Agriculture accounts for around 14% of GDP and 35-40% of jobs in Morocco. Driven in large part by the national agricultural policy, the Green Morocco Plan (Plan Maroc Vert, PMV), the sector’s GDP increased by 57% between 2008 and 2015 to reach Dh115bn (€10.5bn), according to local media. Launched in 2008, the PMV aims at promoting socio-economic development through agriculture.
Expected to run through to 2020, the PMV relies on two main pillars. The first focuses on productivity and value addition, while the second aims to support small-scale farmers in remote parts of the country, with the view of alleviating poverty and hunger.
Perhaps one of the most important changes experienced by the sector since the launch of the PMV is the shift in structure, with Moroccan agriculture today less dependent on cereal output for growth. Under the PMV, authorities have sought to convert large swathes of cereal plantations to develop segments with higher value addition. Results borne of this strategy became most evident when, at the start of the agricultural season in 2015/16, severe droughts hit the country, leaving little hope for prosperous cereal yields. The increased value addition, however, is expected to offset the decline in upstream cereal production. In addition, efforts to mitigate the effects of climate change are playing a significant role in improving the sector’s resilience.
Sector Performance
Favourable weather conditions and abundant rainfall allowed for an overall prosperous agricultural season in 2014/15. As of August 2015, accumulated rainfall had reached 366mm, representing a 16% increase year-on-year (y-o-y) from 2013/14. Consequently, cereal output peaked at an estimated 11.5m tonnes, up 6.5% compared to the previous year, according to the Ministry of Agriculture and Fisheries. Sugar output also benefitted from the favourable weather conditions in addition to extensions of planted surface areas, returning 4m tonnes of sugar in 2014/15 and representing y-o-y growth of 25%. Sugar production is carried out by Compagnie Sucrière Marocaine et de Raffinage, which aims to meet 56% of domestic needs by 2020, up from 43% currently.
Horticulture returned 7.6m tonnes in 2014/15, almost the same volume produced during the previous agricultural season. However, citrus and olive yields, due to their cyclical nature, saw output decline by 14% and 27%, respectively. Although both crops are expected to recover in 2015/16, with citrus production projected to rise by 7% and olives by 24%, other important segments, such as cereals, are forecast to see outputs decline, due to exceptionally bad weather and low precipitation at the start of the planting season in November 2015.
A Segment-Specific Approach
The PMV has been executed in large part through the creation of segment-specific trade committees composed of sector professionals. Acting as a go-between for sector operators and public authorities, as many as 18 committees have been established since 2008, leading development in key segments such as dairy, fruits, vegetables and cereals. The committees match private investors with farmers under long-term government-backed contracts, therefore minimising financial risk and allowing for skills transfer and development of trade capacity.
Many of these deals have now started to bear fruit. For example, a contract programme signed with citrus producers to run from 2009-18 saw plantations expand to reach 118,000 ha in 2015, far exceeding the programme’s target of 105,000 ha by 2018. While the citrus producers’ output, recorded at 2.1m tonnes in 2013/14, is yet to follow in the same pattern, output seems on track to meet the targeted 2.9m tonnes by 2018. Another example is in the red meat segment, where a contract programme (2009-14) saw output exceed its production target by 10% in 2014.
Mobilising Funds
Between 2008 and 2015, investments totalling Dh87bn (€8bn) were mobilised under the PMV, with public investment amounting to Dh56bn (€5.1bn) and private investment contributing the remaining Dh31bn (€2.8bn). The sector has also benefitted from a high level of donor engagement, which is unsurprising given the outsized role farming plays in poverty alleviation and employment in the country. According to local press reports, Morocco received Dh23bn (€2.1bn) between 2008 and 2015 from international lenders, including multilateral and bilateral institutions such as the World Bank, the African Development Bank and the French Development Agency, to help fund the PMV.
