Report Highlights:

Grain crop production in Morocco is expected to decrease in Marketing Year 2013/14 and will result in higher importation, mainly for wheat and barley. The wheat production is forecast to decrease by over 20 percent due mainly to a decrease of about 15 percent of the area planted compared to last year and to late and poor distribution of rainfall in some areas of production. The area planted this year is around 4.5 million HA (46 percent soft wheat, 22 percent durum wheat and 32 percent for barley). The Government of Morocco (GOM) has not issued its official grain production forecast yet, however many analysts expect the cereal crop to reach 7 million MT. Post estimates total grain production to be around 7.1 million MT, including 3.7 million MT of common and durum wheat and 1.7 million MT of barley.

The total cereal imports for the period covering June 2013 to February 2014 of MY 2013/14 have reached 4 million MT so far. Common and durum wheat imports for the same period of MY 2013/14 were revised down from 2.7 million MT to 2.3 million MT, however total wheat import are projected to total 3.5 million MT for MY 2014/15. Barley imports for MY 2013/14 were revised down from 300,000 MT to 240,200 MT and are forecast to total 700,000 MT for MY 2014/2015.

Executive Summary:

The overall grain crop for MY 2014/2015 season is reported to be in good condition with an average yield of 79.5 kg/HA compared to national standard of 77 kg/HA, with very low impurity level, which optimizes its use in the mills. For MY 2014/2015, the harvest is expected to be average. Although all efforts were mobilized, rainfall was late and poorly distributed in some areas of production. The forecast volume is expected to be less than last season even with the latest rainfall that gave some hope for MY 2014/2015 grain crop. Total grain area is estimated at 4.5 million HA with wheat area estimated at 3.06 million HA and barley area estimated at 1.44 million HA. Nonetheless, the GOM has not issued its official grain production forecast for next season yet, but many analysts expect the crop to reach 7 million MT for MY 2014/15. Post estimates total cereal production to be around 7.1 million MT, with wheat and barley production around 5.4 million MT. Wheat production includes, respectively, 3.7 million MT of common and durum wheat and 1.68 million MT of barley. 

Morocco’s per capita consumption of wheat, estimated at 258 kg annually, is among the highest in the world. In MY 2014/2015, total Moroccan wheat consumption is estimated at 8.3 million MT with about 34 percent supplied by imports. As of December 2013 common wheat stocks were around 1.7 MT. Barley is consumed mostly as animal feed in Morocco with total consumption estimated at 3 million tons per year. With pasture conditions improving this year, livestock producers have reduced their demand for feed barley. As of October 2013, Morocco’s barley reserve was estimated at about 80,000 MT. Feed barley prices trended downward in CY 2013 compared to CY 2012. Barley prices as of mid-February 2013 were estimated at 3,420 dirham per MT ($412), which is 9 percent less than the previous year. 

Post kept Morocco’s total cereal imports for MY 2013/2014 at 4.0 million MT, with 2.3 for wheat (common and durum wheat), 0.24 for barley and 1.46 for corn. Morocco’s common wheat imports have been slower than expected due to a higher domestic wheat collection rate and fluctuating wheat prices on the international market. Post estimates wheat import for MY 2014/2015 to be 3.5 million MT. 

In order to protect prices in the local market, the GOM intervene from time to time to regulate the prices through custom duties. In 2013, after it was reported that wheat prices dropped by almost 40 percent in global markets, the government decided to raise customs duties on import of common wheat from 17 to 45 percent, in order to protect prices in the local market. To alleviate the pressure of fluctuating international wheat prices and to ensure sufficient wheat supplies in the local market, Morocco suspended the import duty for common wheat from January 1, 2014 until April 30, 2014. In addition, the government established an import subsidy scheme for a limited time effective February 1, 2014, through which Moroccan wheat importers are reimbursed for the difference between a government set-price 2,800 dirham/MT ($337) and their actual import costs. U.S. wheat is viewed by many Moroccan millers as an “enhancer” of flour performances, and hence some quality oriented mills have been buying it. 

