Reference Date: 27-July-2022

Near‑average cereal production harvested in 2022

Harvesting of the 2022 winter cereals is about to conclude. Although weather conditions for sowing were favourable, the area planted decreased compared to the previous year as high fertilizer prices and general economic uncertainty constrained plantings. The area sown with the 2022 wheat crop decreased to 579 000 hectares, down from 607 000 hectares in the previous year, and the area with barley declined from 510 000 to 430 000 hectares.

Following a good start of the rainy season, cumulative rainfall amounts between November 2021 and February 2022 were about half the average, causing widespread drought conditions in the central part of the country. In March and April 2022, abundant rainfall amounts, up to 40 percent above the average in some areas, during the crucial grain filling stage, benefited crop recovery in the main cereal producing areas, with the exception of the eastern governorates of Souse, Monastir and Mahdia.

Despite decreases in the sown area, the 2022 cereal production is estimated at a close‑to‑average level of 1.8 million tonnes, about 9 percent above the 2021 harvest on account of relatively favourable weather conditions. Domestic crop production varies markedly from year‑to‑year due to significant rainfall variations. The irrigated wheat area represents less than 15 percent of the total wheat planted area.

The country aims to reach an annual domestic production of 3 million tonnes of cereals to achieve self‑sufficiency. Policy instruments used by the government include guaranteed farmgate prices, subsidized certified seeds, an irrigation water subsidy as well as the provision of technical assistance to farmers producing wheat on irrigated areas.

In 2022, the guaranteed farmgate prices of durum wheat increased to TDD 900 (USD 300 using the exchange rate of TDD 3.1 for USD 1 applied in May 2022), up from TDD 620/tonne (USD 225, using an exchange rate of TDD 2.7 for USD 1 applied in May 2021). The guaranteed farmgate prices of soft (common) wheat increased from TDD 500 to TDD 700/tonne and those of barley from TDD 410 to TDD 550. In 2022, the government purchased 700 000 tonnes of grains, compared to 808 000 tonnes in 2021.

The country is still among the most important world phosphate producers despite gaps in production due to general strikes between November 2020 and May 2021, temporarily closing the chemical fertilizer plant in Gafsa Governorate. Already at the end of October 2020, before international fertilizer prices started to surge, domestic fertilizer prices increased by 30‑50 percent, with additional increases of up to 40 percent during the 2021/22 cropping season. In the first quarter of 2022, the country’s phosphate production doubled to 1.3 million tonnes compared to the same period in 2021. Responding to high international prices in 2022, phosphate exports resumed after 11 years, with more than 300 000 tonnes expected to be shipped in 2022.

Cereal imports to increase in 2022/23 marketing year

The country relies heavily on grain imports, even in years with good production. Cereal import requirements in the 2022/23 marketing year (July/June) are forecast at a slightly above‑average level of about 3.8 million tonnes, about 5 percent above the import requirements of the previous year. More than half of the imported cereals is wheat. Between 2016 and 2020, the country sourced almost 40 percent of its wheat imports from Ukraine, 7 percent from the Russian Federation and the rest from various European Union countries. Almost 60 percent of total maize imports of 900 000 tonnes originated from Ukraine.

According to the National Observatory of Agriculture (Onagri), the food trade balance almost doubled in the past 12 months, posting a deficit of TDD 1 559.7 million in June 2022, against TDD 806.9 million during the same period in 2021. The increase in the deficit was driven by increases in the value of cereal imports (+48.6 percent), sugar (+141 percent) and vegetable oils (+70.1 percent), despite the increase in the value of exports of olive oil (+34 percent). In 2022, the average import prices of durum wheat so far reached USD 665/tonne, up from USD 435 in 2021 and USD 327 in 2020. Likewise, import prices paid for 1 tonne of soft (common) wheat increased from USD 231 in 2020 to USD 307 in 2021 and USD 416 in 2022.

In June, as a response to the high international prices exaggerated by the war in Ukraine and challenging domestic fiscal environment, the World Bank announced a USD 130 million loan to help the country to finance soft wheat imports for bread production and barley imports for feed.

Sluggish economic growth and increases in food price inflation

Following the contraction in Gross Domestic Product (GDP) of about 8.6 percent in 2020, mostly due to the collapse of the tourism sector resulting from travel restrictions, the economic growth partially resumed, registering a 3.3 percent increase in 2021. A GDP growth of 2 percent is foreseen in 2022, but high unemployment levels still prevail. Unemployment increased from 15 percent prior to the COVID‑19 pandemic to over 20 percent in 2022, severely affecting young people (aged 15‑24) as about 40 percent of them are currently jobless.

In spite of the country’s high import dependency rate, changes in international prices of wheat products and vegetable oil are not fully transmitted into domestic prices as the government’s universal food subsidy programme keeps them stable. There have been discussions about reforming the subsidy system, which puts a significant burden on the national budget, but the implementation has been postponed so far.

The general Consumer Price Index in June 2022 increased by 8.1 percent on a year‑on‑year basis, increasing for the ninth straight month and reaching the highest levels since the early 1990s. The food price inflation in June rose by 9.5 percent compared to June 2021, mainly driven by the high prices of edible oils (+19.2 percent), fruits (+15.9 percent) and vegetables (+12.1 percent).

The talks with the International Monetary Fund (IMF) for a bailout package are ongoing, amidst balance of payments problems.

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