Ambitious plans to boost cereal crops




Every second year in the 1990s saw drought, compared with one in five before. A $200m fund has been set up to build new waterways to drought-stricken regions

By Mark Huband in Rabat

Financial Times, 20 December 1999

Agriculture employs 40 per cent of the 10m labour force, and the impact of fluctuations in the sector reverberate throughout Moroccan society. They have led to concerted government efforts to ease the uncertainties brought on by alternate years of drought and rain.

Despite the expansion of water management schemes, only about 10 per cent of the 8.5m hectares of agricultural land is irrigated by the country’s 60 reservoirs.

Of the irrigated area, a million hectares are given over to farming export crops such as fruit juice, wine, dried and dehydrated fruits and olives, creating pressure on the balance of payments. The annual importation of staple crops, in particular cereals, has risen to around 35m cantars (1.76bn kgs) on average in the past three years, compared with annual imports of 8m cantars, 30 years ago.

According to the ministry of agriculture, the 1990s have been the most drought-affected years on record, with the number of drought years rising from one in five to one every two years.

The impact on agricultural output has been dramatic, with cereal crop yields falling by up to 75 per cent in the worst affected areas.

Government strategy has focused on raising yields to reduce imports during years of drought. The MoA programme for cereal production proposes reducing the value of cereal imports by Dh2m annually by raising the production level during dry years by 15m cantars to 60m cantars.

The highly ambitious programme also envisages creating 50,000 permanent jobs in the agricultural sector and raising agricultural sector revenue by 40 per cent, from Dh2,000 per hectare of land to Dh5,000.

Vital to achieving these targets are ongoing efforts to upgrade the irrigation network. A Dollars 200m fund was created this year to build new waterways to take water from wetter areas to the regularly drought-stricken regions of the country.

The most significant project within the scheme is a 78km canal costing Dollars 86m and opened in September to take water from Guerdane in the east to irrigate citrus crops in the south.

Local farmers paid 60 per cent of the cost of the project, while the rest was financed through a $16.3m loan from the French government.  Low yields in staple crops have intensified pressure on the government to realign the sector to meet domestic food needs and expand the domestic market for agricultural products. This year it unveiled a significant package of incentives and financial aid to farmers, aimed at modernising the sector and increasing cereals output.

The three-year programme of incentives will reinforce the existing subsidies financed by the state Fund for the Development of Agriculture.

Subsidies of 50 percent will be offered to individual farmers and 60 percent for farming collectives as part of the scheme. The subsidies will bring state financial support to farmers of between Dh20,000 and Dh40,000 for individuals, and up to Dh48,000 to collectives. The plan is also intended to encourage farmers to introduce new technology and improve competitiveness.

“Our primary aim is to create conditions for food security, which also means expanding the domestic market, which we know has great potential,” says Habib el Malki, minister of agriculture, rural development and fisheries.

“The second aim is to not only consolidate our position in our traditional export markets, but to conquer new markets. This is only possible by improving quality and variety, thereby making ourselves more competitive,” he says.

Closely tied to the attempts to secure domestic food supplies and thereby raise agricultural incomes, is the longer term goal of developing Morocco’s rural areas. The dramatic fluctuations in agricultural output have crippled rural life for much of the past decade in particular.

These fluctuations and the resulting impact on incomes have also prevented rural populations from seeking alternative employment, as banks have become increasingly reluctant to lend to small and medium sized enterprises in rural and urban areas, owing to the lack of legal safeguards and guarantees.

The low level of monetisation of the rural economy, stemming from the low level of productivity, is regarded by some economists as a more serious concern than the level of rural unemployment. “In the countryside you don’t have real unemployment. Everybody is doing something,” says a European diplomat.

“The priority is to improve the financial system. This is not because the banks are ineffective, but because they are not really prepared for industrial risk investment. In the meantime, the businessmen must be prepared to submit better projects.”

While the government is moving to stem the impact of poverty, the structural issues which would alleviate the shortage of investment finance have yet to be adequately addressed.

Even so, it has sought to stem the decline in rural living standards with a Dh3.5bn programme aimed at improving infrastructure, addressing the problem of rural debt, and taking steps to create rural employment.

The debt relief programme, which is intended to improve the credit worthiness of 150,000 small farmers, is expected to cost Dh640m, while the employment creation programme has been budgeted at Dh2.2bn.

“The rural areas of Morocco are really in need of a ‘New Deal’,” admits Mr el-Malki. “The rural areas are the spinal cord of Moroccan society, not only because of their actual demographic importance, but because of the cultural legacy they represent and the way they provide Morocco with its social and economic equilibrium.”

© Financial Times