Morocco continued to maintain close price control of wheat and flour at all levels. Under the wheat price support scheme, producer reference price for locally grown soft wheat is set at 2,800 dirhams per ton, subsidized at 100 dirhams per ton compared to last season. A joint decision made by the Ministry of Economy and Finance and the Ministry of Agriculture and Marine Fisheries to ensure proper marketing of 2013-2014 grain harvest. Total cost for national wheat flour is 3,254 dirham/MT ($392) and its price for end-users is set at 2,000 dirham ($240)/MT. Though the GOM has kept the price of bread unchanged throughout the year, it had to do so at a huge budget cost. 

In 2013, the compensation fund budget reached 42 billion dirhams ($5 billion), 23 percent less than the budget allocated the previous year. These funds include 2.3 billion dirhams dedicated to help pay the cost difference for the National flour. For 2014, the government, in an attempt to gradually reform this fund, has only allocated 35 billion dirhams, under the Finance Act, recently passed by Parliament and approved by the Constitutional Council. But, due to high social pressure related to inflation and purchasing power, the total liberalization of prices will not go unnoticed. 4 billion dirhams was added by end of February 2014. Given that the government still intends to provide direct subsidies to the populations in need, the reform would be progressively implemented for a three year period depending on the product’s sensitivity. 

The 2014 Finance bill, however, expanded the tax base to incorporate agriculture into the system by taxing the revenues of large farms, and exempts small and medium-sized farms. The first tranche in a progressive taxation scheme started on January 1, 2014, on agricultural companies realizing a turnover equal to or in excess of 35 million dirhams ($4.2 million). Then from January 1, 2016, farmers with a turnover equal to or above 20 million dirhams will be taxed, while the turnover threshold will be further lowered to10 million dirham in 2018, and finally to 5 million dirhams from 2020. 

Production:

Morocco’s harvest depends heavily on rain precipitations and even in good years, the country relies heavily on wheat imports from the international market to cover its consumption needs. 

The MY 2014/2015 grain crop in Morocco is progressing under promising conditions. The latest rainfalls throughout most of the grain production regions have raised hopes. Cumulative rainfall has been significantly improved compared to the beginning of the season, registering 194 mm as of February 14, 2014, which is less than average for the same period compared to a normal campaign of 239 mm. Dams’ capacity has been filled to 11.23 billion m3 as of February 14, 2014, compared to 12.36 billion m3 in the previous year on the same date. Reserves in dams for agricultural use are estimated at 9.36 billion m3 compared to 10.51 billion m3 and their overall filled capacity rate is around 68 percent. 

Morocco’s total planted area (common wheat, durum and barley) for MY 2014/15 is estimated at 4.5 million HA, about 15 percent less than last year. Wheat planted area is estimated at 3.6 million HA, about 13 percent less than last year, consisting of 2.07 million HA of common wheat and 0.99 million HA of durum wheat. Barely planted area is estimated at 1.44 million HA, a 20 percent decrease from last year. 

The Ministry of Agriculture in its attempt to enhance the results for its MY 2014/2015 harvest season, took a series of actions this year. The Ministry ensured supplying the market with 2 million quintals of selected seeds and 1.2 million quintals of fertilizers. The Ministry also renewed its agricultural insurance program on multiple risks on an area of 600,000 HA to reach the million hectares by 2015.

Meanwhile, the Ministry also continued its national program on the economy of water in order to prepare 50,000 HA of additional irrigation equipment in order to reach 410,000 HA by end of 2014, which constitute 60 percent of the 2020 set target. 

For the MY 2014/2015 crop, the government reported 50 percent of the sown area to be in a good condition, 32 percent is in average condition, and 8 percent is in a bad condition. Most of the wheat in bad condition is located in southern and eastern Morocco and is concentrated mainly in the following regions: Doukkala-Abda (Hmar) and Chaouia–Ouardigha, Marrakech-Tensift – Al Haouz (Skhour Rhamna and Chichaoua) and Souss Massa- Drâa. The remaining 10 percent of sown area is irrigated production is in good condition. 

