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Morocco: Morocco Agribusiness Profile 2012




Morocco Agribusiness Profile 2012

Until 2015, we expect strong production increase for most agricultural sectors. Nevertheless, increase is predictable to be mainly high in the case of livestock and dairy produce, inclunding corn and sugar. Corn production will increase from a moderately low base, fuelled by a request for the grain as a form of animal feed. The production of livestock and dairy produce will profit from the steady expansion of Morocco's economy and from rising per capita incomes. In the meantime, the sugar industry stands to benefit from strong government support and efforts to raise output. Over our-year estimate period, positive request increase is envisaged for amount Morocco's agricultural sectors; we expect increase in the consumption of poultry, beef, milk and sugar to benefit from rising living standards and by an expanding people.

We remain positive about Morocco's agricultural sector and do not believe recent FTAs signed with the EU (and in signing with Canada) will discourage domestic production. In fact, domestic demand has encouraged farmers to plant more and to increase yields for grains, which decreased the country's reliance on imports. We expect this to continue to be the case in the coming years. In the dairy and livestock industries, we expect increased government support and investment - backed by strong domestic demand - to help these sectors to develop, even though competition from European and Canadian dairy giants could slow this process. Overall, we expect the FTA to help moderate domestic food prices.

However, although BMI is predicting steady increase for Morocco's economy, a double-dip recession for the world economy would as well affect Morocco. Per capita income would inevitably be affected, forcing consumers to cut back on the consumption of meat, dairy produce and sugar in favour of staple foods.

Industry Developments Morocco is currently under negotiation with Canada to sign a free trade agreement (FTA) covering the countries' agricultural trade. In fact, Morocco bought CAD267mn in Canadian agricultural products in 2009. This means that the vast majority of trade between the two countries is in the agricultural sector. In fact, Morocco sources most of its durum wheat from Canada as well as more regular types of wheat. Also, the country has already signed an FTA with Canada's neighbour and trade partner, the US, which will make the signing of the treaty straightforward.

The EU FTA is very controversial among European politicians as farmers in some European countries, such as Spain, are afraid they will not be competitive compared to their Moroccan counterparts, especially for fruits and vegetable exports. We do not expect the same controversies to exist for Moroccan dairy exports. In fact, even if the country has a growing milk surplus to export in dairy products such as butter and cheese, we do not see the country's dairy production to be efficient enough to compete with major European brands. In fact, dairy production in Morocco is still very fragmented, milk quality needs to be improved and transportation is often uncertain. Therefore, we do not see Moroccan dairy farmers as likely to endanger their European counterparts. However, EU dairy product exports could prevent future production growth in the sector in the medium term.

Moroccan main sugar producer, Cosumar, is seeking to buy sugar assets in Brazil and Africa in order to boost further its production capacity. This is part of the company's objective to increase productivity and efficiency at its plants in order to increase domestic sugar self-sufficiency. Thus, the acquisition of assets in Brazil and Africa could serve two purposes. First, it would enable the company to increase the amount of sugar it can produce, bypassing domestic resource constraints, such as water and land shortages. Second, it would enable the company to integrate some of its main competitors' practices, improving management and efficiency. In fact, costs for sugar producers in Morocco are two times higher than in Europe, and even more than in Brazil.

Key Industry Forecasts

  • Wheat production growth to 2015/16: 56.1% to 7.6mn tonnes. This will come on the back of steady growth in the country's wheat demand, on the back of strong economic growth. Also, as a result of increased planting and productivity gains.
  • Sugar consumption growth to 2015/16: 9.8% to 1.4mn tonnes. Sugar consumption growth will be restricted in the medium term. First, we predict that the government will gradually lift sugar subsidies over the next few years as part of a plan to cut spending. Second, Morocco's authorities have been encouraging the population to cut down on sugar consumption for public health reasons.
  • Milk production growth to 2015/16: 15.9% to 2.4mn tonnes. Sustained growth will come from the commercialisation of the dairy sector and the move to large-scale mechanisation. These trends will be enforced by rising consumer demand for value-added marketed dairy products.
  • Morocco real GDP growth 2012: 4.3%, up from 4.2% in 2011. Over the longer term, we forecast GDP growth to average 4.7% between 2011 and 2016.
  • Morocco forecast annual average for consumer price inflation 2012: 2.0%, up from 0.9% in 2011. We forecast inflation to average 2.1% between 2011 and 2016.

Livestock Production Estimate, 2010-2015: Poultry: 29%; Beef: 21% - fuelled by strong domestic request for meat, inclunding government support for modernisation and expansion initiatives.

Dairy Production Estimate, 2010-2015: Milk: 24%; Cheese: 18% - fuelled by rising consumption request, especially in the case of higher-price dairy products. Production will as well benefit from the adoption of additional productive technology and the introduction of higher-yielding, quality producing cows.

Sugar Production Estimate, 2010-2015: 28% - supported by government initiatives to double production by 2013. Improvements are expected in key areas, including irrigation, improved farming methods and better access to inputs such as fertilisers. Key Macroeconomic Forecasts

Morocco Real GDP extension: anticipated to slow to 3.6% y-o-y in 2010 from 4.6% in 2009, previous to recuperating to average 4.0% y-o-y over the 2011-2014 periods.

Morocco Private Consumption development: anticipated to grow by 3.0% y-o-y in 2010, and then average 3.8% throughout the remainder of our estimate period.

Morocco Unemployment: anticipated at 9.9% in 2010, although predicted to fall in 8.5% in 2012.

Morocco Core Inflation: anticipated to have reached 2.0% in 2010 and predicted to remain at this rate in 2011. The major driver of headline inflation is food, which accounts for 40% of the consumer price basket.

Key Views

The livestock industry, mainly the poultry and beef sectors, offer significant opportunities for next investment and expansion. In recent years, livestock production has already benefited from increased investment as producers look to address growing request. Request for poultry has been particularly healthy, with consumption increase showing an expanding people and rising GDP per capita. in the meantime, emerging fast food outlets are boosting request for processed meats. Although this is expected to be partially met though imports, domestic production as well stands to benefit. In the years to 2015, we predict that poultry output will increase by over 29%, reaching 681,400 tones.

The production of price-added dairy products offers the highest increase opportunities for dairy producers. Request for cheese and butter are both estimate to grow strongly. In 2015, 101,600 tones of butter and 18,600 tones of cheese are estimate to be consumed by Moroccans following-year increase of 32% and 18% respectively.

Morocco has of the highest per capita sugar consumption figures in the world. This has been aided by government subsidies supporting artificially low prices. Although these government subsidies are expected to be gradually lifted sugar consumption is still estimate to grow steadily through to 2015. This will primarily be driven by higher request for price-added sugar confectionery and soft drinks resulting from higher disposable incomes. This will result in 13% increase in sugar consumption between 2010 and 2015

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