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As countries across the globe prepare to send their delegates to Cancùn next month to discuss progress post-Doha, Morocco is facing similar problems as other developing countries – a workforce heavily involved in agriculture and the threat of free trade with the subsidy-rich north. Although last winter’s rains brought smiles to the Moroccan countryside, the sector continues to face an important problematic – trade.

Value added (VA) in the agricultural sector increased by 5.6% in 2002, helping to contribute to total GDP growth of 3.2%. These figures were more modest than those achieved in 2001 (when agricultural VA rose by 27.6%), but nonetheless showed the continued importance of agriculture to the economy. With GDP forecast to grow by around 5.5% in 2003 (according to government projections), it will be agriculture, and particularly the bounty cereal crop, which will be a primary contributor.

Today, agriculture contributes around 15-18% towards GDP. The principal crops are cereals, fresh fruit and vegetables (FFVs), olives, almonds, citrus fruits, wine, and fish and livestock products. Two products in particular provide bellwethers for the sector’s performance as a whole – tomatoes and cereals.

Tomato exports, the country's main FFV export, have been facing big difficulties. At the end of May 2003, they had declined by 62.4% in value and 65.3% in volume (according to Finance Ministry figures). The reasons for this worrying decline, according to the national FFV exporters’ association, were: climate (large variations affecting the regularity of production), low prices abroad and quota limitations during the crucial winter period (the only period that Moroccan FFVs have access to the main EU market).

Morocco has managed to establish itself as an important source for European tomato consumption, but it continues to face strong barriers. The problem lies in the seasonal structure of the market in the EU. Tomato production is dominated by greenhouse production in northern Europe in the summer months (primarily from the Netherlands, Belgium, and Germany), leaving access limited to the winter months for both Spain and Morocco. The former, with important export production in the southern provinces such as Almeria and Murcia, is keen to limit competition from Morocco. Thus access continues to be constrained, and the picture may be further clouded by increases in agricultural imports from Eastern Europe on the one hand, and stronger indirect protection in the form of quality control and provenance requirements.

Meanwhile, cereals form the basis of Moroccan agriculture. Much of the current agricultural optimism can be traced to the bounty cereal crop this year – 80m quintals, an increase of 59% on the previous year’s harvest. The importance of cereals lies in the fact that over half of agricultural land is devoted to this crop. Bread is also the basic food staple in Morocco, so the performance of the sector also has important consequences on national food security, and the trade balance (when shortfalls necessitate imports).

The fragility of Moroccan agriculture can thus be largely pinned to cereals. Two important factors need to be considered – firstly, the world cereals market is heavily distorted by massive subsidies in the USA and the EU. This makes the Moroccan market continuously vulnerable to agricultural dumping from these countries. The second element, which magnifies this threat, is that most cereals are produced as subsistence crops, or as subsistence with the surplus being marketed, and consequently little effort is made to making the product competitive (an unrealistic effort anyway, given the artificial competitiveness of the product abroad).

So, agriculture is in many senses the key to Moroccan development. Almost half of the Moroccan labour force (around 6m people) works in agriculture. The discrepancy between 50% producing only 18% of the GDP is obvious, yet agriculture remains economically and socially the backbone of the economy. As a recent article in the Moroccan daily “La Vie Economique” stated, "If agriculture goes, everything goes".

This is no exaggeration if one takes into consideration the 23% unemployment rate in the Kingdom, which is proving a problem difficult to address. As regards the urban-rural divide, it is worth noting that rural unemployment is at a record low this year, around 4%, when urban unemployment remains above 21%. The rural exodus should thus be mitigated this year, although this conclusion must be tempered by the relatively more acute poverty levels to be found in the countryside.

In addition, of the adults living in rural areas, nearly 67% are illiterate, making economic diversification a difficult task. The illiteracy rate among farmers is even higher, at 75.6%.

Yet, it is within the sphere of trade that Moroccan agriculture faces its biggest challenge to date. Free trade agreements with the EU and the USA offer the prospect of enhanced access to these important markets, yet at the same time there is the heightened risk of agricultural dumping in Morocco. That, for example, is why the negotiations for the agricultural section are proving to be the most tenacious out of the 11 chapters of the US FTA comprises.

For the US and the EU, Morocco would be just another small market to trade with, but for the Kingdom, such agreements mean proof of the credibility and stability of the economy. This would make it a trustworthy destination for much sought after foreign investment. On the other hand, free trade deals also imply - particularly in the case of the EU - the opening of a lucrative market. Illustrative of this point is the fact that an overwhelming 86% of all vegetables exported are destined for the EU.

A large number of jobs depend on the outcome of the free trade agreement. Most farmers work on small family-run farms, often purely for subsistence (or where only the surplus is marketed), and this bears directly on Morocco’s agricultural competitiveness on the international market. The result could be a deadly concoction for the population should cheap agricultural products be allowed to enter the Moroccan market. Local farmers could be driven out of business due to the large ensuing fall in prices. As far as the US FTA negotiations are concerned, the Moroccan authorities are looking with interest at Chile, where access to the US agricultural market was obtained while the local wheat sector has been afforded continued protection.

Another aspect that needs to be considered in the negotiations is the regulation and standardisation that is common practice in the more advanced economies and which ensures certain product quality standards are met before goods can enter the market. These standards also have the side effect of making it more difficult for smaller producers to trade with the country in question, as market access may not be granted because of the inability of the producer to fulfil certain quality requirements. In addition, often the products meet the standards, but are unable to gain access due to a lack of supervision or certification.

In this regard, although the US has the reputation of being one of the most protected economies in the world, European food quality standards (HACCP, etc) are generally regarded as more stringent. Thus an ability to export to the EU should translate into US quality compatibility relatively smoothly.

It is clear that the success of Morocco’s integration into the world economy, through free trade agreements with the EU and the US, will ultimately depend on agricultural performance. As Morocco celebrated its 50th year of independence last week, it is interesting to note the continued importance of the primary sector to the economy. The ability of that sector to adapt and change will be the key to Morocco’s development in the next half century.