By February 14, 2014, the total rainfall reached nearly 194 mm, a decrease of 18 percent compared to a normal year and less than 50 percent compared to the previous year (2012/13). 

Annual rainfalls in Morocco are very variable and irregular from one year to another. It is impossible to predict their future evolution. Generally rainfall precipitations are between September and March of each year. The northwest usually notice more precipitations than the rest of the territories. 

While it is still early to predict with certainty grain production for this season, it should be noted that the size of Morocco’s grain crop generally correlates with the area planted and the quantity and pace of precipitation from September to May. 

The Government of Morocco has not issued its official grain production forecast yet, but most analysts now believe that total production will be around 7 million MT. Post estimates that total wheat (common and durum) production for MY 2014/2015 will be about 3.7 million MT while barley production will be about 1.7 million MT, and accordingly the total projected production will be about 5.4 million MT for common, durum, and barley.

Government support for cereal production

The Moroccan government has been encouraging farmers to use certified seeds by providing 40 to 60 percent of the cost. For the MY 2014/2015 crop, the government initially planned to increase the availability of certified seeds by 33 percent to reach 200,000 MT. Moroccan farmers are increasingly using certified seed, which currently represents almost 60% of total seed use. Certified seeds provided under this program are part of the Green Morocco plan (GMP) with a stated goal of reaching 280,000 MT by 2020. One of the main objectives of the GMP is to improve the use of certified seed and to secure its domestic market supply. 150 million dirhams was invested to upgrade the infrastructure and organization of the National Seeds Marketing Company (SONACOS). 120 million dirhams financed by the government and 30 million dirhams by SONACOS. Other measures to support grain production include subsidies for farm machinery purchases and irrigation equipment that range from 30 to 70 percent of the purchase cost and subsidization of soil testing to optimize fertilizer usage. Marketed fertilizer for 2013 was estimated at 670,000 MT, which is 17.5 percent higher compared to the previous season. This year the Ministry is supplying the market with 0.12 million (MT) of fertilizers. 

In September 2011, the Government of Morocco implemented a crop insurance program to help grain and pulses farmers deal with the risks associated with the impact of weather conditions on production. The crop insurance program, which exceeded its initial target of 300,000 HA for MY 2012/2013 crop, is projected to cover 600,000 HA for MY 2014/15 crop, which represents about 12 percent of Morocco’s total grain area. The program aims to mitigate financial losses due to droughts, floods, sand storms, and hail. The Moroccan Government will subsidize about 50 to 90 percent of the farmers’ insurance premium, depending on the size of the farm. The government intends to expand the area to one million HA by 2015.The Government is also pursuing its water management program by preparing 50,000 HA of additional irrigation equipment in order to reach 410,000 HA by the end of 2014. 

Consumption:

Wheat consumption per capita in Morocco is estimated at 258 kg annually, which is among the highest in the world. In the past decade, consumption has been driven by rising population coupled with diversification of bread products; this is especially the case in major cities where the higher income population tends to concentrate. Common (bread) wheat is a politically and socially sensitive commodity in Morocco. The government devised a mechanism by which bread wheat prices have been successfully maintained at low levels and the government treasury has supported the difference in costs. The Moroccan Government continues to subsidize more than one million MT of common wheat flour commonly known as “national flour” presumably to make flour available to the low-income consumers. The distribution of the subsidized flour is subject to heavy government control at all levels. The government has set up all processing parameters including the extraction rate, extraction margin, ex-mill prices, wholesale and retail prices. The wheat (whether local or imported through the national cereal office’s tenders) enters flour mills at the same price 2,800 DH/MT for the standard quality and the government supports the difference. The government, however, does not get involved in marketing and pricing of durum wheat in the local markets. 

