Morocco changes import scheme to secure wheat supplies

The Moroccan government introduced new subsidy scheme and consumption restrictions for local users to ensure supply amid low grain production, an official note from the country’s ONICL said.

The government will implement a wheat import tax on May 31 instead of the usual April 30, giving the importers a wider window to secure wheat volumes.

The tax is normally over 100% and was designed to support local farmers but the country has faced a significant crop loss amid drought with end users heavily relying on imports.

The government has also introduced subsidies of around $80/mt for Black Sea origin cargoes and $90/mt for other origins, including France and Germany, the country’s go-to European suppliers.

The compensation will be made each month based on the bill of lading (BL) date, sources said, while prior to the change, the importers were paid after the cargo reached Moroccan waters.

“This gives a chance to buy goods from Black Sea, where the transit takes a bit more time than from France, especially with inspections delays in Ukraine,” a broker told Agricensus.

“I believe they will compensate 500,000 mt per month,” they added.

After a meeting with the Association of Compound Feed Manufacturers (AFAC) representatives, ONICL announced local soft wheat and durum usage restrictions for feed millers to ensure supply for flour mills.

Feed importers will have to source wheat from export markets till May 31, as the country will begin the harvesting campaign in June and the restrictions will be lifted.

Yet traders were skeptical the changes would bring the benefits sought.

“Morocco is a very blurry market at the moment. They first said they would continue buying without implementing the import tax and then said they might do it in May,” a trader told Agricensus.

Moroccan wheat production in the 2022/23 marketing year fell by 64% to 2.7 million mt from 7.54 million mt the previous year amid global droughts, according to the USDA data.

The USDA data also shows Moroccan wheat production for 2022/23 was 53% below the five-year average of 2017-2021 of 5.7 million mt.

"They had a terrible crop last year because of the drought but this year it has rained a bit more so they might harvest more, although no estimates are available," a Europe-based broker told Agricensus.

The collapse in local production has left Morocco heavily dependent on imports, with wheat imports increasing 84% from 4 million mt to 7.5 mt year-on-year in 2022, as the country’s annual demand is 10.5 million mt.

The increased dependence on imports may explain why Morocco has had to extend its subsidy scheme and make it even more attractive for importers.

Another aim of the changes may be to diversify Morocco’s import base.

According to Agricensus Export Dashboard data, Morocco increased imports from the EU by 113% to 4 million mt in 2022, with 3.3 million mt coming from France.

Brazil was second biggest supplier in 2022, with a total volume up 632% year-on-year to 332,044 mt, as the country had a strong wheat crop, while imports of Ukrainian wheat fell 92% to just 64,292 mt amid war.