Morocco, at the northwest corner of Africa, has a large agricultural sector, but it doesn’t produce enough grain to feed the country’s population. It has close economic and trade ties with the European Union (E.U.), particularly Spain, its nearest neighbor, and France. It’s a large-scale importer of grain, and E.U. countries are its major suppliers. It also has a close trading relationship with the U.S., another major supplier.
 
In 2012-13, Morocco has bucked a trend of higher production across North Africa with a lower crop. However, drought conditions have sharply reduced the crop in Morocco, with production predicted to fall by some 40%, to 3.5 million tonnes, the International Grains Council (IGC) said in its Grain Market Report.
 
The IGC puts Morocco’s total grain production at 4.8 million tonnes in 2012-13, compared with 8.4 million the year before. In addition to the 3.5 million tonnes of wheat, down from 5.8 million the year before, the 2012-13 figure includes 1.1 million tonnes of barley, down from 2.3 million the year before.
 
It forecasts Morocco’s total grain imports for 2012-13 at 7.8 million tonnes, compared with 5.9 in 2011-12. The 2012-13 import figure includes 5.1 million tonnes of wheat, compared with 3.5 million the year before. Imports also include 2 million tonnes of maize, up from 1.9 million, and 600,000 tonnes of barley, up from 500,000.
 
Morocco’s wheat production figure, according to the IGC, includes 1 million tonnes of durum in 2012-13, down from 1.7 million the year before.
 
According to the milling industry association, the Fédération Nationale de la Minoterie, there are 180 milling plants in the country. 120 process common wheat for making flour for baking, biscuits and pastry, while the other 60 process durum wheat to make semolina for pasta and couscous. Most of Morocco’s milling facilities are in the Casablanca-Fes region, close to the wheat supply.
 
The association put milling capacity, at the end of 2009, at 7.89 million tonnes. It estimated capacity usage at 58.37%.
 
France dominates imports
 
France, with close historical links, is the dominant seller of wheat to Morocco. A U.S. Department of Agriculture (USDA) attaché report published in May put Morocco’s wheat imports in 2011-12 (through April) at 2.663 million tonnes. “France continued this season to control the largest share of the Moroccan soft wheat market, with 65%, while Canada dominated the durum wheat import market with 51%,” the report said. There were no U.S. wheat exports to Morocco that year.
 
Morocco is a potentially important market for British exporters and British Cereals Exports (BCE), the grains export promotion arm of the Agricultural and Horticultural Development Board of which the Home Grown Cereals Authority is part.
 
“Unlike the other countries in the North Africa region, Morocco has suffered a very poor growing season, because crops were sown late, followed by harsh cold spells in January and February, combined with low rainfall,” George Forbes, BCE chairman, said in a statement released in early August. “We now intend to visit Moroccan millers in Casablanca to show them our ukp varieties which are for bread flour, as we feel there will be a big demand for exports of milling wheat over the coming months. It will also be a good opportunity to highlight uks, which is used for biscuit making.”
 
In an analysis of the Moroccan market supplied by BCE to World Grain, it puts the number of soft wheat mills at about 130, of which 80 are large industrial mills concentrated in urban areas such as Casablanca, Rabat and Fes. Morocco also has 6,000 traditional/artisan mills.
 
After a series of closures, mergers and acquisitions, the cereals processing industry is now dominated by four large groups which have created importer companies: Gromic, Millex, Fandy and Somacereal.
 
The role of ONICL
 
A major role has been played in the Moroccan market by the Office National Interprofessionnel des Céréales et des Légumineuses (ONICL), which was founded in 1937. A separate entity under the control of the finance and agriculture ministries, ONICL is charged with organizing the market and maintaining emergency stocks. It is usually responsible for around a quarter of Morocco’s grain imports.
 
According to BCE, ONICL subsidizes around 1 million tonnes of 80% extraction flour, called “Farine Nationale,” to be supplied to those on low incomes. It buys wheat for the flour on the domestic market or through importers.
 
Most bread consumption comes from the artisan sector, but consumption of industrial bread is increasing. Biscuit and cake consumption is stable. BCE puts the usage proportions of the wheat imported at typically 60%-70% for standard/blending flour, 13%-20% for superior bread-making flour and 7%-8% for biscuit flour.
 
On Aug. 16, ONICL announced that the common wheat harvest had been carried out in good conditions, with production reaching 13.9 million quintals (1.39 million tonnes) by the end of the first week in August. It said that thanks to the measures taken by the government to support prices paid to producers and the good quality of the wheat harvested, the amount of grain taken in by millers and processors had exceeded initial expectations.
 
That meant a predicted end-of-August stock level of four months consumption, or 1.75 million tonnes.
 
