MOROCCO: HUB OF AFRICA

Located in strategically between the Atlantic Ocean and the Mediterranean Sea, Morocco is a bridge in the trade with West African countries. The Maghreb country is a regional hub for North, West and Sub Saharan Africa for shipping, logistics, assembly, production, and sales. It has duty-free access to 55 countries where more than 1 billion consumers live. The country, which has increased its productivity in the agricultural sector in the last few years, aims to shift from fragmented production to more integrated value chains.

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Morocco is the most westerly of the North African countries known as the Maghreb. It is located in the northwest corner of Africa, and at its closest point, it is less than 15 kilometres away from Spain. With a population of 34 million people, Morocco is the 10th largest economy in the Middle East and North Africa (MENA) region. It has Atlantic and Mediterranean coastlines, and a history of independence not shared by its neighbours. Its rich culture is a blend of Arab, Berber, European and African influences. Morocco was a French protectorate from 1912 to 1956, when Sultan Mohammed became king.

Morocco is considered a developing country by international standards. The country is forecast to see some sustained economic progress over the short to medium term with a 5.7% compound annual growth rate by 2020 and beyond, according to Euromonitor. This growth is largely stimulated by domestic demand, and Morocco is on track to see continued improvements in its economic performance due to a combination of government policy measures to enhance the business climate, focused expansion of middle class and improvements in competitiveness.

The vagaries of the weather continue to drive Morocco’s economic growth. After a record cereal production in 2015, Morocco was affected by a severe drought in 2016. Agriculture production, which still represents almost 15 percent of Morocco’s GDP, contracted by around 10 percent and dragged the overall GDP growth down to 1.1 percent in 2016. Despite large public investment efforts in recent years, nonagricultural growth remained sluggish around 3 percent. While the unemployment rate slightly decreased to 9.4 percent, it masked a protracted decline in the labor force participation, which is now well below 50 percent. The government estimates that extreme poverty has been eradicated and the poverty rate was halved to 4.8 percent in 2014.

DUTY FREE ACCESS TO A MARKET OF 55 COUNTRIES
Since the advent of the Arab Spring, in comparison to its neighbors, Morocco has remained stable, introducing a reform framework to address the concerns of Moroccan demonstrators. To meet the domestic demand for infrastructure, during 2010 to 2015 Morocco invested more than USD 15 billion in its transportation infrastructure, building roads, highways, ports, and other transportation services. This infrastructure development supports Morocco’s overarching economic development plan to leverage its location along the Strait of Gibraltar between Spain and Africa to transform the country into a regional hub for North, West and Sub Saharan Africa for shipping, logistics, assembly, production and sales. Morocco’s status as a trade hub is bolstered by its trade agreements with Persian Gulf, Mediterranean and African nations, the United States of America, and the European Union. Morocco currently has duty free access to a market of 55 countries representing more than one billion consumers and 60 percent of world GDP.

AGRO-INDUSTRIAL COMPANIES INVESTING HEAVILY
Morocco’s commercial capital, Casablanca, is a popular location for regional headquarters, thanks to its strategic location and efficient and secure airport. Moroccan businesspeople are increasingly developing a more international outlook on doing business, opting to expand their opportunities beyond the historically close relations with French business interests.

Cargill, Danone, and European agro-industrial companies have also invested heavily in the country. Chevron, Kosmos, and other oil companies are exploring for oil off the coast of Morocco, while others pursue new energy opportunities in renewables and Liquified Natural Gas (LNG).

MARKET CHALLENGES
The greatest overarching barriers to trade in Morocco are a lack of transparency in government procurement, delays in bureaucratic decision-making and procedures, and limits on payments for imports prior to delivery. Restrictions on prepayments of imported orders are often problematic for the exporters. Currently, Moroccan companies can prepay up to 30 percent of the total shipment in advance of importing it.
AGRICULTURE DETERMINES THE GROWTH LEVEL
With the increased productivity of Morocco’s agriculture sector over the past few years, driven by ambitious reforms under the Agriculture Plan, the country aims to drive sector growth by promoting agri-business competitiveness and increasing agri-food market efficiency. The goverment want to accelerate the transformation of the agri-business sector towards greater value addition and market inclusion of small and medium producers and enterprises. Moving away from fragmented production to more integrated value chains will be among the core objectives.

Agriculture largely determines the growth level of the economy as agricultural output is highly variable from year-to-year. The agriculture, fishing, and forestry sector employs about 45 percent of the total workforce with a similar portion of the population living in rural areas. Over 90% of the country’s agriculture is rain dependant and thus this output varies greatly from year to year.

