Morocco is set to offer a similar wheat import subsidy for Black Sea shipments as for other origins this month, a move that will reduce the advantage previously enjoyed
by European Union (EU) supplies, according to a document published by state grain agency ONICL. The subsidy of MAD70.64 ($6.92) per quintal (0.1 tonne) for milling wheat cargoes shipped in April from Russia, Ukraine and other countries using Black Sea ports is slightly below the MAD71.58 ($7.02) per quintal rate for other origins. The per-tonne basis means Black Sea cargoes will receive a subsidy of about $1 less than other origins, a reduction from a gap of over $10 previously.
The decision follows a move by Morocco in March to award the subsidy for cargoes loaded by the end of the month, rather than ships having to arrive in Morocco by the end of the month. This was partly intended to encourage shipments from the Black Sea region, according to an ONICL official.
Morocco has increased imports since a drought-hit harvest last year, relying mainly on traditional supplier France and other EU sources such as German wheat. The shift to Black Sea cargoes could hit EU producers, though they may still find a market in the country if prices are competitive. Morocco’s imports of milling wheat were forecast at 6.2 million tonnes in 2020-21, up 21% on the previous year, according to the US Department of Agriculture.
Morocco is not the only country to turn to Black Sea sources. Egypt has also recently started to buy more Russian wheat, while the Philippines has also sought supplies from the region. Russia is the world’s largest wheat exporter and is expected to ship 38 million tonnes of wheat in 2020-21, a rise from 34.7 million in the previous year, according to the US Department of Agriculture.
The shift in Moroccan policy could have implications for the EU, which has faced competition from Black Sea and other producers in other markets, such as Asia. The EU is the world’s largest wheat exporter but has struggled to compete with other sources in recent years, with exports falling to a six-year low in 2020. The bloc also faces competition from Russia and other countries in the barley and maize markets. The EU exported just 12.1 million tonnes of barley in 2019-20, a fall from 17.3 million the previous year, according to the European Commission.
The EU has sought to protect its producers from competition through measures such as tariffs on imports and subsidies to farmers. However, critics argue that this has led to higher prices for consumers and a distortion of the market. The shift in Moroccan policy could be seen as a challenge to the EU’s position as a leading supplier of wheat to the region, and may prompt the bloc to review its own policies.
Overall, the move by Morocco to offer a similar wheat import subsidy for Black Sea shipments as for other origins is likely to have an impact on the EU’s exports to the country. EU producers may have to focus on price competitiveness to maintain their share of the market. However, the shift to Black Sea sources also reflects a broader trend towards diversification of supply, which could benefit producers in other regions. Photo by NAC, Wikimedia commons.