Wheat is the staple food of most Algerians. To ensure food security of the population, the government has always favoured an interventionist regulation policy based on consumer prices control. Since the country's independence in 1962, consumption subsidies have been established as a key measure of government. Besides the high cost of this policy and the distortional effects it causes, the consumption subsidies do not target the most needy, they strengthen the country's dependence for the wheat consumption, hinder the market players organization and oppose the free trade agreement. Despite this mixed results, to our knowledge, no research has attempted to quantify the expected effects of possible reforms of wheat consumption subsidies in Algeria, whether at macroeconomic or microeconomic level. To address this situation, our work attempts to assess the impact of wheat consumption subsidy reform on the economy as a whole and on the household's welfare. Using a CGE model calibrated on the characteristics of the Algerian economy, we simulate two types of scenarios; the first implies a total removal of wheat consumption subsidies. The second test alternative compensations policy following the removal of subsidies: direct transfers to households, reduction of direct taxes on household income and the agricultural and agro-food liberalization. The results show that the simulation of subsidy reform confirmed our assumptions. The consumption subsidies removal caused a decline in wheat consumption following the rise of its domestic price, while consumption of other food products remained at the same rate, then increased after the introduction of compensations measures. These have ensured to maintain the level of overall food consumption to a satisfactory level. This was possible in the first two measures, due to the increase in household income caused by the redistribution of subsidy as household transfer and income tax reduction. It was also allowed by decrease in agricultural and food products prices as a result of the ...
Wheat is the staple food of most Algerians. To ensure food security of the population, the government has always favoured an interventionist regulation policy based on consumer prices control. Since the country's independence in 1962, consumption subsidies have been established as a key measure of government. Besides the high cost of this policy and the distortional effects it causes, the consumption subsidies do not target the most needy, they strengthen the country's dependence for the wheat consumption, hinder the market players organization and oppose the free trade agreement. Despite this mixed results, to our knowledge, no research has attempted to quantify the expected effects of possible reforms of wheat consumption subsidies in Algeria, whether at macroeconomic or microeconomic level. To address this situation, our work attempts to assess the impact of wheat consumption subsidy reform on the economy as a whole and on the household's welfare. Using a CGE model calibrated on the characteristics of the Algerian economy, we simulate two types of scenarios; the first implies a total removal of wheat consumption subsidies. The second test alternative compensations policy following the removal of subsidies: direct transfers to households, reduction of direct taxes on household income and the agricultural and agro-food liberalization. The results show that the simulation of subsidy reform confirmed our assumptions. The consumption subsidies removal caused a decline in wheat consumption following the rise of its domestic price, while consumption of other food products remained at the same rate, then increased after the introduction of compensations measures. These have ensured to maintain the level of overall food consumption to a satisfactory level. This was possible in the first two measures, due to the increase in household income caused by the redistribution of subsidy as household transfer and income tax reduction. It was also allowed by decrease in agricultural and food products prices as a result of the of agricultural trade liberalization. This shows that taking simultaneously into account the free-market pricing of wheat, recycling consumption subsidy budget through household income or by the agricultural trade liberalization, we can verify that the domestic wheat price deregulation would not necessarily mean a harmful effect on the population economic welfare, in doing this, the potential food security risk would be moderated. ; Le blé est à la base du régime alimentaire d'une grande partie des algériens. Afin de garantir la sécurité alimentaire de la population, l'État a de tout temps privilégié une politique de régulation interventionniste basée sur le contrôle des prix à la consommation. Depuis l'indépendance du pays en 1962, les subventions à la consommation se sont toujours imposées comme une mesure phare des pouvoirs publics. Outre le coût élevé de cette politique et les distorsions qu'elle engendre, les subventions à la consommation ne ciblent pas les populations les plus démunies, elles renforcent la dépendance du pays envers la consommation de blé, elles entravent l'organisation des acteurs du marché et s'opposent aux règles du libre échange. Malgré ce constat mitigé, à notre connaissance aucune recherche n'a cherché à quantifier les effets des éventuelles réformes des subventions à la consommation du blé an Algérie, que ce soit au niveau macroéconomique que microéconomique. Afin de pallier à cette situation, notre travail tente d'analyser l'impact de la réforme des subventions à la consommation de blé sur l'économie dans sa globalité et sur le bien-être des ménages. À l'aide d'un MEGC calibré sur les caractéristiques de l'économie algérienne, nous simulons deux types de scénarios, le premier suppose une suppression totale des subventions à la consommation de blé. Le second teste des politiques alternatives de compensations suite à la suppression des subventions : transfert direct aux ménages, réduction des taxes directes sur le revenu des ménages et la libéralisation du commerce agricole et agroalimentaire. Les résultats montrent que la simulation de la réforme des subventions a confirmé nos hypothèses de départ. L'élimination des subventions a provoqué une baisse de la consommation de blé suite à la hausse de son prix domestique, pendant que la consommation des autres produits alimentaires s'est maintenue au même rythme, puis elle a augmenté après l'introduction des mesures de compensations. Ces dernières ont fait en sorte de maintenir le niveau de consommation alimentaire global à un niveau satisfaisant. Cela a été permis, dans les deux premières mesures, grâce à la hausse du revenu des ménages provoqué par la redistribution des subventions sous forme d'aide et de réduction de taxation. Il a été également permis par la baisse des prix des produits alimentaires à la suite de la libéralisation du commerce agricole. Ce qui démontre qu'en prenant simultanément en compte, la libre formation du prix à la consommation sur le marché du blé, le recyclage du budget des subventions à travers les revenus des ménages, ou par la libéralisation du commerce agricole, nous pouvons vérifier que la dérégulation du marché intérieur du blé n'a pas que des effets dommageables sur l'économie dans sa globalité, et le supposé risque de sécurité alimentaire des ménages est à nuancer.
In this paper we present a Social accounting matrix and a computable general equilibrium model of the Algerian economy for 2009. The model is then use to perform scenarios simulation of reduction and removal of consumption subsidies on the wheat sector in Algeria.
