Although it boasts a comparatively diversified economy, Morocco’s primary sector still plays a significant role in terms of job creation, trade, rural development and overall headline GDP. At present, agriculture contributes around 15% of GDP. In 2013 the sector accounted for 39.4% of total jobs and 72.7% of rural jobs. Agricultural goods represent about 12% of the overall value of exports and constitute a key source of foreign exchange earnings. Moroccan agriculture benefits from a temperate climate, large tracts of available agricultural land and accessible labour, but it also faces a number of challenges, notably weather conditions and fragmented production, which have meant the country relies on imports in certain segments, including grains and dairy. The value of imported agricultural goods ranges between 14% and 24% of total imports, and key imported products include wheat, sugar and powdered milk.
In 2008 the government launched the Green Morocco Plan (Plan Maroc Vert, PMV) to enhance the sector’s performance and address issues constraining growth. The PMV includes two pillars: it aims to increase sector profitability by developing high-revenue crops for export, as well as to develop agriculture as a means of boosting earnings for the rural population and combating poverty. To achieve these goals, the plan relies heavily on private capital.
“The PMV has been particularly beneficial in that sector professionals from each segment were directly involved in devising the plan and laying out its goals,” Ahmed Darrab, secretary-general of the Moroccan Association of Citrus Producers (Association des Producteurs d’Agrumes du Maroc, ASPAM), told OBG.
As of the end of 2012 overall agricultural output is estimated to have increased by 43% since the launch of the PMV in 2008, while sector GDP jumped 32%.
SECTOR PERFORMANCE: As with agricultural activity elsewhere, exogenous shocks can result in volatility in terms of production, particularly if farmers have low capital or technical buffers. In Morocco, unfavourable weather conditions characterised by cold temperatures and drought took their toll on a number of key crops in 2012. However, better weather conditions and abundant rainfall in 2013 allowed for higher domestic production, particularly in the cereals segment, which produced 9.7m tonnes, up 89% compared to 2012. Other high-revenue segments that saw positive growth in 2013 included sugar, dairy and red meat.
MODERNISATION: The PMV has been one of the most successful of Morocco’s numerous strategic development plans for various sectors in recent years, in terms of strengthening the resilience of the sector, improving output and boosting efficiency through enhanced mechanisation, the use of modern production techniques and better access to land. To oversee the implementation of the PMV, the Agency for Agricultural Development was established in 2009 by the Ministry of Agriculture and Fisheries (Ministère de l’Agriculture et de la Pêche Maritime, MAPM). The role of the organisation is to stimulate investment in the sector and facilitate the development of agriculture and agribusiness projects. A number of donors have supported the PMV since its inception in 2008. The World Bank, for instance, approved a $203m Development Policy Loan in March 2013 to contribute to the modernisation of Moroccan agriculture by providing help to smallholders, improving agricultural services, and enhancing management and delivery of irrigation water.
According to figures from the MAPM, an estimated Dh53bn (€4.7bn) has been invested in the sector since the launch of the PMV in 2008, of which Dh12.3bn (€1.1bn) has been mobilised by bilateral and multilateral partners. The bulk of these funds have gone towards capital investments to modernise production techniques. In terms of mechanisation, the past five years have seen Morocco achieve the minimum threshold recommended by the UN Food and Agriculture Organisation of supplying every 1000 ha with at least seven tractors. “Incentives introduced under the PMV, such as aid to acquire machinery and seeds, helped simplify procedures and reduced waiting lists,” ASPAM’s Darrab told OBG. “This, combined with access to state-owned land and tax exemptions up until end- 2013 have constituted the main drivers for investment in Moroccan agriculture over the past five years.”
Sustainable irrigation systems continue to be extended across plantations, as scarce water resources remain a major challenge for Moroccan agriculture. The National Irrigation Water Saving Programme was devised under the PMV with the aim of enhancing water resource management, modernising irrigation infrastructure and promoting sustainable usage. The 10-year, Dh37bn (€3.3bn) plan aims to introduce localised irrigation systems on 500,000 ha of land by 2020. As of end-2012 the minister of agriculture, Aziz Akhannouch, announced that some 330,000 ha had already been converted. The target for 2014 is to reach 410,000 ha by year-end. In citrus, a segment which consumes up to 9000 cu metres per ha per year, a programme was set up by the MAPM to equip plantations with micro-irrigation systems that enable them to save up to 40% of their water needs. Today, over three-fourths of citrus plantations have been equipped, thanks in large part to government subsidies covering up to 80% of the cost of equipment and 100% for farmers operating on less than 5 ha of land. As a result of these measures, as well as better access to land under the PMV, the area under cultivation increased by 11% between 2008 and 2012.