40% OF MOROCCO’S CONSUMPTION OF GRAINS IS IMPORTED
Moroccan agriculture remains mostly traditional with limited applications of production inputs such as fertilizers, pesticides and mechanization. Grains account for over 60 percent of agricultural production, and area planted to wheat has expanded with increased government support. The prevalence of small farms complicates inherited land status, and increasing land prices pose serious challenges to agricultural policy makers.

Moroccan agricultural production consists mainly of wheat, sugar beet, orange, tomatoes, potatoes, olives, and olive oil. However, Morocco produces enough food for domestic consumption except for grains, sugar, coffee and tea. More than 40% of Morocco’s consumption of grains is imported. Wheat imports to decrease in 2017/18 owing to ample domestic production. The Government supports wheat production by establishing a reference price for purchasing local wheat and by providing a storage premium to store wheat in licensed facilities. Morocco has traditionally used tariffs on wheat imports to protect local producers from foreign competition and revises the duties on a periodic basis depending on the supply/demand situation in the country.

In 2016, Morocco’s exports of agricultural and related products were $4.5 billion, while its imports were $5.7 billion. The European Union is Morocco’s primary trading partner, accounting for about 60 percent of Morocco’s agricultural exports. Morocco agriculture is extremely dependant on rainfalls and thus its output could fluctuate drastically from year to year. Consequently, Morocco is a net importer of agri-food products.

Morocco’s top agri-food and seafood imports in 2015 were wheat, corn, soybeans oil, cane sugar, durum wheat, oilcake, and green tea. Key supplying countries were France, Brazil, Argentina, the United States, Germany and Canada.

At 9.9 million tonnes, the 2017 cereal production exceeded the five-year average by over 30 percent, but remained 14 percent short of the record-breaking cereal output of 11.8 million tonnes gathered in 2015. In the 2015/2016 season, a total of 8 million tons of wheat was harvested in Morocco, an increase of nearly 60 percent compared to the previous year in which very low yields were seen due to weather conditions. This season, the production figure is expected to exceed 6 million tons with an increase of 128 percent compared to the 2016/2017 season. Morocco looks on course for a sharp drop in wheat production in 2018 from last year’s 6.25 million tones crop. At present, industry analysts are projecting wheat production to come in at a range of 3.0-5.5 million tones. And barley output in 2017 amounted to 2.5 million tones, four times as much as in the previous year and 30 percent above the five-year average.

Morocco relies heavily on wheat imports to cover its consumption needs. European Union and Black Sea countries supply most of the common “soft” wheat, while Canada is the traditional supplier of “durum” wheat.

STATE OF MILLING INDUSTRY
In Morocco, there are nearly 200 member mills in Morocco National Federation of Milling. In 2016, the president of Morocco National Federation of Milling, Abdullatif Izem told Miller Magazine that 140 of these members grind wheat, soft wheat and corn, 60 of them grind barley and durum wheat. More than 80 of these mills use Swiss technology. Turkish companies and their technologies have been used for 8-9 years. Izem stated that Turkish technologies have become more prominent thanks to investments made in the recent years. Due to excess milling capacity in Morocco, limited quantities of wheat flour are exported to neighbouring countries.

Cimbria joins in the Moroccan adventure
The seed sector in Moroco has been growing in recent years and Cimbria, one of the world’s leading suppliers within grain handling and seed processing technology, has made inroads into Morocco with several installations for seed processing. As the main player on the Moroccan seed market, SONACOS, with a market share of over 90%, has major focus on the quality of its final seed and thus on the whole production process. In 2016, two of their more than 15 seed processing facilities across the country were fully reconditioned with Cimbria tech¬nology, thus providing a new dimension of final purity and hourly throughput, combined with ease of operation and reduced energy consumption. The two seed processing plants, each for 10 t/h grain, have now been in operation since the beginning of 2017 and are delivering high quality processed grain to the full satisfaction of SONACOS at their sites in Sale and Fkih ben Salah. In October 2017, Cimbria also succeeded in winning another order for the supply of two further seed processing plants for SONACOS to be installed in 2018. In addition to the Cimbria’s processing equipment, a pre-storage unit (400 tonnes silo storage) will be installed. This will enable the client to receive and process grain at the same time. The PLC controlled processing plants connected to the ERP system will enable full overview and control, thus keeping headcounts low. The two processing plants, each for 14 t/h grain, will be installed in Berkane and Sidi Kacem in the first quarter of 2018.

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REFERENCES:
www.fao.org
www.usda.gov
http://publications.gc.ca
www.export.gov

In our previous article titled "MILLING POTENTIAL IN AFGHANISTAN" information is given about "AFGHANISTAN ve MILLING POTENTIAL".

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