Evaluation of the Agricultural strategy of Morocco (Green Morocco Plan) with a Dynamic General Equilibrium Model

FEM35-20 | December 2013


« Evaluation of the Agricultural strategy of Morocco (Green Morocco Plan) with a Dynamic General Equilibrium Model »


Lahcen OULHAJ, Université Mohammed V – Agdal Lahcen OULHAJ, Université Mohammed V – Agdal


Rafael DE ARCE (Universidad Autonoma de Madrid – AGREEM) Idriss EL ABBASSI (Université Mohammed V - Agdal) Abdelhamid EL BOUHADI(Université Cadi Ayyad - Marrakech) Abdelkader EL KHIDER (Université Cadi Ayyad – Marrakech) Eva MEDINA MORAL (Universidad Autonoma de Madrid) Abdelaziz NIHOU (Université Mohammed V - Agdal) Ayache KHELLAF (Université Mohammed V - Agdal) Alejandro LORCA (Universidad Autonoma de Madrid – AGREEM) Ramón MAHIA (Universidad Autonoma de Madrid – AGREEM) José M. MELLA-MARQUEZ(Universidad Autonoma de Madrid) Said TOUNSI (Université Mohammed V - Agdal)

Note :

This document has been produced with the financial assistance of the European Union within the context of the FEMISE program. The contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of the European Union.

Summary :

1. Objective and Methodology

The research seeks to assess the capacity of Morocco to achieve the objectives assigned to its agricultural strategy named “Plan Maroc Vert – PMV” in terms of economic and social development as well its impact on agricultural production, on global GDP, on macroeconomic equilibria, on households’ welfare in terms of income and consumption of goods and services, as well as on trade in agricultural products with the rest of the world and country’s food security etc.

The aim of the research is to highlight the challenges facing Moroccan agriculture and their implications for the PMV and to suggest adaptations to avoid negative impacts on agriculture in particular, of exogenous factors, which may hamper the implementation of PMV.

Fundamental questions structuring this work include:
– Can the agricultural sector be a catalyst with spillover effects on the development of the Moroccan economy? In particular, its effects on the trade balance in the light of the openness policy.

– What will be the impact of PMV on the distribution of income (rural / urban), and hence on social welfare in a holistic way?

– What are the human, financial, institutional and managerial means to be put in place to achieve the objectives set by the Plan? In this context, what is the impact of the public intervention (taxation + subsidy) on the agricultural sector?

– Will the PMV allow Morocco to reach food security and how could it be achieved?

The study examines, first, the historical evolution of public policy intervention in the agricultural sector. Second, it details the characteristics and performance of the agricultural sector, to appreciate its strengths and weaknesses, tendencies. The focus being made the economic and social implications. A third part presents the foundations, the objectives and the strategic axis of the PMV. The fourth section discusses the main challenges facing the PMV which implications may hamper its implementation. A final section focuses on an ex-post evaluation of the first years strategy’s implementation and an ex-ante evaluation that develops a trend scenario of the strategy and simulation of some policies related to agricultural issues before concluding with some recommendations.

Three complementary methodological approaches have been put to use:
• An Input-Output analysis based (IO table) complemented by a descriptive analysis of the evolution of indicators relating to agriculture;

• A comparative analysis of the Moroccan agricultural sector with those of other countries, particularly countries having succeeded in transforming their agriculture sectors such as Spain, Chile, Mexico and India;

• The third approach consists in using a dynamic computable general equilibrium model for an impact assessment of the PMV.

2. Characteristics and performance of the agricultural sector
Public policy efforts, despite their shortcomings, have achieved success and strengthened the role of agriculture in growth dynamics. In addition to its contribution to GDP of 16%, its impact on foreign trade is significant with a value of agricultural exports representing an average of 18% of total exports. Agricultural production can cover national needs up to 100% for meats, fruits and vegetables, 78% of needs milk, but only 62% of cereals (50% wheat needs).

In addition to the production function, agriculture plays an important role in improving the standard of living of the rural population and a central role in the management of natural resources. Indeed, agriculture provides 45% of national employment and generates more than 65% of rural household income and enhances the 8.7 million ha of agricultural area (15% irrigated).

3. Objectives, foundations and strategic axis of PMV
The new agricultural strategy called “Plan Maroc Vert” (PMV), developped over the next fifteen years, envisions to make the agricultural sector as the main engine of growth for the national economy. The PMV is thus the roadmap which Morocco has drawn to follow the path of convergence and successful regional integration. This new strategy ambitions socio-economic spillovers in terms of value added, investment, job creation, and improving farmers’ incomes. It also takes into account the different components of the agricultural sector on the territorial, human, social sides as well as sustainable management of natural resources.

Adopted in 2008, the PMV presents itself as a platform that allows for making adjustments to the framework. It combines a series of policies, institutional reforms and public sector investments to implement the vision for agriculture in Morocco. It aims to achieve a balanced development of the sector that allows the shift from a dual system (a minority of modern farms and a majority of farmers practicing subsistence crops) to an agriculture based on two pillars:

The first pillar focuses on the development of modern agriculture and high value / high productivity to meet the rules of the market with a central role of the private sector.
The second pillar concerns the solidarity support of small farmers through improving farmers’ incomes specially the precarious ones. To this end, the strategy foresees the implementation of projects of conversion (reallocation), of intensification and diversification with direct state assistance to improve farm income 2 to 3 times for 3 million rural.

To do this, it provides public interventions suitable for medium and large farms and the development of modern agriculture with high value added (Pillar I) while maintaining the solidarity support of small-scale agriculture (Pillar II).

4. Key issues / risks in the implementation of PMV
In an international context marked by an economic crisis with consequences and effects not yet entirely clear, the objectives of PMV depend on the fate of the challenges that will surely arise for the evolution of agriculture. These uncertainties and changes in internal and external factors require a lot of vigilance in this assessment, including issues related to technological change, particularly biotechnology, opening and trade liberalization, insertion into global value chains, food safety, the pressure of demographic shock with its implications for employment and poverty reduction, and the preservation and enhancement of the environment by adaptation to climate change especially droughts in recent decades.

5. Ex-post and ex-ante PMV assessment
Two approaches are used to assess the ability to achieve the objectives of the PMV: The first is an ex-post evaluation of the first years of implementation of the strategy. The study summarizes the main achievements of the PMV and lists expectations regarding interconnections with other areas of business and economic and social requirements.

The second approach is based on an ex-ante evaluation of PMV based on a dynamic computable general equilibrium model.

Various simulations explore the impact of PMV on the Moroccan economy in general and on the welfare of the poor in particular. In the absence of accompanying policies, major investments planned (public and private) in the pursuit of liberalization will have mixed and ambiguous results.

6. Conclusions and recommendations
Through the combination of the three approaches, it appears that the existence of an agricultural development strategy is certainly better than no strategy. The strategy adopted will certainly have a positive economic and social impact: increased production and farmers’ incomes.

However, the strategy deserves to be revisited in a broader framework:

1. What place for Moroccan agriculture in the overall economy: its weight in the GDP and employment?

2. What relationship between the country’s agriculture and other sectors of the economy and foreign trade in particular?

3. What socio-economic system for the rural world and what place for it at the national level?

The comparative analysis shows the need for:

• A technological framework, especially Pillar II: Training of farmers, extension technology, the development of research and development by industry.

• A re-industrialization of the country: it is the only option to absorb the surplus labor in the sector. The agro-industry should be an important part of this process.

•Educational and training schemes as levers for the modernization of agriculture and its development.

• Supply chains and marketing where farmers play an important role to help them acquire part of the sector’s surplus.