* Farming investment needed to offset import costs
* Oil price drop prompting some government reforms
* Law requires majority Algerian stake in projects
By Hamid Ould Ahmed
Feb 28 (Reuters) - Algeria will this week invite a new round of bids from foreign firms to invest in its farming sector, a senior source at the agriculture ministry told Reuters, part of efforts to boost domestic production and reduce its hefty import bill.
The tender for expressions of interest will be aimed at local and foreign investors, and a total of 28 pilot farms focused on vegetables, fruit trees, cattle breeding and animal feed will be on offer, said the agriculture ministry source.
OPEC member Algeria has been slowly opening up its agriculture sector to private and foreign investors in an attempt to slash the cost of food imports after a fall in global oil prices caused a sharp drop in energy earnings.
The North African nation of 40 million people imports most of its food needs due to insufficient domestic output and a lack of investment.
But the oil price slide has prompted the government to take steps including approving a new investment law last year that provides incentives for private and foreign businessmen looking to carry out projects in the non-oil sector.
“The goal is to set up joint ventures to manage and operate farms, but land will remain state property,” the source said.
Winning bidders will hold a minority stake in those farms, in line with Algerian law that limits to 49 percent foreign stake in any investment project.
The pilot farms on offer are located in eastern, western, central and southern regions, the source said.
The tender is part of reforms promised by the government to diversify the economy away from oil and gas, which account for 94 percent of exports and 60 percent of state budget.
Earlier this year, Algerian private firm Tifralait and the American International Agriculture Group (AIAG) signed a $300 million deal to jointly develop projects over an area of 25,000 hectares to produce cereals, potato, dairy and cattle feed.
Despite import restrictions, food import costs still account for over 20 percent of total purchases, which last year reached $46.72 billion, with energy earnings falling to $27.5 billion from $35.7 billion in the previous year and $60 billion in 2014. (Reporting by Hamid Ould Ahmed; editing by Patrick Markey and David Evans)