Representing one of Morocco’s largest GDP contributors, and responsible for approximately 4m jobs, the agricultural sector has long been a major driver for export revenues, job creation and rural development in the kingdom. However, Morocco’s agricultural sector is now also increasingly serving as a platform for value creation, manufacturing and social development.
The Green Morocco Plan (Plan Maroc Vert, PMV), launched in 2008 to run through 2020, is the kingdom’s strategic agricultural policy. Centred around two main pillars, the first aims to boost productivity and sector profitability, while the second looks to improve smallholders’ earnings through agricultural development to help alleviate poverty in rural and disadvantaged parts of the country. The kingdom has also launched a number of large-scale projects since the introduction of the PMV, with the objective of modernising production methods through efficient irrigation and enhanced mechanisation, for instance, as well as raising value added, particularly through the development of high-potential crops and agribusinesses.
However, one of the more crucial components – particularly in terms of improving productivity and rural development – has been a focus on aggregation and closer public-private collaboration, notably through the creation of a number of segment-specific trade committees, broadly known as “interprofession”.
So far, 18 committees, representing key segments like cereals and dairy have been formed. A number of these groups have secured contract programmes – government-backed contracts – to develop their activities. These committees, composed of multiple sector professionals, work alongside the government in carrying out its plans for each segment, and also act as a go-between with sector operators, examining their needs and seeking solutions to meet demands.
Contributing around 15% of GDP, agricultural output has evolved over the past two decades in terms of quantity and structure, with an improvement in overall stability and a reduction in volatility. Part of this is due to the fact that upstream activities in particular have received a significant boost since the launch of the PMV, with overall output rising 43% between 2008 and 2012.
The reduced volatility is also in part a result of the conversion of cereal plantations, a key staple food, towards crops with higher value added. Up to 300,000 ha have so far been converted under the PMV to instead grow produce such as fruits and olives. While this has reduced the surface area allotted to cereals, enhanced mechanisation and the gradual adoption of modern production methods have allowed a gain in productivity and greater yields despite the unfavourable weather conditions that loomed during the 2013/14 season.
“Agricultural output was mainly dependent on cereal yields 15-20 years ago. However, this is no longer the case today,” Soufiane Larguet, director of strategy and statistics at the Ministry of Agriculture and Fisheries, told OBG. “Moroccan agriculture is also less dependent on rainfall for we have considerably developed varieties, such as olive production, which require less water and are able to resist adverse weather conditions.” As well as branching into crops that are less water intensive, the extension of an efficient irrigation network has also benefitted production and diversification of upstream activities in the sector over recent years.
A major component underlying the increase in volume and productivity, and the reduction in volatility, is the expansion of irrigated land in the country. “Almost half of agricultural GDP growth since the launch of the PMV was realised within irrigated areas. If we exclude the rainfall factor, 97% of the value added created was achieved within these irrigated areas thanks to the introduction of modern techniques such as drip irrigation,” Larguet told OBG. Irrigation is part of a large-scale development project policy initiated under the PMV. By end-2014, some 400,000 ha had been equipped with modern drip irrigation systems under the 10-year National Irrigation Water Saving Programme, which was devised to enhance water resource management, modernise irrigation infrastructure and promote sustainable usage. The programme’s target is to reach 550,000 ha by 2020, although this goal is likely to be achieved by 2017 if the country fulfils its plans to equip an additional 50,000 ha a year.
Irrigation projects have received considerable public investment under the PMV, with around 30% of the ministry’s budget being funnelled into the system. Nevertheless, irrigated land in Morocco is estimated at just 19% of total agricultural land. The need to continue increasing areas under irrigation is therefore a pressing matter for the country to secure its ambitious plans under the PMV to boost production as well as promote sustainable usage of the country’s water resources.
Land & Credit
Expanding output and crop varieties has also benefitted from the government’s policy to lease state-owned land. Up to 120,000 ha of land have been allocated since the launch of the PMV to be developed in the form of public-private partnerships (PPPs). Known as “PPP foncier” or land PPPs, this strategy forms part of the government’s move to gradually withdraw from agricultural activity, and cede production to private investors. Additional allotments are expected to be offered in the years to come.
