Agriculture in Tunisia: soaring prices, structural crisis

Rising prices of agricultural commodities and recurring food shortages[1] highlighted the vulnerability of Tunisian agriculture to the vagaries of the global economy. The Covid-19 pandemic[2] and the war in Ukraine[3] have indeed been powerful indicators of an agricultural crisis that threatens the country's food security and the survival of large sections of farmers. But the current crisis is rooted in structural causes linked to the country's economic and agricultural development strategies.  

Strategic disorientation and external dependence

Assigning agriculture the role of better contributing to major macroeconomic balances, agricultural policies implemented since the 1990s have aimed at greater integration into the global market, through the development of export agriculture and the expansion of the irrigated sector. The privatization of marketing channels, the liberalization of fruit and vegetable prices, the reorganization of the credit system and the reduction of input subsidies have encouraged the reallocation of resources in favor of irrigated and intensive agriculture, including in sectors geared towards supplying the national market.

If the intensification of agricultural production systems allowed until the early 2000s to increase agricultural exports (fruits and vegetables, olive oil, fish products) and consolidate new production sectors geared towards local consumption (poultry, meat, milk), the dynamics of the sector have also been characterized by both a decline in the share of agriculture in GDP[4] and by a sharp increase in agricultural imports. These represent on average 60 % of cereals consumed, 100 % of livestock feed requirements (cake, soybeans, corn) for poultry farming and 40 % for cattle breeding, to which are added imports of plants, seeds, fertilizers and agricultural equipment, which weigh more and more heavily on the agricultural trade balance deficit. This dependence on external markets represents an increasing burden on public budgets[5], reducing the State's capacity to subsidize basic food products, and leading to increased pressure on the prices of administered agricultural products (cereals, fodder, milk, poultry). In a context of rising agricultural commodity prices, maintaining low producer prices – guided by the desire to preserve the purchasing power of urban consumers and the competitiveness of manufacturing and services – has inevitably had negative repercussions on farmers, endangering several agricultural sectors.

The decade following the post-2011 political upheavals has been marked by a intensification of farmers' mobilizations against the surge in prices of agricultural inputs, the resulting increase in production costs and the deterioration of their incomes[6]The worsening crises currently affecting the cereal, milk and poultry sectors are the best illustrations of this.

Cereals: a devastated sector, diverted production

In the cereal sector, the effects of rising input and fuel prices, combined with stagnant production prices, are mainly felt on small farmers, the vast majority of whom are heavily indebtedMany of them are reducing the areas sown with cereals, unable to cope with the increase in production costs; others are turning away from official marketing channels to avoid direct collection by the bank or because of the frequent underestimation of the purchase price by certified collectors, which is justified by the poor quality of the grain.[7]. This results in the development of a parallel marketing circuit for cereals, controlled by smugglers who offer a better price to farmers and sell the collected quantities on the Libyan and Algerian markets. To counter the decline in the quantities of cereals produced and delivered to certified collectors and limit budgetary costs linked to the increased costs of imports[8], the public authorities have recently agreed to increases in producer prices of cereals (nearly 50 % increase for durum wheat between 2021 and 2022)[9], increases deemed insufficient by farmers.

Livestock farming: decapitalization and milk shortage

The rise in the prices of agricultural raw materials is also having a very severe impact on animal production, which is suffering from the combined effects of drought, fodder shortages and rising prices for animal feed, leading in recent years to a decline in livestock numbers, accentuated by the phenomenon of smuggling to neighboring countries. Particularly affected are cattle (meat and milk) and poultry farming, which depends largely on imports of animal feed (barley, concentrates, corn, soy, etc.).

For example, the dairy sector, whose growth has benefited from a policy of promotion and state support, is experiencing an unprecedented crisis which threatens the survival of a sector in which small breeders occupy a leading position. The surge in the price of imported livestock feed, combined with the decline in fodder production, increasingly subject breeders to the dictates of illegal fodder marketing networks, as well as importers and manufacturers of fodder feed.  Rising milk production costs which results in many small breeders having to reduce or liquidate their livestock, leading to severe shortages of milk on the local market. To the multiple protest actions organized by the latter in several regions of the country[10], public authorities respond with measures aimed at limiting the price increases of fodder decided by the major operators in the livestock feed sector. Furthermore, remaining inattentive to the structural problems of the dairy sector[11] and the breeders' demands[12], they continue to favor short-term measures, such as imports of powdered milk[13] which amplify the protests from breeders and agricultural unions.

This brief overview of the current issues of Tunisian agriculture allows to highlight the importance of analyzing the impacts of the rise in prices of agricultural raw materials in relation to the structural characteristics of agricultural activity and the strategic orientations of public policies. Guided by contradictory logic – between protection of urban consumers and selective support for agriculture -, These policies ultimately had the effect of worsening the dysfunctions of the agricultural sector and its dependence on the global market. They have disastrous consequences for the least well-off farmers, while the unprecedented crisis in public finances makes the continuation of production and consumption subsidy systems, as well as the model of agricultural intensification, unsustainable.

[1] Since 2021, and for the first time in its post-independence history, Tunisia has experienced shortages of food products (vegetable oil, sugar, coffee, milk and butter, pasta, etc.) due, beyond the effects of the global economic situation, to a major crisis in public finances.

[2] Elloumi M., “Tunisian agriculture facing Covid-19: impacts of the health crisis and prospects for resilient agriculture”, Cah. Agric. 2020, 29, 35.

[3] Tunisia depends on the Russian and Ukrainian markets for 80% of its grain imports.

[4] The share of agriculture in GDP fell from 12% on average in the 2000s to 10% during the 2010s.

[5] Chebbi HE, Evaluation of the agricultural sector support system in Tunisia, 2018

https://www.iamm.ciheam.org/ress_doc/opac_css/doc_num.php?explnum_id=18211

[6] Gana, A., “The rural and agricultural origins of the Tunisian Revolution”, Maghreb – Mashreq, flight. 215, no. 1, 2013, pp. 57-80.

[7] Khaldi R., Analysis of the cereal sector in Tunisia and identification of the main points of dysfunction causing losses, http://www.onagri.nat.tn/uploads/Etudes/RapportIVF.pdf.

[8] Resulting from the combined effects of rising world prices and the devaluation of the Tunisian dinar

[9] National Observatory of Agriculture – Tunis. http://www.onagri.nat.tn

[10] Inkyfada, " Dairy sector : THE little·you are a farmer·trices of more in more vulnerable to lobbies”, 06/08/2022 https://inkyfada.com/fr/2022/06/08/protestations-agriculteurs-agricultrices-societes-fourrage-composes-tunisie/

[11] Fodder production, breeder debt, producer prices favoring large operators in the dairy sector and consumers

[12] Agricultural unions are demanding an increase in milk production prices and an increase in subsidies for livestock feed (https://news.gnet.tn/tunisie-lutap-reclame-une-hausse-du-prix-du-lait-de-800-millimes-litre-a-la-production/)

[13] The 2023 Finance Act provides that imports of powdered milk and butter will be exempt from taxes