Morocco shows export advantages in agriculture sector

In 2013 foodstuffs accounted for more than 15% of the country’s total exports. Fresh fruits and vegetables, processed fruits and vegetables, and fresh and canned seafood constitute Morocco’s three main exported food categories. Overall, Europe takes in up to 63% of the kingdom’s exported food goods and the country has been increasingly looking into diversifying its customer base to supply more markets notably in the Middle East, Eastern Europe and Africa.

Fresh & Processed Goods

Bolstered by the efforts carried out under the Green Morocco Plan (Plan Maroc Vert, PMV) since 2008 to boost upstream production, exports of fresh food have witnessed a significant uptick in recent years, with fruit and vegetables accounting for around 95% of exported fresh goods, with the other two categories making up the remainder.

Citrus in particular comprise a significant share of exported fresh goods, accounting for around 31% of the sector’s overall exports between 2007 and 2013, according to a report released by the Ministry of Economy and Finance in July 2014 on the performance and competitiveness of Morocco’s food exports. Tomatoes are another key traded product that saw exports increase, making up an average 23% of the sector’s overall exports between 2007 and 2013. Other vegetables make up the third-largest category of exported produce with an average share of 20% of the sector’s overall exports between 2007 and 2013. Europe, the country’s main trade partner, absorbed 91.5% of the kingdom’s exported fresh goods in the same time period, led by France (38.9%), Russia (14.6%), Spain (13.1%) and the Netherlands (9.9%).

Exports of processed goods have increased in terms of value over the past decade due in large part to higher food costs in the market. However, volumes have remained more or less flat, accounting for around 12% of total industrial exports and mainly constitute canned goods and olive oil. Europe is also the country’s biggest trade partner for processed food goods, absorbing nearly half (49%) of exports between 2007 and 2013.

Year in Review

According to preliminary figures released by the Office des Changes, the value of exported fresh foodstuffs and processed goods increased by 3.2% in 2014 compared to 2013, rising from Dh36.2bn (€3.9bn) to Dh37.3bn (€4.06bn). This increase was mainly driven by sales of processed food products and seafood, turnovers for which grew by 8.3% and 3.1%, respectively. However, a decision in April 2014 by the EU to impose a new entry system price on all imported fruits and vegetables – part of a broader plan to reform Europe’s Common Agricultural Policy on Customs clearance rules to introduce more transparency and implement a system of Customs valuations – increased the cost of exporting to the region.

Moroccan operators and policymakers were swift in voicing discontent over the new price mechanism and requested it be reviewed in accordance with extant bilateral trade agreements, including the Association Agreement signed in 2000. The issue pertaining to the new price mechanism was nonetheless settled after a compromise was reached between both parties in June 2014 to adjust entry prices for certain crops like strawberries, tomatoes, garlic and cucumber.

Broadening Trade Partners

Since the late 1980s, Morocco has been intent on diversifying its trade partners and has inked a number of free trade agreements (FTAs) in the intervening years, including with the US, the EU and Turkey. Several more, including two with African blocs, are currently in the works (see Trade & Investment chapter). “The purpose of these trade agreements does not only aim at broadening trade relations, but also at turning Morocco into a regional platform, an access hub to a potential market of around 1bn consumers, as well as gateway to markets in Africa, the Arab world, the EU and North America,” Jamaa Hakim, head of studies, legal affairs and communication division at the Ministry of Foreign Trade, told OBG.

Africa has been high on the agenda in recent years and a region where Morocco has been looking to develop existing ties as well as acquire new market shares. Exports to the region, however, have been slow to take off as inadequate transportation, poor logistics and distribution channels, and challenges in finding reliable partnerships and securing payment impede growth.

Modernising & Marketing

Morocco is also reviewing its export procedures. In 2014 the “engagement de change”, a legal document previously required for all exportable goods, was removed. Enabling procedures to be carried out online is another major step being gradually implemented to boost efficiency. These developments have helped Morocco’s ranking in the World Bank’s “Doing Business” report improve.

Procedures are expected to be further simplified with a new bill on foreign trade currently under way to assimilate the changes that have cropped up over the past two decades stemming from the conclusion of a considerable number of FTAs, as well as the opportunities to modernise operations thanks to IT advances. “In the years to come, exports will become the driving force of economic expansion as opposed to previous years where growth was highly dependent on domestic demand,” Hakim told OBG.

As part of its push to diversify its export base and boost value addition, Morocco has devoted attention in recent years to developing several niche products and marketing procedures. This includes a labelling system introduced in 2008 to improve awareness of product origin and quality. To date, a total of 30 products have been awarded the “protected origin designation” label including dates, olive oil and saffron. In January 2015 an agreement was signed between Morocco and the EU for these labels to be recognised.

Challenges

Competition in export markets is fierce, challenging Morocco’s ability to expand market share, particularly in Europe. “Morocco needs to capitalise on its current performances and further engage in diversifying its source markets in order to circumvent the slowdown witnessed in most of the traditional markets,” Hakim told OBG. In the case of citrus, a number of Mediterranean countries like Spain, Egypt and Turkey, produce similar products and export to the same markets around the same time.

“We are looking into ways to diversify our market shares, but competition is stiff and non-tariff barriers, notably phytosanitary measures, are becoming more stringent,” Ahmed Darrab, secretary-general of the Moroccan Association of Citrus Producers, told OBG.

Exported goods derived from the informal sector also distort visibility and render it difficult to gauge export outcomes. According to figures released by the High Planning Commission in 2007, the number of informal industrial units operating in the overall economy – including food processing facilities – stood at 1.55m, accounting for 2.2m jobs and a turnover of Dh100bn (€10.9bn), up from 1.9m jobs and Dh65bn (€7.1bn) in 1999. The land border with Algeria, closed since 1994, has further induced informal trade and seen illicit activities, like produce smuggling, surge.