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Morocco Agribusiness Report Q1 2014 - New Report Available

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2014-01-07 21:28:25 - New Food market report from Business Monitor International: "Morocco Agribusiness Report Q1 2014"

Morocco's agriculture sector holds significant potential, particularly the dairy, poultry and sugar industries. The dairy sector is benefiting from growing interest from international dairy companies and is likely to enjoy strong growth in the coming years. In the livestock segment, we expect increased government support and investment - backed by strong domestic demand - to help the industry to develop. However, the lack of investment in modern infrastructure will hamper production growth in the short term. Despite these hurdles, grain output will rebound strongly in 2013/14 after drought-like conditions led to a steep decline in production in the 2012/13 season.

Key Forecasts

* Wheat production growth to 2016/17: 29.9% to 7.5mn tonnes. Output growth will follow the steady growth in the

country's wheat consumption, a result of strong economic growth. Increased planting and productivity gains will also help to support production.
* Corn consumption growth to 2017: 19.7% to 2.4mn tonnes. Demand growth will mainly be driven by a steadily expanding domestic livestock sector.
* Milk production growth to 2016/17: 17.4% to 2.8mn 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.
* BMI universe agribusiness market value: 24.5% year-on-year increase to US$5.1bn in 2014, forecast to grow on average 3.8 % annually between 2013 and 2017.
* 2014 real GDP growth: 2.8%, down from 4.4% in 2013. We forecast GDP growth to average 3.9% between 2013 and 2017.
* 2014 consumer price inflation: 3.5% average, up from 2.5% in 2013. We forecast inflation to average 2.8% between 2013 and 2017.

Full Report Details at
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Key Developments

Following months of preparation, the Moroccan government began implementing plans to reform Morocco's subsidy system, which acts a key bulwark of stability for food and energy prices. The government set up a fuel price index system in September 2013 and announced a 15% cut in the subsidy it pays millers for imported soft wheat. The cut of the soft wheat subsidy will have little impact on prices, giving its limited time frame. However, we believe it is an indication that the government will reform other food subsidies in the coming quarters.

Centrale Laitiere decided to raise both wholesale and retail milk prices in August 2013 following an increase in feed prices and production costs. Prices will rise by around MAD0.4-0.5 per litre, with wholesale milk costing now MAD8.40/litre (US$1.0). This sudden increase in milk prices provoked concern among many consumers and calls for a boycott spread on the internet. We believe this will have a negative short-term impact on milk consumption in the country, and poses downside risks to our consumption forecast for 2013. However, demand will pick up in the medium term given Morocco's growing GDP per capita and low consumption rates.

We expect the poultry sector to see improvement in 2013/14 following two years of high feed prices and slowing production growth. Small-scale livestock farmers also suffered from the heat wave that hit Morocco in August 2012. In an attempt to soften the impact of high feed prices, the Moroccan government has introduced a number of measures. Among these is a significant reduction in the tariff applied to certain imported feed ingredients (soybean, soya and sunflower cake), a harmonisation of value-added tax rates, and permission to include wheat in feed.

With the 2013/14 grain harvests effectively complete in Morocco, our view for a rebound in wheat production has played out. The improved crop is likely to help to keep food price inflation at low levels over the coming months, particularly given that global food prices have fallen considerably since January. For the 2014/15 season, for which plantings begin in Q413, we expect lower production growth owing to our expectations for lower average wheat prices in 2014.

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Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

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