Cereal harvests: A matter of wheat

Lhe cereal harvest for the 2021-2022 agricultural campaign is catastrophic to say the least. According to the Ministry of Agriculture, the main cereals (soft wheat, durum wheat and barley) are expected to produce 32 million quintals in Morocco, with a forecast drop in agricultural GDP of 14%.
Cereal production thus fell by 69% compared to the previous campaign, ie 17.6 million Qx for soft wheat, 7.5 million Qx for durum wheat and 6.9 million Qx for barley.
In question, a severe rainfall deficit, accompanied by poor temporal and territorial distribution: 188 mm at the end of April, i.e. a drop of 42% compared to the average of the last 30 years (327 mm) and 35% compared to the previous campaign (289 mm) on the same date.
Inevitably, Morocco will therefore have to resort to imports to meet its cereal needs, particularly wheat which is heavily consumed in the Kingdom.
But this is where things get tricky. Because, on the world market, there is strong pressure on prices, exacerbated by the war in Ukraine. To stock up on wheat, you currently need a lot of wheat. The government subsidy intended for this commodity so that it arrives at the flour mills at the price of 260 DH per quintal has seen a sharp increase: it has gone from 71 DH last January to nearly 200 DH per quintal currently.
It appears from the figures revealed by the Minister of the Budget, Fouzi Lekjaa, last Monday in the House of Representatives, that the soft wheat import bill reached 2.52 billion DH at the end of April 2022 for 20 million quintals. And overall, the cost of compensation for common wheat and flour should reach 7.32 billion dirhams at the end of the year.

The reasons for the outbreak

The cereal bill will therefore be particularly steep because of the low production this year, but also because the price of wheat has taken the lift. On the European market, it is currently at 438 euros per tonne compared to 200 euros per tonne less than a year ago, due in particular to the Russian-Ukrainian conflict which has repercussions on the world cereals market, these two countries being leading agricultural producers. They represent approximately 30% of the wheat marketed in the world (20% for Russia and 10% for Ukraine). However, the World Food Program (WFP) estimates that 13.5 million tonnes of wheat and 16 million tonnes of corn are blocked in Russia and Ukraine, i.e. 23% and 43% of their planned exports in 2021-2022.
The rise in prices is also accentuated by the sanctions imposed on Russia, the disruptions in the supply and distribution chains of cereals and the export restrictions decided by Ukraine. Added to this, in addition to speculation, is the latest measure taken by India, the second largest wheat producer in the world: an embargo which prohibits the sale of this cereal internationally because of a severe drought which has weighed down the production.

This decision will aggravate the grain supply crisis and fuel price tensions, especially if the Russian-Ukrainian war persists.
The only note that seems to be positive: according to the FAO, world wheat production should reach 775.4 Mt in 2021/2022, practically at the same level as the previous season, thanks to abundant harvests in Australia and Argentina. This could perhaps contribute to the relaxation of prices.
But, whatever the case, Morocco will have to break the bank for its national grain needs. “(…) The conflict has disrupted the supply of wheat on a global scale. Ukraine and Russia provided around 20% of Morocco’s cereal imports. Faced with a drop in national production, Morocco will have to seek new suppliers at a higher cost, which will put pressure on the trade balance,” indicates the rating agency Fitch Ratings in its latest forecast for the Kingdom.
The Moroccan government ensures, for its part, that it has a set of mechanisms capable of renewing and consolidating the national wheat stock. According to government spokesman Mustapha Baitas, Morocco sources its wheat from different markets, with a national stock covering almost four months of consumption.

F. Ouriaghli

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