.