SUPPORTING FARMERS: Agriculture employs around 40% of active population and the PMV is expected to see 1.15m new jobs created by 2020. However, the sector remains dominated by smallholders and subsistence farmers, and 70% of farmers today still operate on surface areas of less than 5 ha. More assistance is therefore key to allow these farmers to capitalise on the advantages offered to them under the PMV and enhance the value added of their crops. “While the PMV has considerably contributed to the modernisation of Moroccan agriculture, further support and assistance should be brought to producers in carrying out their operations on the field,” Darrab told OBG.
Helping smallholders improve production and modernise their activities is a laborious task and one that involves extensive interpersonal networks. To tackle this, the Moroccan government is emphasising farmer training through one-on-one and communal advisory services. Advisory services to Moroccan farmers on how to enhance production and value added have been available to varying degrees for several years, but have seen little tangible impact so far. To help increase engagement with farming communities, the National Office of Agricultural Advising was established in early 2013. The MAPM aims to restructure and revitalise existing agricultural advising services, develop private consultancy, and enhance the involvement of farmers and professional organisations through partnerships with the state. The ministry’s target is to boost the number of agricultural advisors from its current one per 3800 farmers to one per 1350 farmers, by expanding the involvement of private firms. A bill defining the legal framework for private consultants is currently being studied in parliament and the government plans to subsidise the costs to ease access to these services for farmers. However, the impact of all this activity will not be felt for some time. “The return on investment is likely to manifest itself over the medium and long term,” Nathalie Barbe, director at the National Federation of Agribusiness, told OBG.
CEREALS: Cereals constitute a key agricultural segment and one in which Morocco is unable to meet local demand. Morocco is compelled to import 60-70% of its cereal needs at present. According to the US Department of Agriculture Foreign Agricultural Service, Morocco has one of the highest levels of per capita wheat consumption in the world, estimated at 210 kg annually. Morocco imported 3.3m tonnes of wheat and 250,000 tonnes of barley in 2012-13.
Still, favourable weather conditions allowed for better cereal harvests in 2013. Production reached 9.7m tonnes, up from 5.1m tonnes in 2012 and exceeding the target set under the PMV of producing 7m tonnes of cereals annually by 2020. 5.2m tonnes of wheat alone was produced – thanks in part to efforts to supply farmers with quality seeds at affordable prices under the PMV. Indeed, the government is subsidising 40% to 60% of the cost of purchases of certified seeds. Subsidies ranging between 30% and 70% also apply to purchases of machinery and irrigation equipment. Increased local production should contribute to reducing the volume of wheat imports, and favourable weather conditions should allow for another good year of harvests in 2014. The total planted area is estimated at 4.9m ha and production is projected to reach 7m tonnes. Hicham Mohsine, secretary-general of flour manufacturer May-Mouna, told OBG, “Consumption of wheat-based products is not expected to grow significantly over the next few years as existing local demand is already tapped. Instead, it will rise steadily due to population growth.”
CITRUS FRUIT: Citrus benefitted from a contract programme (2009-18) signed with the government under the PMV to modernise the segment. Sector professionals carried out awareness campaigns through regional and communal meetings with producers to introduce them to the objectives outlined for the segment under the PMV and inform them about the incentives and means mobilised to help achieve these goals. The contract programme planned to attract Dh9bn (€799.2m) in total investment, two-thirds of which was expected to come from private investors. Plans included renewing plantations over 30,000 ha and planting new ones on an additional 20,000 ha. The programme has enabled the expansion of plantations and the planting of new trees. Subsidies on irrigation equipment were a major contributor to the expansion efforts.
Morocco produces around 2m tonnes of citrus, of which 500,000 to 600,000 tonnes are exported. The aim is to bring production to 2.9m tonnes and exports to 1.3m tonnes by 2018. In total, around 1.4m tonnes of fruit and vegetables are exported with the largest share going to the EU, except for citrus, for which more than 50% is exported to Russia. Current production figures seem promising and according to ASPAM’s Darrab, these objectives could even be reached by 2016.
However, the segment faces a number of challenges as well, particularly as far as farm-to-table logistics are concerned. “The commercialisation of agricultural produce remains dominated by inadequate distribution channels and increased intervention of numerous commercial intermediaries,” Darrab told OBG.
“Better organisation of distribution channels would increase revenues for producers and bring the final cost down for consumers,” he added. One solution suggested to address the issue includes bringing producers closer to consumers by developing farmers’ markets through which producers are able to directly sell part of their produce – something that currently occurs on a largely informal and small-scale basis.
Product quality and standardisation is another issue. Efforts to categorise produce have started in certain niche products such as dates through a system of labelling to improve awareness of origin and quality. Better product labelling would boost exports, allowing producers to distinguish exported Moroccan produce from other competing goods, particularly in citrus.