There are about 154 common wheat industrial processing mills in Morocco with a capacity of about 10 million MT and about 34 specialized on durum wheat with a capacity of 1.16 million MT, and 12 specialized on barley with a capacity of about 0.3 million MT. In addition, there are literally thousands of traditional small family-run wheat processing mills located mostly in small towns and rural areas. The wheat mills capacity is generally underutilized which has opened an opportunity for the wheat millers to process wheat for exports, especially to African countries. U.S. wheat is viewed by many Moroccan millers as an “enhancer” of flour performances, and hence some quality oriented mills have been buying it. For MY 2013-2014, the total cereal milling of flour and semolina production reached 3.41 million MT (2.4 common wheat, 0.33 durum wheat, 0.05 barely, and 0.63 corn), marking an increase of 32 percent compared to the same period last season. 

Barley is consumed mostly as animal feed in Morocco, with total consumption roughly estimated at about 3 million tons per year. Irregular rainfalls from September to February 2014 might have an impact on pasture condition and will likely increase demand for feed barley this year. As of February 2014, Morocco’s barley reserve was estimated at about 80,000 MT. Feed barley prices in the local market were estimated at 2,907 dirham per MT ($350). In 2014, barley prices registered a downtrend compared to 2013. Domestic barley prices were estimated at about 3,420 dirhams ($410) per MT, about 12 percent more than imported barely. 

Trade:

The total cereal imports for MY 2013/14 have reached 4 million MT, for the period between June 2013 and February 2014. Common wheat imports were revised down from 2.7 million MT to 2.3 million MT. Barley imports for MY 2013/14 were revised down from 300, 000 MT to 240,200 MT and are forecast to total 700,000 MT for MY 2014/2015. 

To alleviate the impact of international prices on domestic market and to keep the price of common wheat around 2,800 dirhams per ton ($336), the GOM established a subsidy scheme from February 1 to April 30, 2014, for common wheat used to make flour for low-income consumers “national flour,” The GOM covers the difference between the actual price and guaranteed mill price. Durum wheat is not regulated. 

Wheat

Morocco has become one of the world’s major wheat importers in recent years. Morocco’s imports of common and durum wheat tend to fluctuate from year to year reflecting the swings in local production. Provided minimum specifications, Morocco remains a price oriented market and importers must compete with the cheaper origins 

According to Moroccan official data for MY 2013/2014 campaign (June-May), imports of Common, Durum wheat and barley have reached as of February 2014, 2.54 million MT, a decrease of 40 percent compared to the same period of last year. These imports include respectively, 1.5 million MT of Common wheat, 0.8 million MT of Durum wheat, and 0.24 million MT of barley. The United States remained almost absent from the wheat market for the third year in a row. Morocco’s durum wheat imports were supplied solely by Canada. 

In general, the EU wheat suppliers have a competitive edge over U.S. suppliers because of their proximity to the Moroccan market and their ability to export the small size shipments desired by the Moroccan buyers. In addition, the EU has larger wheat TRQs under the Morocco-EU free trade agreement. However, recently Black Sea suppliers have been gaining ground compared to EU competitors.

As of February 2014, Post revised Morocco’s wheat imports for MY 2013/2014 down from 2.7 million MT to 2.3 million MT. The lower imports were mainly due to Morocco’s higher rate of domestic wheat collection and fluctuating international wheat prices, coupled with the government’s slow reimbursement of the import price differential to wheat importers under the restitution scheme. Post projects Morocco’s wheat imports for MY 2014/15 will total 3.5 million MT due to the expected average crop. 

Barley

For MY 2014/15, Morocco imports are forecast to total around 700,000 MT. This is mainly due to late rainfall that might impact pasture coverage and hence increase demand for feed barley imports. It is important to note, Morocco’s MY 2011/2012 barley imports soared by 330 percent to reach 611,200 MT. France dominated the market for that year with a 38 percent market share, followed by Argentina (26 percent), Turkey (10 percent), Ukraine (9 percent), Russia (9 percent), and the U.S. (4 percent). The increase was mostly due to a higher demand for feed barley and the implementation of a government subsidy scheme to help the Moroccan livestock farmers cope with the drought and cold weather conditions that affected the MY 2011/2012 barley crop. MY 2012/2013 barley imports were back to average reaching 113,800 MT. During the period June 2013-May 2014, Morocco imported 240.2 MT, an increase of 100 percent, compared to the same period in the previous year. France supplied about 70 percent of Morocco’s barley imports for the mentioned period. Due to improved pasture conditions, Post revised Morocco’s barley imports for MY 2013/2014 down from 300,000 MT to 240,200 MT.

