In the current context of continuously rising commodity prices, the impact of the suspension of customs duties remains minimal. This is indicated by the Professional Association of Oil Manufacturers in Morocco (APFHM), which announces that it has proposed an action plan to the government to protect Morocco against soaring international prices. The details.
By suspending import duties applicable to oilseeds and crude sunflower, soybean and rapeseed oils on June 3, the government hoped to mitigate the impact of the rise in raw material prices on the selling price of oils to consumers, but the effect of such a measure is “minimal”, according to the Professional Association of Oil Manufacturers in Morocco.
For oil manufacturers, this decision to suspend import duties offers practically only one advantage: it “will make it possible to harmonize the customs duties of the different origins, but above all in the long term will make the market more competitive imports.
Indeed, according to the Association, 80% of Morocco’s imports of crude oils and oilseeds are already subject to 0% customs duties from countries that have signed bilateral agreements such as Europe and the United States. “The rest of the imports (20%), mainly come from countries like Argentina or Ukraine with customs duties of 2.5%”, justified the edible oil producers in a press release. “Either the government has not properly measured the impact of its decision to suspend customs duties or either the oil manufacturers are unwilling to pass on this suspension to prices”, analyzes an expert in the food industry. .
Today, on the national market, the prices of edible oil continue to increase under the effect of the rise in the prices of inputs at the international level. For example, in the space of 18 months, the price of a 5-litre bottle of the “Huilor” brand went from 60 DH to 147 DH, that of the “Lesieur” brand from 51 DH to 120 DH . The “Afia” brand, on the other hand, displays the same price for the same volume.
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It must be said that Morocco is directly confronted with the fluctuations of the international market, since it imports 98% of the raw material which is used in the manufacture of edible oil, and consequently the final prices are strongly affected. The Kingdom uses the international market to import crude vegetable oils, particularly soya, with an annual bill of approximately 4 billion DH, since oilseeds produced locally contribute only 1.3% of national needs. What room for maneuver to lower these prices when we know that the Russian-Ukrainian crisis will not stop soon and therefore the pressure will continue during 2022 on the prices of raw materials, namely sunflowers or soybeans ?
For several years, the State has been subsidizing several products, including butane and sugar for individuals, through the Compensation Fund, in order to ensure price stability for these products. Moreover, the executive has just approved in this sense a draft decree to mobilize additional credits amounting to 16 billion DH to continue to support the expenses of this Compensation Fund.
But a few years ago the state withdrew from direct subsidization of edible oil, diesel and gasoline. However, many have been calling for months for the return of subsidies for cooking oil and fuel at service stations, given the prices. For hydrocarbons, for example, the Minister of Finance and the Economy, Nadia Fattah Alaoui, responded negatively to requests for subsidies. According to her, the state “does not have sufficient financial resources to provide subsidized fuel”. A reversal of the decision to liberalize the fuel sector is therefore not possible. This is probably the case for edible oil. “Faced with the weakness of local production and the fluctuations of the international market, storage remains a solution among the solutions, but the reality reveals that the storage capacity available in Morocco for edible oil”, estimates the expert in food industry which specifies that in this case, the players in the table oil industry will have to make significant investments in infrastructure to increase this storage capacity.
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But for the Professional Association of Oil Manufacturers in Morocco, the solution requires national sovereignty in terms of the cultivation of oilseeds, as such, it says it is working jointly with the government to put in place the necessary mechanisms to ensure a better local production of oilseeds. Ultimately, edible oil producers believe that this is the only way to protect the Kingdom against soaring international prices. To this end, several mechanisms are to be activated, according to them. In this sense, the association claims to have proposed an action plan to the government.
However, Morocco had about 150,000 hectares planted per year with oilseeds, especially sunflower in the west and north of the Kingdom, but this area has considerably decreased to reach only 17,000 hectares during the year 2021. According to figures from the Department of Agriculture, Morocco has an estimated area of 600,000 hectares that can be exploited to increase the area of oilseeds with sunflower and rapeseed. This makes it possible to secure a guaranteed minimum price for the benefit of farmers, regardless of the price of priority oilseeds on the international market, with the use of approved and high-yielding seeds by farmers. The main reason for the abandonment of oilseeds is that farmers are looking for less risky and more profitable crops, since the other production chains are well organized and offer significant incentives for investment, as is the case for example with sugar production line.