A number of recent agreements illustrate the sustained commitment on behalf of international development agencies and donors to continue supporting Morocco in its transformation plans. In March 2016 Morocco received Dh720m (€66.1m) from the Japan International Cooperation Agency to help boost the competitiveness of Moroccan agriculture and promote sustainable development through rational management of natural resources and inclusive growth.
That same month, the Agency for Agricultural Development, set up by Morocco in 1986 to encourage private sector participation in developing agricultural production, gained access to the UN’s Green Climate Fund on the back of the advancements made to mitigate the effects of climate change since the launch of the PMV (see analysis). This deal enables developers – once their projects are approved by the agency – to be eligible to access up to $50m in funding. A few months prior, in October 2015, the African Development Bank also announced it would grant Morocco $132m in funding to support the PMV in its plans to bolster sector productivity.
Fostering Collaboration
The government’s policy of leasing state-owned land for agricultural purposes has helped a great deal in stimulating private sector participation in agricultural development through public-private partnerships (PPPs). Under the scheme, aimed at small-scale farmers as well as large companies, land is leased to investors who carry out agricultural projects under a contractual framework with the state. This has helped alleviate the difficulty investors, particularly smallholder farmers, often face in accessing land for development. Land fragmentation is still a prevailing issue in Morocco, where farmers operating on plots of five ha and under account for roughly 70% of production.
In total, 835 projects covering a surface area of around 110,000 ha have been carried out under PPPs since the launch of the PMV, mobilising Dh14bn (€1.3bn) in investment and generating 42,000 permanent jobs. These PPPs and land concessions, which collectively fall under the government’s policy of agricultural land aggregation, aim to foster closer collaboration between small and large-scale producers, with the view of streamlining downstream and upstream activities. The system has allowed output in the sugar segment, for instance, to more than double between 2005 and 2014 and productivity to increase from six tonnes per ha to almost 10 tonnes per ha.
The policy has also helped the implementation of the National Irrigation Water Saving Programme, which has expanded the surface area equipped with modern drip systems to reach 460,000 ha in 2015 (see analysis). The El Guerdane project, located in the Souss-Massa region, is one example of a successful irrigation PPP. Carried out under a partnership between the government and Moroccan company Amensouss, which was signed in 2005, a total of 10,000 ha of citrus plantations have been equipped with modern irrigation systems.
Broadly speaking, PPPs carried out in the citrus and olive segments since 2008 have resulted in additional output of 260,000 tonnes and 57,000 tonnes, respectively. Once plantations reach maturity, these figures are expected to rise to 650,000 tonnes and 211,000 tonnes. That said, some segments have not been able to fully embrace land aggregation, as inconsistencies related to the overall legal framework and financing have limited expansion. To resolve this, in July 2015 the legislation governing the policy was reviewed to expand aggregation to new segments, increasing their number from 11 to 32. In addition, smallholder eligibility to take part in aggregated projects is under review, project approval procedures are being streamlined and new subsidies are in development.
Cereals
Cereals represent one of the largest sub-segments in Morocco’s agriculture sector. Cereal output peaked in 2014/15, reaching 11.5m tonnes, comprised of 3.5m tonnes of barley, 2.4m tonnes of durum and 5.6m tonnes of wheat. This comes on the back of favourable weather conditions, but is also in part due to the PMV’s efforts to modernise production methods, boost productivity and develop climate-tolerant varieties of wheat (see analysis).
As a result of these efforts, average annual production levels increased from 5.84m tonnes between 2000 and 2007 to almost 8m tonnes between 2008 and 2015. “The headway made in the cereal industry owes its success in large part to improved organisation of the segment and enhanced collaboration,” Aziz Abdelali, general director of the National Office for Cereals and Legumes, told OBG. “There is a need, however, to further strengthen the level of integration within the cereals industry.”
