Morocco pursues cheaper wheat with new changes in import subsidy policy
MOROCCO – The National Interprofessional Office of Cereals and Legumes (ONICL), Morocco’s market watchdog for grains, has announced that it is revising down grain subsidies for imported wheat in a bid to incentivize wheat importers to turn to cost-efficient grain suppliers.
In a statement, the watchdog explains that starting August 1, the baseline for issuing subsidies would be based on the average cost prices of the lowest origin among Germany, Argentina, France, and the USA.
“We would like to inform the importers of soft wheat that starting from August 1st, 2023, the average cost price used for calculating the lump-sum premium will be based on the average cost prices of the lowest origin among Germany, Argentina, France, and the USA,” the statement read.
The decree follows that in June, the National Interprofessional Office of Cereals and Legumes (ONICL) released a circular providing that the subsidy program will support importers monthly covering the difference between the cost of wheat and the reference import price of MAD 270 (US$27) per quintal.
According to the circular, between July 1 and September 30, 2023, subsidies will be granted to facilitate the import of considerate quantities of milling wheat, which can reach up to 2.5 million metric tons.
The policy change comes as Morocco recovers from last year’s severe drought. The previous policy did not specify a baseline for subsidies to encourage wheat importers to maintain the local market as wheat prices soared in international markets on the backdrop of the Ukraine war.
Morocco is a major cereal importer, ranked as the largest importer of wheat from the EU for the 2022/2023 agricultural campaign, according to the European Commission.
However, in a bid to mitigate the adverse effects of drought on the agricultural sector, the government has set raft measures expected to provide a much-needed boost to Morocco’s agricultural industry, safeguarding food security and strengthening the economy.
Recently, the government launched the ‘The Generation Green Plan 2020-2030’ initiative, a drive to achieve greater food security for cereal crops by 2030, notably through strengthening the certified seed sector to offer better varieties to farmers.
Further, the government decided to halt its common wheat import support program to alleviate inflationary pressures.
In February 2022, Morocco’s Deputy Minister to the Finance Ministry, Fouzi Lakjaa, declared that exempting wheat from import duties caused the country to lose MAD 550 million (US$58.6 million) in import duties while falling short of its target to bring prices down.
In addition, the official reckoned that the budget allocated for subsidies rose to MAD 3.2 billion (US$340.8 million) in 2021, MAD 2 billion (US$213 million) more than pre-pandemic levels.
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