Morocco Agribusiness Report Q3 2016 - New Market Research Report

With the exception of the corn and sugar sub-sector s , all areas of Morocco's agriculture sector are set to enjoy solid growth through to the end of our forecast period. Our optimism is bolstered by the government-initiated Green Morocco Plan, which is likely to see increased investment in an effort to reduce the industry's weather-related production risks out to 2020. We believe that the twin strategies of producing high-yield and market-related agriculture, as well as improving the existing water conservation programme, will yield good results in the medium-to-long term.

Key BMI Forecasts

Wheat production growth 2014/15 to 2019/20: 19.5% to 6.1mn tonnes. Production will be volatile throughout the forecast period as it will decline substantially in 2016/17 following a bumper crop in 2015/16. Out to 2019/20, continued investment and support by the government will keep output growth steady.

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2016 real GDP growth: 2.0% (down from an estimated 4.4% in 2015).

2016 consumer price inflation (ave): 1.6% (up from an estimated 0.6% in 2015).

Latest Updates And Structural Trends

Morocco's agricultural agreement with the EU was deemed illegal by the European Court of Justice in February 2016 on the grounds that it does not exclude the disputed territory of Western Sahara. EU officials have appealed against the ruling amid vigorous protests from the Moroccan government, and trade will continue as before until a final ruling is made. While we expect that the agricultural agreement will eventually be allowed to stand, its reversal would have dire implications for the agribusiness sector as the EU is the main destination for its exports.

We have further revised down our growth forecast for 2016/17 wheat production to a 52.5% y-o-y decline to 3.7mn tonnes due to lower acreage and yields. Dryness at times of planting in November 2015 has weighed on grains acreage, while a severe drought in H116 has had a devastating impact on yields. Similarly, we now expect a 66.6% y-o-y decline in barley for 2016/17 at 1.1mn tonnes.

We have also further revised downward our forecast for 2016/17 sugar production as more information about the severity of the drought in Q116 has emerged. More than three quarters of Moroccan sugar output is accounted for by beet, a winter crop particularly susceptible to drought conditions. We now forecast 2016/17 output to decline by 29.0% y-o-y to 291,000 tonnes.

The Morocco Agribusiness Report features BMI Research's market assessment and independent forecasts for production, consumption and trade across core agricultural commodities.

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