Cereal trade is mostly carried out by regional associations of cereal producers and agricultural cooperatives, which play an important role in cereal collection. Following the liberalisation of the sector in 1996, a number of cooperatives were gradually pushed out of the distribution network. To resolve this, in May 2016 a memorandum of understanding was signed between the government, the union representing the cooperatives, and two major banks – Banque Centrale Populaire, and Crédit Agricole du Maroc – to support authorities in their effort to restructure the role of Moroccan cooperatives and reintegrate them back into the distribution network.
Insurance Growth
While better internal organisation has played an important part in driving growth, the sector nonetheless remains highly vulnerable to adverse weather conditions and climate change. The latest droughts, which coincided with the start of the planting season in November 2015, have led to forecasts by the government that cereal output would decline by 60% in volume in 2015/16.
While lower yields will have a significant impact on farmer revenues, the higher insurance penetration witnessed in recent years should provide a financial buffer. This is thanks to government efforts to reform and develop the agricultural insurance segment through PPP agreements with insurance firms, such as Moroccan Agricultural Mutual Insurance, which helped raise the area covered by insurance from 30,000 ha in 2008 to 1m ha in 2015. Its success has paved the way for other partnerships with private insurers, such Saham Assurances, which is set to launch a product that guards against climactic hazards such as drought, waterlogging and sandstorms in 2016. Under the agreement, the state will provide a subsidy to farmers of up to 90% of the premium. “The development of insurance products saw a spectacular increase in the past year”, Abdelali told OBG. “Awareness will play a major role in inciting farmers to invest money and insure their production. The number of those taking out insurance should rise in the coming years and not just in the cereal segment.”
Fisheries
In 2014 the fishing industry returned 1.35m tonnes in output, according to local press reports, putting the sector on track to raise its annual catch to 1.66m tonnes by 2020 under its development strategy, Plan Halieutis.
Launched in 2009, Plan Halieutis aims to raise the sector’s GDP contribution to Dh21.9bn (€2bn) by 2020, as well as boost the value of exports to $3.1bn. In 2014 the value of exports was $1.7bn while the volume of exported goods reached 590,000 tonnes. The EU took the largest share, with 260,000 tonnes, followed by Africa, with 137,000 tonnes. “The EU remains a privileged trade partner though exports to Africa are significantly rising,” Hassan Sentissi, president of FENIP, told OBG. “They currently account for 10-15% in value and mainly comprise canned sardines, fish meal and frozen seafood.”
In terms of production, Morocco is looking to boost output through the development of aquaculture, with the ambition of increasing fish farm production to 200,000 tonnes by 2020. The sector’s development is primarily led by the National Agency for the Development of Aquaculture, established in 2011, which has overseen a slate of investments since its creation. Among the latest projects to come on-line is Azura Aquaculture, a hatchery in El Argoub, near the southern town of Dakhla, designed to promote the sustainable development of resources and boost fish farming. With an estimated value of Dh81m (€7.4m), the project was inaugurated in February 2016 and is part of a broader plan to invest Dh2.8bn (€256.7m) between 2015 and 2020 for the development of aquaculture in the region of Dakhla-Oued Eddahab, with the goal of producing 115,000 tonnes of fish per year and creating around 3300 new jobs.
Export Levels
Agriculture plays a sizeable role in the country’s export mix. Foodstuffs represented more than 15% of total exports in 2013, comprised mainly of fresh fruit and vegetables, processed fruit and vegetables, and fresh and processed seafood. In 2015 their overall value stood at Dh43bn (€3.9bn), according to local press reports.
While the EU has historically been Morocco’s main trade partner, absorbing around two-thirds of the country’s food exports, a decision taken by the European Court of Justice in December 2015 invalidating the agricultural trade agreement between the bloc and Morocco has strained relations.
The court’s move was aimed at excluding the disputed territory of the Moroccan/Western Sahara from the accord, which was concluded in 2012 and includes duty-free quotas on agricultural produce. In response, in February 2016 Morocco suspended all contact with EU institutions. The council of the EU has filed an appeal against the decision and a ruling is expected in 2016.
