Question

Analysis of the economic welfare of Morocco through agricultural exports

Answer 1

In Morocco, as in most countries, the most sensitive sector is agriculture, and the most sensitive products are agricultural products. Agriculture contributes around 15 percent of Morocco’s GDP and largely determines the growth level of the economy as agricultural output is highly variable from year-to-year. The agriculture, fishing, and forestry sector employs about 45 percent of the total workforce with a similar portion of the population living in rural areas.

Morocco is endowed with numerous exploitable resources. With approximately 33,000 square miles (85,000 square km) of arable land (one-seventh of which can be irrigated) and its generally temperate Mediterranean climate, Morocco’s agricultural potential is matched by few other Arab or African countries. It is one of the few Arab countries that has the potential to achieve self-sufficiency in food production. In a normal year Morocco produces two-thirds of the grains (chiefly wheat, barley, and corn [maize]) needed for domestic consumption. The country exports citrus fruits and early vegetables to the European market; its wine industry is developed, and production of commercial crops (cotton, sugarcane, sugar beets, and sunflowers) is expanding. Newer crops such as tea, tobacco, and soybeans have passed the experimental stage, the fertile Gharb plain being favourable for their cultivation. The country is actively developing its irrigation potential that ultimately will irrigate more than 2.5 million acres (1 million hectares).

Now Morocco and the US have completed negotiations on a Free Trade Agreement (FTA) that would help stimulate further reforms in agriculture. The hope and expectation is that the reforms taken to date plus additional reforms linked to the FTA will increase productivity and efficiency in Moroccan agriculture and thus lead to higher growth and economic and social well-being. Moroccan production sectors with FTA.
Under the FTA, production of wheat (-8%), other cereals (-4%), red meat (-22%), dairy (-3%) and beverages and tobacco (-7%) all fall. The reason is that the domestic sales share of
these products fall by essentially the same amount as production while exports remain unchanged. Domestic sales weaken because firms share and households share in use
of domestic output fall. Effects on national production are small but positive for the rest of production categories. Moreover, the export shares of all items experience a positive
change showing an increased participation of production sectors in international trade.

In 2016, Morocco’s exports of agricultural and related products were $4.5 billion, while its imports were $5.7 billion. The European Union is Morocco’s primary trading partner, accounting for about 60 percent of Morocco’s agricultural exports.

Public policy efforts, despite their shortcomings, have achieved success and strengthened the role of agriculture in growth dynamics. In addition to its contribution to GDP of 16%, its impact on foreign trade is significant with a value of agricultural exports representing an average of 18% of total exports. Agricultural production can cover national needs up to 100% for meats, fruits and vegetables, 78% of needs milk, but only 62% of cereals (50% wheat needs).