Morocco’s local barley production normally covers about 80 to 90 percent of its domestic demand with imports making up the rest. Given that only a small portion of locally produced barley goes through official collection channels, it is difficult to differentiate how much is used for human food consumption versus animal feed. Domestically produced food barley is used for bread making and/or mixed with whole wheat flour for use in some traditional dishes, including couscous. During last year’s drought many small farmers used barley for human consumption rather than animal feed. 

Barley consumption as animal feed fluctuates heavily depending on pasture conditions. Sheep production is most dependent on pasture lands with farmers using barley grain as a secondary provision. Barley is also used in the feed processing sector for cattle and dairy production. According to the Ministry of Agriculture’s latest inventory, Morocco had an estimated 17 million head of sheep and 2.7 million head of cattle in 2010.

Morocco’s barley imports for brewing average about 15,000 MT per year and are relatively stable. 

Moroccan Flour Export:

Although Morocco is a net importer of wheat, it exports limited quantities of wheat flour to neighboring African countries. Morocco’s wheat flour exports reflect the excess milling capacity in the industry; hence, millers have been able to process wheat cheaply for export destinations. For the period January-September 2013, according to official trade data, this number has reached 130, 280 MT.

Stocks:

Grain stocks held by farmers fluctuate significantly in Morocco, and they are very difficult to assess. Stocks held by agents licensed by the Cereal Office (grain merchants, cooperatives, processors) and government managed port silos are normally known. 

In CY 2013, Morocco’s total storage capacity remained unchanged compared to CY 2012 and totaled 4.48 million MT. More than 50 percent of the storage capacity is concentrated in the regions of Fes- Boulmane, Casablanca and Doukkala-Abda. The wheat stored at these silos accounts for about 10 percent of the total stored wheat in the country. 

Morocco’s wheat reserve as of January 31, 2014 totaled 1.42 million MT, which was 9 percent higher compared to the same period the previous season. The Moroccan government policy concerning the strategic wheat stocks is to maintain available wheat supplies to cover three months of wheat consumption. As of October 2013, the wheat collected was estimated at 1.4 million MT, which 3.5 months of local industrial millers demand. This was mainly due to lower wheat imports in January and February 2013. 

Storage facilities and port handling 

A large silo facility with a storage capacity of 42,000 MT and discharging capacity of 16,000 MT/day that was built by a private Moroccan investor in JorfLasfar port in 2008 is now fully operational. This facility contains two 400 MT/hour screw conveyors and a conveyor belt with a capacity of 800 MT/hour. The JorfLasfar port currently has the deepest berth (12 meters) of all grain docks in Morocco and is capable of handling grain ships with loads up to 40,000 MT. Another private sector silo with a storage capacity of 66,000 MT (operational capacity of 55,000 MT) was built by a Moroccan company in the port of Casablanca. This facility expanded the total capacity of the Casablanca Port to 110,000 MT. 

Policy:

Morocco imposes tariffs on wheat imports on a periodical basis in order to protect the local grain producers from foreign competition. The government usually intervenes when the supply and demand situation in the local market requires such intervention. With mounting pressure from fluctuating wheat prices on the international markets, and to ensure sufficient wheat supplies in the local market, Morocco suspended the import duty for common wheat from January 1, 2013 until April 30, 2014. In addition, the government established an import subsidy scheme for a limited time effective February 1, 2014, through which Moroccan wheat importers are reimbursed for the difference between a government set-price (2,800 dirham/MT, about $337) and the wheat prices in the international market. 

The allocated budget to support wheat imports from October 1 to December 31 was initially estimated at 1 billion DH ($116 million). Morocco’s common wheat imports during this period reached 1.38 million MT, corresponding to a subsidy of 832 million DH. In this case, Morocco utilized 83 percent of its initial restitution budget, which is explained by a higher domestic wheat collection rate, which reduced wheat import demand. During the extension phase effective until April 30, 2013, the government did not limit the quantity or budget for the restitution scheme. 