Accessing land in Morocco has been a particular challenge for smallholder farmers. Indeed, reluctance on behalf of financial institutions to grant credit for agricultural projects was largely impeded by land ownership issues as well as farm fragmentation. In Morocco, as many as 70% of farmers operate on plots of less than 5 ha. To address this issue, the Ministry of Agriculture and Fisheries, in collaboration with Crédit Agricole launched, “Tamwil El Fellah”, (Arabic for “financing the farmer”) in 2010 to aid small-scale farmers. Although the first two years into its launch proved particularly challenging due to confusion over whether it was to be rolled out under the first or second pillar of the PMV, according to local media reports, Dh407m (€44.3m) were distributed in 2014 as part of the programme.
As is the case across the Maghreb economies, Morocco relies heavily on food imports to meet local demand, even in staple segments. Food imports amounted to Dh41.2bn (€4.48bn) in 2014, according to preliminary data released by the Office des Changes, increasing 14.8% year-on-year (y-o-y).
While the country has made significant strides in boosting local output, a number of segments, such as cereals, powdered milk and table oil, still fall shy of their overall potential. Adverse weather conditions harmed production in a number of crops during the last agricultural season, notably cereals, for which output fell from 9.7m tonnes in 2013 to 6.8m tonnes in 2014. Wheat imports, as a result, increased some 51.2% totalling Dh12.4bn (€1.35bn) in 2014.
An important share of these imports is driven by the grain milling industry, which consumes around 4.5m tonnes of wheat annually and yet, for quality and technical purposes, only utilises 20-25% of locally produced wheat. In a bid to encourage local wheat consumption and reduce its food bill, Custom duties on wheat imports are increased from May through August annually, and can sometimes be prolonged up until the end of the year depending on the outcome of local harvests. While this protects domestic production, it distorts the supply picture as importers scramble to build up their stocks prior to the tax hike. This results in a number of bottlenecks, notably reduced storage space and port congestion, consequently driving up costs.
“The national policy to protect local wheat production means imports are restricted for a few months, therefore preventing us from benefitting from competitive prices in certain markets, such as those of the Black Sea,” Bouchaïb El Haddaj, general director of the National Federation of Cereal and Legume Merchants, told OBG.
To address this, the government, in collaboration with the National Trade Committee for Cereals and Legumes, is in the midst of devising a new system to secure sales and consumption of local wheat in return for a clearer import transparency to allow sector operators to supply the local market with quality produce in a more cost-efficient manner. According to El Haddaj, the system should be ready to be implemented by the 2015/16 agricultural season.
Cereals remain the single largest segment of agricultural production in Morocco. Cereals yielded 6.8m tonnes in output in 2014. Although down from the 9.7m tonnes produced in 2013, the latest results remain within sight of the government’s objective under the PMV to bring cereal yields to a regular average of 7m tonnes a year by the start of the next decade.
Parallel to its efforts to boost output, the country will need to pursue efforts to improve the quality of its yields to increase consumption rates of locally produced cereals. This applies particularly to wheat, but also concerns other key crops such as durum wheat. While Morocco produces 1.5m-2m tonnes of durum wheat annually, processing industries’ needs are entirely met through imports – averaging 600,000-700,000 tonnes annually – for quality reasons.
Among the issues that degrade the quality of locally produced cereal are irregular rainfall and unfavourable weather conditions, which cause production to fluctuate from one year to another. Additionally, land fragmentation and the prevalence of small-scale farms are among the factors that have traditionally affected upstream production. The liberalisation of the sector in 1996 further exacerbated the situation, leading an important number of agricultural cooperatives, previously in charge of collecting cereals from small-scale farmers, to cease activities.
“In France, for instance, 97% of the cereal trade is carried out by cooperatives. In Morocco, however, 99% of this trade is overseen by private operators whose interests are mainly profit-driven,” Alaoui Moulay Abdelkader, general manager of the National Union of Moroccan Agricultural Cooperatives, told OBG.
