Although Morocco’s economy is comparatively welldiversified, the agriculture sector still plays a significant role in terms of rural development. The sector accounted for 13.2% of GDP in 2011, rising to 15% in 2013, and provided roughly 40% of total employment, with millions more indirectly reliant on it. As a result, the government’s agricultural strategy, the Green Morocco Plan (Plan Maroc Vert, PMV), has sought to boost industrialisation and shift activity up the value chain with the aim of ensuring that the rural population benefits from increased production and value addition.

According to figures from the Moroccan Investment Development Agency, agribusiness comprises 29% of industrial units and employs over 90,000 people. The sector is largely made up of small and medium-sized firms with less than 200 employees. Plans to develop the sector under the PMV are expected to generate 24,000 new jobs by 2015. While progress has been considerable in primary processing, secondary processing remains underdeveloped and the main industrial centres like Casablanca are congested. “Incentives are needed to encourage the decentralisation of businesses away from these congested areas,” Hakim Marrakchi, managing director of Maghreb Industries, said.

SECTOR PERFORMANCE: According to a review on agribusiness from the local daily Les Echos in July 2013, the sector’s turnover increased from Dh61bn (€5.4bn) in 2000 to Dh112bn (€9.9bn) in 2011, recording average growth of 6% annually. This growth can be attributed to a number of factors, notably increased local demand and consumption of processed goods which account for around 40% of Moroccan households’ expenditure. The rise in the cost of raw materials and the value of exports also explain the jump in turnover.

The leading growth segments in recent years include cereals, dairy and poultry, thanks in large part to enhanced integration of upstream and downstream activities, but also fruit juice and the chocolate and biscuit segment. Incentives have helped fuel growth in some areas, such as the biscuit and chocolate segment, which benefitted from targeted measures, notably a 2.5% reduction on the import duty for raw materials such as refined sugar, powdered milk and wheat, as well as the measures introduced by the National Pact for Industrial Emergence (Pacte National pour l’Emergence Industrielle, PNEI), a programme launched in 2008 to stimulate industrial activity through 2015. The PNEI specifically targeted food processing, among other areas, for development. However, its impact has been modest. “Although the PNEI has proven particularly beneficial for niche sectors such as automobiles, aeronautics and offshoring, its overall impact has been minor in agribusiness,” Marrakchi told OBG. A contract programme with the government, now under consideration for the sector, should present an opportunity to reorient the PNEI to better target agribusiness.

EXPORTS: Agricultural exports comprise three main categories: fresh fruit and vegetables, processed fruits and vegetables, and fresh and canned seafood. Fresh produce and products derived from primary processing account for the majority of trade in agricultural products. Exports of fresh food in particular are on the rise, with fresh fruit and vegetables accounting for around 95% of exported fresh goods and composed for the most part of citrus and farm produced crops. The value of exported processed goods has increased in recent years, although volumes have remained more or less constant over the past decade. Major processed product exports include olive oil and canned goods.

The EU is the main export market, taking in more than 70% of processed Moroccan agricultural goods, although the kingdom is increasingly supplying new markets in Eastern Europe, the Middle East and Africa. “Demand for Moroccan processed goods in sub-Saharan Africa is on the rise,” Nathalie Barbe, the director of the National Federation of Agribusiness (Fédération Nationale de l’Agroalimentaire, FENAGRI), told OBG. “However, the optimisation of logistics is a prerequisite to ensure the transfer of perishable Moroccan produced goods to the region.” Despite the diversification of trade partners, exports of processed agricultural goods still account for just 11% of industrial exports. Free trade agreements (FTAs) are expected to stimulate the outflow of goods. The conclusion of a number of FTAs since 2005 should help stimulate innovation in the industry in the face of growing competition from blocs like the EU and countries such as Turkey.

The most significant FTA is perhaps that signed with the EU. “The impact is initially positive for Morocco, and Moroccans should take more advantage of the agreement as well as the present negotiations on advanced status to expand trade with the EU,” Maghreb Industries’ Marrakchi told OBG. “Importing more raw goods would stimulate the domestic food processing industry,” Marrakchi added. Although it is the second-largest industrial sub-sector in the country – accounting for around 30% of industrial GDP – and despite the increase in agricultural output, agribusiness only generates value addition of 4-5% of GDP as opposed to 16% in agriculture. One of the reasons behind this is related to the taxation system, which subjects the industry’s output, as well as imported equipment, to a 20% value-added tax (VAT), as well as corporate and revenue tax. VAT has discouraged processing industry activity and resulted in the expansion of the informal sector.

AGRICULTURAL SITES: The PMV’s goals are dependent on efforts to encourage downstream processing production, through the reinforcement and restructuring of existing segments in agribusiness, and the development of new segments with higher value added, as well as to strengthen upstream activities through the creation of six key production agricultural sites by 2015. These sites are meant to establish a platform for cooperation along the entire supply chain. “It is crucial to simulate the industrial engine to complement upstream activities,” Barbe told OBG. Under the PMV six agricultural sites in key production regions will be established. The aim is to provide an attractive framework for agribusinesses by improving access to land and increasing the sector’s value addition by enhancing collaboration between upstream and downstream activities.

Two sites in Meknès and Berkane in the north are already operational. The Berkane site, located 12 km from the town of the same name, is established over a surface area of 100 ha for a total estimated investment of Dh1.3bn (€115.4m). This site aims particularly at boosting output, processing and marketing of agricultural produce in the Oriental region, notably citrus, olives and cereals. As for the site in Meknès, it spreads over 630 ha and involves total investment of an estimated Dh4bn (€355.2m). Two more sites are planned for the interior regions of Tadla and El Haouz and another two are to be received along the Atlantic coast in Agadir and Gharb.

“Given their geographical location which places them close to key producing agricultural regions, these sites are for the time being particularly attractive for primary processing industries, while secondary and tertiary processing industries await sites placing them closer to key consuming areas,” FENAGRI’s Barbe told OBG.

CHALLENGES: Morocco’s agribusiness sector benefits from its close proximity to European and African markets, as well as affordable labour, competitive production costs and a varied supply of inputs ranging from fish to dates to dairy.

However, ensuring steady access to those inputs is one of the main obstacles limiting the sector’s growth due to the irregular supply of primary goods, in terms of both quantity and quality, as well as international price volatility. Despite the rise in agricultural output brought about by the PMV and a gradual improvement in modernisation efforts, production levels remain highly vulnerable to climate conditions. According to Barbe, the volatility of agricultural production levels constitutes one of the main impediments to the development of agribusiness in Morocco.

In terms of distribution, the sector is also hampered by the number of commercial intermediaries, an issue that affects the trade in fresh fruit and vegetables in particular and results in additional costs for processing industries. These challenges have somewhat limited the capacity of the sector to innovate and compete.

The development of Moroccan agribusiness will depend on the development of the industrial sector as a whole. There is plenty of unexploited potential in the sector and several segments are eligible for processing, which could help boost sales in both the domestic and export markets.

However, to allow the sector to realise its full potential, reforms must be implemented in a variety of fields such as the fiscal framework, sector regulation and hygiene, for instance. Therefore, redefining a clear policy framework for the sector is a priority in order to enhance visibility for future investors and stimulate sector activities in a context of trade liberalisation.

A long-awaited new contract programme is expected to be signed with the government to review the industrial policies governing agribusiness and objectively evaluating the impact of FTAs on the sector. However, no date for its release has yet been made public.