Given the size of the Moroccan wheat crop in MY 2013/2014, the tariff rate quotas (TRQs) for U.S. common wheat exports under the FTA were set at their minimum level of 360,000 MT for CY 2013. Though the US remain almost absent from the market for the last couple of years, on August 13, 2012, however, Morocco’s tender to import 300,000 MT of common wheat from the U.S. under the TRQs was not successful. There was no participation from the Moroccan importers due to the soaring wheat prices on the international market and the lower wheat prices on the domestic market and an imminent suspension of import duties. The remaining U.S. common wheat quota of 60,000 MT was not tendered in CY 2012. In CY 2012, the TRQ for U.S. durum wheat of 310,000 MT was rendered ineffective due to an import duty suspension throughout the year. 

Given that Morocco’s common wheat production totaled 2.7 million MT during MY 2012/2013, the U.S. common wheat TRQ for CY 2013 is estimated at 548,592 MT. The durum wheat quota is estimated at 320,000 MT for CY 2013. On January 10, 2013, Morocco’s tender to import 160,000 MT of U.S. durum wheat under the TRQ was not successful due to lack of participation. On March 21, 2013, Morocco launched a second tender of 160,000 MT to fulfill its obligation for durum wheat in CY 2013 that was also unsuccessful. 

Barley under the FTA

Under the US-Morocco FTA, import duties on barley would be phased out in equal installments over 15 years. The base import duty for barley negotiated under the FTA was 35 percent. The tariff rate quota for CY 2013(the eight year of the agreement) is set at 16.3 percent. 

Marketing:

Distribution Channels

Moroccan wheat farmers have the option to sell their production in the local markets if prices are more appealing than the minimum government guaranteed price. To sell at the pre-set government price, farmers must deliver their crop to licensed grain merchants, cooperatives, or millers. The pre-set price is for a standard quality and deductions or bonuses apply to take into account deviations from the standard quality. 

Common wheat accounts for most of the grain that goes through the official distribution channels in spite of the yearly variations caused by the size of the harvest. As of October 2013, the total quantity of common wheat delivered by farmers through the official channels (authorized grains merchants, grains cooperatives, and wheat millers) was estimated at about 2,042 million MT, of which 99 percent was common wheat. The Moroccan Office of Cereal and Pulses (ONICL) collected about half of the domestic wheat through biding to make subsidized flour. For MY 2013/2014, the wheat collection rate was higher compared to previous year.

In MY 2012/2013, grains merchants, flourmills, and cooperatives accounted for 69 percent, 26 percent, and 5 percent, respectively, of the grains collected through the official channels. 

U.S. Wheat Marketing Activities 

The U.S. Wheat Associates Office in Casablanca continues to implement market development and promotional activities to expand U.S. wheat exports in Morocco and other North Africa markets. These activities include the support of a milling school that is managed by the Moroccan Miller Federation, as well as other market development and trade servicing programs targeted at wheat buyers in the region. In December 2012, the U.S. Wheat Associates organized its annual Crop Quality Seminar in Casablanca for Moroccan end-users, including private millers, importers, and regulatory officials 

Prices:

Cereal farmers in Morocco have the option to sell their common wheat production to government licensed traders (grain merchants, cooperatives, and mills) at a preset price (2,800 dirham/MT) or sell it in the free market. Prices of other grains (including durum wheat and barley) are freely negotiated in the market place. During the period June 2013- to mid-February 2014, common wheat prices in the local markets averaged 2,588 dirham/MT. For the same period durum wheat prices averaged 3,150 dirham/MT, while barley prices averaged 3,020 dirham/MT. Compared to the same period in the previous season, prices of the three commodities declined by 1.25 percent, 5.49 percent, and 9.76 percent respectively. The stability of common (bread) wheat prices in the local market during this period reflects the success the government’s measures have made in alleviating the impact of fluctuating international wheat prices and ensuring sufficient wheat supplies in the Moroccan markets