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Morocco - Wheat Annual 2004
USDA, March, 2004
Provided adequate rainfall during March/April, Morocco’s wheat production are expected to be at least as good as last year. AgAtt forecasts total wheat production at 5.3 MMT. Adequate weather conditions (rainfall) during the planting season boosted early plantings, which allowed the fall crop to benefit from subsequent rainfall during the last few weeks of CY 2003. The more recent rains (February 2004) should help the yields to firm up, especially in fields that were planted relatively late. An additional rain during end of March - beginning of April should provide a final boost in yields and result in good wheat crop. In the worst case, this year, wheat and barley production should not be below average.The government continues to support grain production in Morocco, mostly through high customs tariffs. Also, for bread wheat, producers can get a minimum support price of 2,500 dh/MT for standard quality wheat when they sell their production to traders approved by the government Cereal Office (ONICL).
The government continues to subsidize about 1.0 MMT of flour ostensibly to help low income population. For this subsidized flour, the government pre-sets the milling margins, the extraction rate, wholesaler and retailer margins. Thus, the standard subsidized flour cost is pre-set to 3,253.75 dh/MT and is sold ex-mill at 2,000 dh/MT, resulting in a subsidy to the consumer of 1,433.75 dh/MT, paid directly to the flour mill. (Current exchange rate is 8.75 dh/$). The effectiveness of the flour subsidy program in Morocco has been criticized widely in Morocco and the current government has been considering phasing it out, but no reform plans have been made public, as this issue is politically very sensitive.

The recently signed free trade agreements (FTA) between Morocco and EU, and Morocco and the US will likely change considerably and durably Morocco’s major suppliers of wheat. The EU has been traditionally a major supplier of wheat to Morocco and has, with this FTA, secured its market share. On the hand, the US lost significant market share in recent years, and is likely to benefit substantially from the agreement and recapture market share on the sake of other suppliers, including Canada, Australia, and southern American countries.

On June 1, 2003, Morocco reverted to the duty computation system used before 1998 whereby the tariff is split into two parts; the portion of the CIF price below the GOM-set threshold price is subject to a high base duty, while the portion above the threshold price is assessed a flat 2.5 percent.

Current customs duties (ad valorem):
Duty on part Less or Equal Threshold Price 55.00% on wheat 75.00% on durum
Duty on part Above Threshold Price 2.50% on wheat 2.50% on wheat
Threshold Price (dirhams per MT) 1,000 1,000
(Exchange rate 8.75 dirhams/US$)


Morocco and the EU came to an agreement on October 25, 2003 by which Morocco provides preferential access to EU bread wheat (and other minor commodities). Although the agreement was to be effective December 1st, 2003, as of today, the details of the implementation have not yet been made public.

The agreement called for a 38 percent reduction in the base duty prevailing October 1st, 2003 (135 percent). Any reduction in the Moroccan customs duties for bread wheat will increase the reduction granted to the EU (0.275 per point of decrease) so that the EU keeps its relative advantage. The same mechanism will be applied in reverse if Morocco increases its duties on bread wheat, meaning that the reduction granted to the EU will be decreased. Although the exact mechanism has not yet been published, it is likely that the EU will enjoy tariff reductions comparable to the following.

Free Trade Agreement with US On March 2, 2004 Morocco and the US concluded negotiation for a free trade agreement by which the US will have preferential access in the Moroccan market for grains.

Local industrial mills continue to bring in wheat, mill it, and re-export, mostly to Libya and other African countries, which provided a good opportunity for the local mills to use some of the largely unused capacity. Export figures for wheat flour have been reconverted to wheat (80 percent extraction rate) to be re-included. The wheat brought in for this purpose is exempted from duties and taxes and is subject to strict control from the customs office that ensures that all the finished product is effectively re-exported.

The government, through the Moroccan Cereal Office (ONICL), has been involved in part of bread wheat imports only. Over the past few years, ONICL purchased about one-fifth of the bread imported into Morocco. All the bread wheat imported by ONICL enters the flour mills at the preset GOM price of 2,588 dh/MT and is used to make subsidized “Standard” flour for the lower income population.

Tendering system
ONICL issues tenders for bread wheat for delivery during specific periods and at specific ports. Tenders are usually issued up to one month before the delivery period. Depending on the tender, ONICL requests that importers make bids on all-duties-paid price (including importer margins) or on the differential to pay to ONICL in case the final price is lower than pre-set price at which the ONICL-imported wheat (for subsidized flour) is sold to the flour mills (2,588 dh/MT). When final price is higher than the pre-set price, importers actually make bids on amount per metric tons that ONICL is required to pay back to the importers. Finally, ONICL tenders typically specify payments to be cash, COFACE, or GSM.
MGR Archive 18.3.2004
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Region Type Price  
Russia Rapan $ 700
USA Jupiter Rice $630
USA Calrose #1 $830
USA Calrose #1 Paddy $480
EU Prices Baldo €660
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