In the meantime, Morocco has been looking to strengthen and diversify its trade relations with other countries. The EU sanctions over the Ukraine crisis have played to the advantage of Moroccan exports to Russia, for example. Today, Russia imports around 8m tonnes of Moroccan fruit and vegetables per year, and the market has grown by 7% each year over the past decade, according to local press reports. Exchanges have been facilitated since 2011 by the launch of a maritime line between Agadir – a major producing region – and Saint Petersburg.
Other markets with significant export potential include African markets. The volume of exported goods to Africa is still shy of its potential, accounting for just 10% of Morocco’s food exports. Logistical constraints continue to impede exchanges, though efforts are under way to improve the facilitation of foodstuffs trade in West Africa. To this end, Morocco plans to set up a commercial and logistical platform in Abidjan in Côte d’Ivoire, using it as a trading base not only for the country but also for the rest of the region. To be located at the Autonomous Port of Abidjan, the project, still in the planning stages, will be carried out as a PPP, the tender for which was launched in the second quarter of 2016, according to the local press.
Made In Morocco
To help encourage revenue growth for some of its key agricultural exports, the country has also been looking to improve marketing for products like oils and fruits. Following an agreement signed with the EU in January 2015 to mutually protect geographical indications on traded food products, promoting their quality and origin, Morocco launched Terroir du Maroc or “Local Morocco” in late 2015 to further boost the visibility of Moroccan goods among local and foreign consumers. Launched by the Agency for Agricultural Development, this move aims at regulating and streamlining the usage of the label, improving smallholder revenues and boosting the quality of products. It concerns a diverse range of goods, including dates, saffron, argan oil and olive oil. The move is part of a broader strategy launched under the PMV in 2008 to improve the awareness of product origin and quality.
Agri-Business
As the country’s second-largest industrial subsector, agri-business accounts for around 27% of industrial GDP and 30% of industrial value added. The sector is made up of more than 2000 industrial facilities and employs around 143,000 people. Processed food goods are for the most part absorbed by the local market, with exports accounting for just 12% of total industrial exports and primarily led by canned goods and olive oil.
To further support the development of the industry, six new agricultural production sites – Meknès, Berkane, Tadla, El Haouz, Agadir and Gharb – are being established across the country. The sites are intended to improve access to land for investors and enhance collaboration between upstream and downstream activities. The first two sites, in Meknès and Berkane, are the only ones operational so far.
However, local access to inputs is a challenge and domestic competition from the informal sector and imports also puts further pressure on the industry. To help resolve this, a new contract programme reviewing the industrial policies governing agri-business and promoting the development of high-potential segments is under discussion to improve the local competitiveness of Moroccan businesses. While the scheme has been in development for the past few years, no date for implementation has been set.
Hygiene & Quality
The National Office for Food Safety was set up in 2010 to improve the quality of locally produced, exported and imported food products. Among its most recent actions is the oversight it has exercised since 2014 to contain the foot-and-mouth disease which spread across the Maghreb region. It did this through prevention and vaccination campaigns, restrictions on animal imports and stricter border controls. In 2015 the office launched a national animal identification and tracking system, aimed at regulating the contribution of livestock to food security. By early 2016 the system had allowed the registration of 2.8m cattle, with each animal receiving an electronic ear tag for ease of tracking.
Outlook
Moroccan agriculture has posted average annual growth of around 7% since the launch of the PMV in 2008. However, poor weather conditions at the start of the 2015/16 agricultural season bode less well for yields in the current agricultural year, with a substantial drop of 70% projected for cereal crops in 2016. This decline should be offset by other segments which have come to occupy a higher share of agricultural GDP in recent years. The PMV has also played a substantial role in laying the foundations to allow for a more resilient sector to emerge, particularly through its efforts to extend modern irrigation systems and hedge against climate change.
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