In a bid to improve sector governance, the Ministry of Agriculture and Fisheries is looking to restructure the role of cooperatives and reintegrate them into the distribution circuit. A contract programme (2014-20) was signed to create 15,000 cooperatives and raise membership numbers from 250,000 to 1m. Efforts are also being geared towards the introduction of three quality categories and a bonus system to encourage better production results and reward farmers accordingly.
The trade balance for fresh produce, excluding cereals, registered an average annual surplus of Dh4.5bn (€489.6m) between 2007 and 2013, according to a report released by the Ministry of Economy and Finance in July 2014 on the performance and competitiveness of Morocco’s food exports. This can be largely attributed to improved domestic output under the PMV, particularly that of fresh fruit and vegetables, which returned 1.85m tonnes in 2013/14, registering a 7% y-o-y increase. For the most part, output is commercialised on the domestic market for both direct consumption and food processing, although the latter absorbs just a modest share (see analysis).
Fruit and vegetables comprise around 95% of fresh produce sold abroad, with the country also exporting processed fruit and vegetables as well as fresh and processed seafood. Europe (including Russia) is Morocco’s main trade partner, absorbing 91.5% of exported fresh goods between 2007 and 2013. Key export crops include tomatoes and citrus fruits. Given its historical ties with the EU, the market was particularly shaken by the bloc’s decision in April 2014 to impose a new entry price system on all imported fruits and vegetables, but a compromise reached that June for certain crops spared the market further disruption (see analysis).
Production of citrus peaked in 2013/14, returning around 2.2m tonnes, according to figures from the Ministry of Agriculture and Fisheries. Yields benefitted from favourable weather conditions, as well as from the increase in production generated by the citrus planted between 2009 and 2013 that has begun to reach maturity. A key export crop, the segment has thrived under its contract programme (2009-18) to bring output to 2.9m tonnes by 2018. At current production figures, the sector is on track to meeting its target.
Even as output has significantly progressed, the segment has experienced difficulty over the past three years in commercialising production both locally and abroad. Firstly, a number of inconsistencies related to the proliferation of distribution middlemen and the quality of service rendered by wholesalers have affected the domestic market, which absorbs up to 70% of output. “Produce must transit through the wholesale market before being commercialised. However, these markets are ill-equipped to be able to efficiently handle the 1.5m tonnes that go through them every year,” Ahmed Darrab, secretary-general of the Moroccan Association of Citrus Producers (Association des Producteurs d’Agrumes du Maroc, ASPAM), told OBG. “The taxes disbursed at these markets by producers, the majority of which come from the rural regions of the country, are detrimental given the low quality of services they receive in return,” he added. Storage space, security, hygiene and logistics are among the challenges afflicting local wholesale and distribution channels.
On the international scene, competition is fierce, particularly for output destined for the European market. Russia is Morocco’s largest customer today absorbing approximately 50% of exported Moroccan citrus, but European exports as a whole have declined. “Our share of exported citrus to the European market has considerably decreased over the past 20 years,” ASPAM’s Darrab told OBG. “This can in large part be explained by the fact citrus output at the time was not sufficient to meet demands of the domestic, EU and non-EU markets, particularly Russia, at once.”
“Regardless, given the sharp increase in local production, we will need to work on strengthening our presence in Europe,” Darrab added. Recent years have seen exports to the region affected by the lingering impact of the 2008 crisis, leading demand to shrink. In 2013-14, the total volume of exported citrus amounted to 584,000 tonnes. The sector’s contract programme aims to raise exports to 1.3m tonnes by 2018.
Morocco produced around 490,000 tonnes of red meat in 2013/14. Efforts carried out under the 2009-14 contract programme saw red meat exceed its production target by 10% as of 2014. Annual per capita consumption also rose by 4%. A new Dh5bn (€544m) contract programme was signed in 2014 to run through 2020 and will capitalise on gains achieved under the previous contract and pursue efforts to modernise and expand slaughterhouses, absorb informal activity and enhance sanitary controls. The plan aims to bring production to 612,000 tonnes by 2020, raising per capita consumption to 17.3 kg and generating 80,000 jobs.
