Highlights

Re-establishment of import duties on hard wheat and soft wheat collection

06/05/2021
Re-establishment of import duties on hard wheat and soft wheat collection

The Government Council held a meeting Thursday May 6th 2021 and passed two decrees, the first one is related to the re-establishment of the collection of import duties on soft wheat and its derivatives and modifying the applicable import duty on these products’ quota and the second one n°2.21.329 on the re-establishment of import duties on hard wheat collection. The present draft decrees, presented by the Minister of Economy, Finance and Administration Reform, Mr Mohamed BENCHAABOUN, aim to suspend the government measures for ensuring soft wheat and hard wheat supply, in consequence of the shortage witnessed in the national market in 2020.

The decree on the re-establishment of applicable import duties on hard wheat and its derivatives collection and the modification of the applicable import duty on these products’ quota. 

By decree n° 2-20-922 dated December 25th 2020, the applicable import duties on soft wheat and its derivatives collection was suspended January 1st 2021 until May 31st 2021. The present measure was aiming to maintain a minimum stock allowing a national market supply in the best conditions.

Currently, the soft wheat stock, held in the national market by cereal operators, has reached a sufficient level to cover the milling industry requirements for more than 3.5 months. In addition, as the current agricultural campaign is progressing in proper conditions, it heralds a good cereals harvest for this year. 

Internationally, the global soft wheat prices have witnessed a bullish trend since August 2020. However, in consequence of the announcement of a favourable outlook of the global production for the agricultural campaign 2021/22, the prices have witnessed a downtrend starting March 2021.

Based on the current price levels observed on the global soft wheat market and on the import duty rate of 35%, which should be applied starting June 1st 2021, the simulations emphasize a cost price, moroccan ports exit, of approximately 290-310 MAD/QL and 268-287 MAD/QL within the framework of the Morocco-European Union association agreement. This level is deemed insufficient to protect the national production of soft wheat during the collection period, knowing that the global market trend remains bearish. 

Given the above, in view of the perspectives of a proper soft wheat production domestically and internationally, and by means of the related decree, the collection of applicable import duties on soft wheat and its derivatives will be re-established at a rate of 135% starting May 15th, 2021.

The decree on the re-establishment of applicable import duties on hard wheat collection 

By decree n°2-20-296 dated March 27th 2020, the applicable import duties on hard wheat was suspended starting April 1st 2020 in order to allow a normal supply for the market following a weak national collection. 

Therefore, the importations by economic operators have allowed a regular supply for the national market as well as sufficient stock levels to cover the milling industry requirements for more than 4 months.

In addition, as the current agricultural campaign is progressing in proper conditions, it heralds a good cereals harvest for this year. 

Internationally, the global market of hard wheat has witnessed, since August 2020, a high level of demand which increased the prices from 290$/TM to 350 $/TM. However, by the end of March 2021, the prices have witnessed a bearish trend, respectively ranging around 365 $/TM and 350 $/TM for the hard wheat coming from Canada and France.

Based on the current levels of prices observed in the global hard wheat market and in consideration of the current suspension of the import duties collection, the cost price, moroccan ports exit, would be of 345 MAD/QL for the Canada originated one, and of 334 MAD/QL for the France originated one, which is insufficient for the protection of the hard wheat national production. However, the application of a 170% rate, for the period of June-July 2021, would lead to a hard wheat cost price, moroccan ports exit, of 510-525 MAD/QL, which would allow a great protection of the national production during the collection period.

Given the above, in view of the perspectives of a proper hard wheat production domestically and internationally and by means of the related decree, the collection of applicable import duties on hard wheat collection will be re-established starting June 1st 2021.