OLIVES & TOMATOES: The expansion of planted areas under the PMV, which increased from 763,000 ha in 2007/08 to 933,475 ha in 2012/13, led to a rise in olive production from 765,000 tonnes in 2007 to almost 1.2m tonnes at present. PMV objectives for the segment include bringing production to 2.5m tonnes by 2020 and planted area to 1.2m ha. The diversification of varieties encouraged under the PMV is expected to boost production. Around 75% of output is used to produce oil; however, the quantities made available on the domestic market only meet 16% of the country’s needs. Exports of olive oil, which face rising competition from other Mediterranean countries, account for 5-15% of total production and are mainly destined for Europe and the US. In 2012 olive oil exports were 15,640 tonnes, although the country also imported 3500 tonnes, mainly from Spain, France, Italy and Tunisia. The PMV objectives for the sector are to increase exports to 120,000 tonnes of oil and 150,000 tonnes of table oil by 2020.
The production of tomatoes increased by an annual average of 5.8% between 1990 and 2010 and as of 2011, cultivated areas covered more than 17,000 ha. Tomato exports are among the top revenue earners. Between 1998 and 2011, exports increased by 4.9% on average a year, with the EU absorbing the biggest share (90%). The major constraints facing tomato exports include the quotas and prices in European markets as well competition from other major producers in the region. In 2012 the EU decided to extend the free trade agreement signed back in 2000 and grant Morocco new preferential export quotas to increase the volume of its imports – including tomatoes. EU import quotas for tomatoes will be increased by up to 32,000 tonnes by 2016. As a result, Morocco is now able to export 55% of its products, namely tomatoes, cucumbers and oranges, without paying Custom duties, as opposed to 33% under the previous agreement.
MEAT: The red meat industry produced a total of 490,000 tonnes in 2012, exceeding the government’s target of producing 450,000 tonnes by 2014. Per capita consumption of red meat also rose from 11.6 kg in 2009 to 13 kg in 2013. This performance can partly be attributed to the Dh6bn (€532.8m) contract programme signed in 2009 to boost red meat production by modernising slaughterhouses and enhancing distribution. The programme planned for the upgrade of the country’s 12 municipal slaughterhouses and the creation of private units. However, only one slaughterhouse in Meknés has been established so far. The delay is mainly due to the dominance of small-scale farmers and the size of the informal meat market.
The white meat segment registered significant growth between 2008 and 2012, during which time production rose by 14%. The segment also generated 50,000 new jobs and saw turnover rise by 44%. In 2012 production stood at 560,000 tonnes with growth being largely driven by the removal of tariffs on imported maize, bringing costs down for the industry.
A Dh700m (€62.2m) contract programme ( 2011-20) between the government and the poultry federation is expected to further stimulate sector development and attract up to Dh3.7bn (€328.6m) in investment. Zalagh, one of the larger firms active in the grain trade and poultry in Morocco, will receive $24m from the International Finance Corporation to help the company expand its activities and stimulate socio-economic development in rural areas. Zalagh plans to invest up to Dh350m (€31.1m) over the next three years to boost the output of animal feed, enhance production of poultry and construct farms across the country.
DAIRY: While local consumption of milk is around 55 litres per inhabitant per year, milk production increased by 40% between 2008 and 2012, rising from 1.8bn litres to 2.5bn litres. This rise can be attributed to efforts carried out under the PMV to expand the number of dairy cows, adopt modern production techniques and encourage aggregation. Centrale Laitière is Morocco’s leading producer of milk (with around 60% of market share) and dairy products; France’s Danone acquired 68% of the firm’s shares in 2012. Cooperative Agricole is the number two player in terms of market share (25%), while small-scale farmers account for the rest of the market. The PMV aims to increase milk production to 4.5bn litres by 2020. The government has committed to invest Dh2bn (€177.87m) in the sector and hopes to generate an additional Dh10bn (€889m) in private investment. In April 2012 Nestlé signed an agreement to invest Dh50m (€4.45m) by 2015 to encourage the aggregation of smallhold milk producers in the region of Doukkala-Abda (see analysis).
SUGAR: Sugar is one of the most developed segments in terms of industrialisation in Moroccan agribusiness. Compagnie Sucrière Marocaine et de Raffinage (Cosumar) became the country’s sole sugar provider after the acquisition of four state-owned refineries in 2005, and has an installed production capacity of 1.6m tonnes a year. Previously controlled by Morocco’s largest conglomerate, Société Nationale d’Investissement (SNI), the firm has gradually seen its shares divested, bringing SNI’s stake to 9.1% after it sold off 27.5% of its shares in April 2013 to Singaporean firm Wilmar for a total of Dh2.3bn (€204.2). Since 2005, Cosumar has embarked on a plan to modernise the segment and maximise output by encouraging aggregation. It has invested up to Dh3.6bn (€319.7m) to make output reach 55% of domestic demand by 2013 and bring yields to an average of 675,000 tonnes of sugar annually. To support the firm in achieving its objectives, a first contract programme was signed in 2008. However, unfavourable weather conditions between 2009 and 2012 severely affected plantations and output, particularly in the Gharb and Loukkos regions, and as a result in 2013 yields were only able to cover 32% of domestic demand. The substantial investments made by the company since 2005 have resulted in enhanced productivity, particularly in sugar beets, with output increasing from 7.8 tonnes per ha in 2006 to 9.5 tonnes per ha in 2012. A new contract programme signed in 2013 and expected to run through 2020 is designed to further modernise the segment by expanding the use of quality seeds, acquiring machinery, and supporting further investment in research and development.
