HomeEconomythe factors of the price increase and the prospects for local production

the factors of the price increase and the prospects for local production

Edible oil in Morocco continues to record successive and alarming price increases among Moroccan consumers who are highly dependent on this food, whether in the kitchen or in many food industries.

The rise in edible oil prices began with the covid-19 pandemic in 2020, which caused disruptions in production and supply chains, until the Russian-Ukrainian crisis at the beginning of 2022 has exacerbated the situation in a way that has driven prices up in a very significant way.

According to data from the Ministry of Economy and Finance, the average national price of edible oil increased by 3% this week compared to last week, to reach around 18.90 dirhams per litre. The ministry attributed these successive increases in international prices of crude palm oil to the weakness of supply compared to the increase in demand and the impact of the Russian-Ukrainian crisis on international edible oil markets. raw.

Morocco is directly confronted with these fluctuations of the international market, since it imports 98% of the raw material which is used in the manufacture of table oil, and consequently the final prices are strongly affected. The Kingdom uses the international market to import crude vegetable oils, particularly soybeans, with an annual bill of around 4 billion dirhams, since oilseeds produced locally contribute only 1.3% of national needs.

According to one of the players in the edible oil industry in Morocco, the current edible oil price situation is linked to several reasons, including the climatic conditions recorded in the main producing countries, and the demand for biofuels. , in addition to the repercussions of the Russian-Ukrainian crisis.

The same spokesperson added, according to statements granted to MoroccoLatestNews, that the first increases in the price of soybeans were recorded in October 2020 due to unfavorable weather conditions which reduced production in the main soybean producing countries, such as the United States and Argentina. At the same time, the demand for petroleum products has increased, particularly in the United States and Europe, which requires the use of biofuels extracted from oleaginous plants.

Countries in America and Europe impose the use of biofuels on the one hand to preserve the environment, which has imposed direct competition on the edible oil industry to a large extent, and due to the factors mentioned above, the price of a ton of soybeans reached $700 per ton in 2020 and then increased to $1450 per ton in 2021, an increase of almost 50% compared to the pre-covid level.

At the beginning of 2021, the Russian-Ukrainian crisis broke out, which directly affected commodity prices, especially since Russia, Ukraine and the Black Sea are considered the largest region in the world. world for the production of sunflowers, which are consumed more in Western Europe.

Faced with this situation, industrialists in Western Europe, users of sunflower oil, were forced to look for an alternative and found their happiness in soya. Consequently, demand increased in the face of the stability of world production, so that the price of a ton of soybeans jumped by almost 1900 dollars during the current year.

Production and storage

Local production of oilseeds meets only a small percentage of national needs, but players in the sector confirm that imports are easily done from Latin America thanks to the financial system which makes it possible to secure previous exports, which has partially mitigated the repercussions of the Russian-Ukrainian crisis on prices.

Our source explained that the price of edible oil recorded in the last three months, although high, remains low compared to the price in Spain, Germany, France and Tunisia thanks to the capacity of Moroccan actors to cover imports for up to 4 months at a fixed price.

Regarding the outlook, the spokesperson indicates the absence of a clear answer due to the current situation which is characterized by uncertainty. Adding that expectations indicate that the war between Russia and Ukraine will not end anytime soon. As a result, the pressure will continue during 2022 on the prices of raw materials, namely sunflowers or soybeans.

Faced with the weakness of local production and the fluctuations of the international market, storage remains a solution among the solutions, but the reality reveals that the storage capacity available in Morocco for edible oil, according to the testimonies of our source.

In order to increase this storage capacity, players in the edible oil industry will have to make significant investments in infrastructure, but it takes time to operate, which can reach two years. And it is a reality that calls, according to our source, to promote local production so that it is the strategic stock in the fields.

Previously, Morocco had about 150,000 hectares planted annually with oilseeds, especially sunflower in the west and north of the Kingdom, but this area has decreased considerably to only 17,000 hectares during the year 2021.

Official data indicates that Morocco has an estimated area of ​​600,000 hectares that can be exploited to increase the area of ​​oilseeds with sunflower and rapeseed. This makes it possible to secure a guaranteed minimum price for the benefit of farmers, regardless of the price of priority oilseeds on the international market, with the use of approved and high-yielding seeds by farmers.

The reason for abandoning oilseeds is that farmers are looking for less risky and more profitable crops, since other production chains are well organized and offer high investment incentives (such as the sugar production chain) compared to oilseed production.

As part of encouraging local production, the Interprofessional Federation of Oilseeds of Morocco (FOLEA), decided last March to compensate local production of sunflowers by about 6 dirhams per kilogram instead of 3 and a half dirhams. It is expected that the Ministry of Agriculture will contribute to this price of one and a half dirhams, to reach 7.5 dirhams, in order to encourage farmers.

Our source confirms that the current conditions require supporting local oilseed production to raise the rate of meeting national needs, as well as increasing the strategic stock and getting rid of total dependence on the international market in order to achieve food sovereignty. .

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