Reference Date: 20-November-2012
FOOD SECURITY SNAPSHOT
Favourable rains herald a good start to the winter cropping season
Cereal production was reduced significantly in 2012 following poor rains
Food prices are stable despite some increases in cereal prices
Good start to the new season
Planting of the winter crops (mainly wheat and barley), for harvest from May next year, is under way. Although above average rains have hampered some field work, soil moisture has improved significantly encouraging early planting. Projections from the Ministry of Agriculture indicate that total area under cereals would remain at about 5 million hectares, similar to last year. The government has taken various measures to improve yields, including the provision of certified seeds (at 40-60 percent of the cost), subsidies for farm machinery and irrigation equipment (30-70 percent of the purchase cost), and subsidies for soil testing to optimise fertiliser application. The area covered by crop insurance with 50-90 percent of insurance premium subsidised is expected to increase from current 300 000 to 500 000 hectares (with an intention to reach 1 million hectares covered by 2015).
Low numbers of adult locusts are present in northeast Morocco. Depending on the developments in the northern Sahel, some groups and small swarms could be expected to move as far as Morocco.
Sharp decline in 2012 cereal production
Cereal production in 2012 was estimated at 5.3 million tonnes, some 38 percent below the last year’s exceptional harvest and 23 percent below the five-year average. Late sowing, cold spells in early 2012 and subsequent drought conditions have contributed to the decline. To encourage local purchases of crops, the government extended the 2012 government procurement period by one month, to September 2012. By the end of September domestic soft wheat stocks were about 1.3 million tonnes, covering the milling needs for about three months.
Furthermore, Morocco’s citrus fruit production in 2012 is expected to decrease by 25 percent following unfavourable weather conditions. By contrast, the date harvest is expected to increase by 10 percent compared to the last five years.
Wheat imports expected to increase in 2012/13
Morocco is a food-deficit country where agricultural production fluctuates markedly from year to year due to weather variations. Even in good years, the country relies heavily on wheat imports from the international market to cover its consumption needs. Given tight local supplies, Morocco’s cereal imports in 2012 are estimated to reach a record high level of 8.4 million tonnes, 35 percent up on 2011. Wheat constitutes the bulk of the imports amounting to about 5.2 million tonnes. France and Canada are likely to re-emerge as dominant sellers of wheat to Morocco following difficulties with export supplies in the Black Sea region.
In light of the large import requirements, Morocco suspended a 17 percent import duty on soft wheat from 1 October until 31 December and on durum wheat from 1 May until 31 December 2012.
The import restitution scheme, whereby the Government reimburses wheat importers for the difference between a government-set price and the prices in the international market was expanded from 1 October to 31 December 2012. Wheat importers are reimbursed 85 percent of the difference between a government reference price (dirhams 2 600/tonne, about USD 300/tonne) and international price levels. The allocated budget for the wheat market stabilization scheme is estimated at USD 116 million. Previously the import restitution scheme reimbursed 100 percent of the difference.
Food inflation remains moderate despite some increase in cereal prices
In spite of the country’s high import dependency rate, the impact of the changes in international prices on domestic prices were mitigated by government interventions, including the above mentioned import restitution scheme and other subsidies. According to the Government, the price of bread (a loaf of 200 grammes) is to stay at dirhams 1.2 (USD 0.14).
However, the current poor production is exerting some upward pressure on food prices. The food inflation rose 1.4 percent in the 12 months to the end of September, against 1.5 percent in August.
Morocco was granted over USD 6 billion liquidity line by the International Monetary Fund (IMF) in September 2012 to balance the impact of the euro-zone, its main trading partner, and the threat of further depletion of the country's hard currency reserves due to lower tourism and smaller remittances.
Like other countries in the subregion, Morocco is considering a reform of its subsidy system to achieve greater targeting to the neediest people. Nevertheless, in 2013 the preliminarily budget for subsidy spending on energy and staple commodities is kept at similar levels to 2012. Widening fiscal and current account deficits resulted in a downgrading of its economic outlook. Morocco expects its economic growth to strengthen to 4.5 percent in 2013.