The plan aims to boost production to 12 tonnes per ha by 2020 and meet 62% of domestic demand. Consequently, sugar cane and sugar beet are expected to see planted area expanded to 28,200 ha and 66,500 ha, respectively. According to Mohammed Fikrat, the CEO of Cosumar, “The contract programme has been instrumental in boosting yields and production in certain segments like sugar, thanks to investments in the modernisation of equipment, among other things.”
FISHERIES: Fisheries are being developed under the country’s national strategy, Plan Halieutis, launched in 2009. Goals set to be achieved by 2020 include boosting the sector’s GDP to Dh21.9bn (€1.94bn), raising the value of exports to $3.1bn, and increasing total employment in the sector to 115,000 (direct) and 510,200 ( indirect). Amina Figuigui, managing director of Office National des Pêches, told OBG, “The fisheries sector, including the processing industries, has contributed an average of 2.5% to GDP over the past decade, and represents 15% of national exports and 50% of food-related exports, underlining its importance.” The sector has seen steady growth in recent years – in 2013, the value of processed seafood exports rose by 8.54% from Dh13.23bn (€1.17bn) in 2012 to Dh14.36bn (€1.3bn), while export volumes rose by 11.75% from 471,249 tonnes in 2012 to 526,631 in 2013. “Some 90% of the local production of canned fish is exported, with half going to African countries, a region where demand has posted steady growth over the past few years, in spite of lingering challenges in distribution channels,” Karim Ayouche, associate manager of Kay Holding, said.
Still, there is a need to accelerate momentum to meet the sector’s goals. “Plan Halieutis is an ambitious programme which has set clear goals for the sector. However, its impact so far has been limited,” Hassan Sentissi, president of the National Federation for Seafood Processing Industries, told OBG. Key fishing zones include Tangiers, Agadir and Laâyoune. Under Plan Halieutis, the objective is to boost the annual catch to 1.66m tonnes by 2020. Seafood exports generate over 70% of the segment’s GDP and the EU is the largest importer. Exports include fresh and processed seafood. Processed seafood accounts for 50% of exported Moroccan food products and 12% of total exports. Local factories process around 70% of the total coastal catch and export 85% of processed production.
“The seafood processing industry is a key exporter and foreign exchange earner and therefore a strategic contributor the country’s development that requires enhanced efforts on behalf of public and private operators to allow it to realise its full potential,” Sentissi told OBG. “A number of measures need to be introduced, from accelerating implementation of Plan Halieutis to reforming logistics and diversifying production.”
To enhance production volumes, Morocco also has plans for the development of aquaculture. Under Plan Halieutis, the goal is to boost fish farm production to 200,000 tonnes by 2020 for a turnover of Dh5bn (€444m). Challenges remain, however, as the sector is constrained by the lack of available land, high start-up costs and dependence on export markets.
A new fisheries protocol between Morocco and the EU was adopted in December 2013. The four-year agreement will allow the European fleet to return to Moroccan waters in exchange for €40m, up from €36.1m under the previous protocol, which expired in December 2011. Under the new deal, a total of 126 European boats will be allowed to sail in Moroccan waters in search of six types of fish. The new fishing agreement (2014-18) brings benefits to both sides. Under the accord, specific quantities have been defined for a variety of species and solely concern any excess not caught by either the national Moroccan fleet or foreign fleets operating in Morocco’s exclusive economic zone. A monitoring system is planned under the new agreement, as is a mechanism to review the arrangement if sustainability issues arise. The agreement also explicitly promotes greater economic integration of EU fishing activity within the local Moroccan economy.
OUTLOOK: As the country pursues its plans to modernise agriculture and increase support to producers and small-scale farmers, production should continue to expand. Nevertheless, output, notably in cereals and fruits and vegetables, remains vulnerable to changing weather conditions, and efforts to mitigate risks will be a determining factor in securing revenues for both farmers and agribusinesses. Better integration of upstream and downstream activities is expected to contribute considerably to addressing the rise in production planned under the PMV’s first pillar and enhancing revenues and living conditions for the country’s rural population, as laid out under the plan’s second pillar. According to Akhannouch, the PMV will require another $10bn of funding in order to achieve its goals by 2020.
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