Policy and progress in Moroccan agriculture: A retrospective and perspective [chapter]

Channing Arndt, Wallace E Tyner
Research in Middle East Economics  
JEL Codes: Q1, Q2 The policy reforms in Moroccan agriculture brought about through the process of structural and sectoral adjustment and the engagements undertaken by Morocco in the context of the General Agreement on Tariffs and Trade (GATT) represent important milestones in Moroccan agricultural history (1). Since 1985, reforms have been undertaken, especially with respect to domestic agricultural markets. Both authors have been closely involved in the reform process (Arndt since 1990 and
more » ... r since 1985). The process has been drawn out, halting, and highly complex. Throughout this article, we have tried to strike a balance between the need to generalize, in order to make the discussion accessible to readers unfamiliar with the evolution of Moroccan agricultural policy, and the need to present enough detail to be true to the facts. In this paper, we draw from available sources and our experience to argue three related points. 1) The impacts of reforms undertaken to date have, by and large, been positive. This reflects much more the dismal state of agricultural policy in 1985 rather than a positive rating of the reform process or the current policy environment. 2) Accordingly, further reforms, especially with respect to trade policy, are desirable. 3) Future reforms require important policy trade-offs, especially with respect to price stability for strategic agricultural commodities (bread wheat, sugar and oilseeds). Structural and Sectoral Adjustment At the dawn of agricultural sector adjustment in 1985, the Moroccan agricultural sector was marked by one of the highest levels of state intervention in the world. Heavy government involvement, both direct and indirect, characterized input markets, production decisions (especially in irrigated zones), marketing, and international trade. For example, the Office Nationale Interprofessionelle des Céréales et Légumineuses (ONICL) managed all imports of cereals. The Office de Commercialisation et Exportation (OCE) managed all exports. Delivery of wheat to industrial flour mills was accomplished by a byzantine system involving state run storage depots, licensed traders, the government transportation monopoly (Office Nationale de Transport (ONT)), and ONICL. Parastatals were the dominant providers of seed, fertilizer, and credit. Production patterns within large irrigation perimeters were dictated by the Offices Régionale de Mise en Valeur Agricole (ORMVAs). Prices, including storage and processing margins, were set by the government. Variable levy trade protection implemented through state trading broke all connection with international prices for imported products (2). Finally, a complex web of producer and consumer subsidies was required to lubricate the system. The subsidy burden on government finances in the early 1980s amounted to about 3.5 billion Dirham (DH) per annum accounting for nearly 15% of government current expenditure or roughly 3% of GDP (Crawford and Purvis, 1986) . Despite all the regulation and controls in the economy at this time, the overall level of producer subsidy, in general, was not extraordinary. The main problem with the system was excessive rigidity and government controls rather than excessive levels of producer subsidization. The era of agricultural sector adjustment began in 1985 with the first agricultural sector adjustment loan (ASAL1) from the World Bank. There were four major objectives of that loan: 1) restructure the agricultural investment program; 2) re-orient the prices and incentives framework; 3) strengthen agricultural support services including rationalizing the role of the private sector; and
doi:10.1016/s1094-5334(03)05014-3 fatcat:sgmz7pvyjrbhzlu6oid7rzweaa