In terms of white meat, such as poultry, Morocco produced 534,000 tonnes in 2014, up from 495,000 tonnes in 2013. Per capita consumption has increased from around 2.3 kg in the 1970s to 17 kg today, although it still lags behind countries like Spain (27 kg) or Saudi Arabia (40.7 kg). The sector benefits from a contract programme signed with the government in 2011 that aims at producing 900,000 tonnes of white meat by 2020. This is expected to see per capita consumption rise to 25 kg and multiply the volume of exported white meat to Africa by a factor of 10.
Morocco produced 2.3bn litres of milk in 2013/14, allowing it to meet 90-95% of its domestic needs. The segment has experienced a slight decline in output compared to previous years as a number of dairy farmers, driven by a change in profit margins, have opted to use their cattle for meat instead. Nonetheless, the sector has made significant strides, with output increasing 40% between 2008 and 2012 thanks to efforts under the PMV to modernise production and expand dairy cattle numbers.
Sugar is a segment where aggregation has successfully been integrated, allowing for yields to more than double between 2005 and 2014 and productivity to improve from 5-6 tonnes per ha to almost 10 tonnes per ha. Sugar output stood at 480,000 tonnes in 2014, rising by 32% y-o-y and covering up to 40% of domestic needs, up from 28-29% in 2012-13. Output in recent years has also benefitted from greater sugar beet production by farmers. Testament to this is the increased surface area devoted to sugar beet in the region of Doukkala, which extended over more than 16,980 ha in 2013/14, up from around 12,600 ha in 2012/13. In terms of output, the region returned 170,000 tonnes of sugar in 2013/14, up from 113,000 tonnes in the previous season.
Within the framework of the programme signed with the government in 2013 to modernise and boost the segment’s production, planted area for sugar beet is to reach 66,500 ha by 2020. The country’s sole producer Compagnie Sucrière Marocaine et de Raffinage (Cosumar) aims at expanding production to meet 56% of domestic demand by 2020. “Compared to previous years, the drop in fuel prices is good news for the sugar industry,” Mohammed Fikrat, CEO of Cosumar, told OBG, “although with the new configuration of prices, we are also exposed to volatility.”
Morocco’s fisheries sector is being developed in line with the objectives outlined in its national sectoral strategy, Plan Halieutis. Launched in 2009, the plan aims to increase the sector’s GDP to Dh21.9bn (€2.4bn) and bring the value of exports up to $3.1bn by 2020. Tangiers, Agadir and Laayoune are among the country’s main fishing zones.
With the objective of bringing its annual catch to 1.66m tonnes by 2020, efforts are currently under way to raise production and diversify the product base. To that end, Morocco has invested in aquaculture with the objective of boosting fish farm production to some 200,000 tonnes by 2020. Aquaculture is being developed in five different regions along the country’s coast and is managed by the National Agency for the Development of Aquaculture. Established in 2011, the agency has overseen up to Dh1bn (€108.8m) in aquaculture investment since its creation.
Morocco exports a good deal of its fisheries output, with exported products including fresh and processed goods. In 2014 processed seafood exports generated Dh15bn (€1.6bn), with the EU accounting for 75% of the total, although demand from Africa for certain goods, namely canned fish, outpaces that of Europe. Indeed, African demand for Moroccan canned fish has grown on average by 22% a year. Nonetheless, exports to the region are challenged by a number of obstacles – notably, high Customs duties, high logistics costs and competition from Asian countries, among others.
Agricultural output will continue to depend on weather conditions and rainfall levels in the coming years as the country pursues its efforts under the PMV to modernise production and equip plantations with adequate irrigation systems. However, volatility is decreasing and production volumes are rising, meaning export revenues are likely to increase over the medium to long term, particularly if the country captures more market share in the EU.
Domestically, more work remains to be done to streamline distribution networks and reinforce downstream activities to accommodate rising production. In line with the current policy strategy, government intervention in agriculture is likely to diminish going forward, offering the possibility for state funds to be used instead to bolster investment incentives and input subsidies. The challenge that will loom ahead as a result will consist of attracting further private investment to the sector and injecting funds into schemes and projects.