ONICL noted that only part of Morocco’s wheat imports are carried out under its calls for offers. The main suppliers of wheat to Morocco, the E.U. and the U.S., had never restricted their exports, particularly not to Morocco.
 
U.S. Wheat Associates (USW) expressed some concern over the operation of the U.S.-Morocco Free Trade Agreement, which went into effect Jan. 1, 2006, in a report dated October 2011.
 
“The U.S.-Morocco Free Trade Agreement (FTA) is in effect, which has resulted in some increase of U.S. wheat exports to Morocco, a market traditionally dominated by the E.U.,” it said.
 
It complained of a lack of enforcement mechanisms. “A calendar versus marketing year definition has been an issue with this FTA. The United States defines a year as a calendar year, while Morocco would prefer it to be a marketing year, as is the case with the E.U.-Morocco FTA,” USW said. “The major advantage to using a marketing year is that TRQ levels are based on Morocco’s domestic crop size. Establishing the TRQ after the domestic harvest will help establish a tender schedule for the full quota amount since the domestic harvest would not split TRQ tenders for U.S. wheat.”
 
It also highlighted a problem as the most favored nation (MFN) rate for durum in 2009 was lower than the TRQ duty for U.S. durum under the FTA, which resulted in buyers not utilizing the TRQs and expressed concern over a potential Morocco-Canada trade agreement.
 
Biotechnology ‘sensitive’
 
Morocco has been slow to adopt biotechnology. “Biotechnology is a politically sensitive issue in Morocco as many negative perceptions have spilled over from its geographical neighbors in Europe,” the USDA attaché said in a report dated July 2012. “Morocco’s heavy dependence on the E.U. market as the main destination for its agricultural exports has created reluctance among policy makers and producers for the acceptance of biotechnology products.
 
“The scientific community in Morocco is relatively advanced and clearly understands that biotechnology has much to offer the developing world, but the application of science-based public policy remains a challenge. Although there is a National Biosecurity Committee that was officially formed in April 2005, currently there is no legal framework for biotechnology in Morocco.”
 

Key Facts
 

Capital: Rabat
 Population: 32,309,239 (July 2012 est.)
 Religions: Muslim 99% (official), Christian 1%.
 Location: Northern Africa, bordering the North Atlantic Ocean and the Mediterranean Sea, between Algeria and Western Sahara.
 Government: Constitutional monarchy. Chief of state: King Mohammed VI (since July 30, 1999; head of government: Prime Minister Abdelilah Benkirane (since Nov. 29, 2011).
 Economy: Morocco has capitalized on its proximity to Europe and relatively low labor costs to build a diverse, open, market-oriented economy. In the 1980s, Morocco pursued austerity measures and pro-market reforms, overseen by the IMF. Since taking the throne in 1999, King Mohammed VI has presided over a stable economy marked by steady growth, low inflation, and generally declining government debt. Industrial development strategies and infrastructure improvements — most visibly illustrated by a new port and free trade zone near Tangier — are improving Morocco’s competitiveness. Key sectors of the economy include agriculture, tourism, phosphates, textiles, apparel, and subcomponents. In 2006, Morocco entered into a bilateral Free Trade Agreement with the United States; it remains the only African country to have one. In 2008, Morocco entered into an Advanced Status agreement with the European Union. Despite Morocco’s economic progress, the country suffers from high unemployment and poverty. In 2011, high food and fuel prices strained the government’s budget and widened the country’s current account deficit. Key economic challenges for Morocco include fighting corruption, reducing government spending, reforming the education system and judiciary, addressing socioeconomic disparities, and building more diverse, higher value-added industries.
 GDP per capita: $5,100 (2011 est.); inflation: 1.9% (2011 est.); unemployment: 8.9% (2011 est.).
 Currency: Moroccan dirhams (MAD): 8.3306 dirhams equal 1 U.S. dollar (Aug. 22, 2012)
 Exports: $20.52 billion (2011 est.): fertilizers (including phosphates), petroleum products, citrus fruits, vegetables, fish.
 Imports: $39.42 billion (2011 est.): crude petroleum, textile fabric, telecommunications equipment, wheat, gas and electricity, transistors, plastics.
 Major crops/agricultural products: Barley, wheat, citrus fruits, grapes, vegetables, olives; livestock, wine.
 Agriculture: 16.6% of GDP and 44.6% of the labor force.
 Internet: Code: .ma; 278,075 (2010) hosts and 13.213 million (2009) users.
 Source: CIA World Factbook
 

Chris Lyddon is World Grain’s European editor. He may be contacted at: chris.lyddon@ntlworld.com.