Effect of incentive policy on performance and international competitiveness of fruits, vegetables, and olive oil in Morocco: the case of greenhouse tomatoes, Clementine mandarins, and Maroc-Late oranges

This article presents a brief review of agriculture situation in Morocco anddeals with evaluating the effects of Morocco's incentive policy on performanceand international competitiveness of four agricultural produce. Theseproducts are: green house tomatoes, two citrus fruits: the large orange varietyMaroc- Late and the small fruit Clementine, and olive oil. Data of the respectiveagricultural chains of the four products were collected in two major producingareas of the products, and were used to calculate the Nominal ProtectionCoefficients (NPC) and the Effective Protection Coefficients (EPC) to evaluatethe effects of the local incentive policy, and to calculate the Domestic ResourceCost (DRC) ratios as indicators of international competitiveness of theproducts.The four NPC ratios, which all were less than one, indicate that the fourproducts are relatively taxed. In addition, the EPC's show that along with thedirect taxes on these products, indirect taxes on their inputs are furtherpenalizing these products.All the DRC ratios for the four products were also less than one, indicating acomparative advantage and an efficient allocation of domestic resources.Green house tomatoes had the smallest DRC, 0.36. Those of the two citrusproducts were a little higher; 0.41 for the Clementine and 0.50 for Maroc- Late.Olive oil had the highest, 0.93, DRC. The low yield per hectare is the maincontributor to this relatively modest performance. However, there is aconsiderable potential for this product if its productivity is improved and theprocessing industry along with the marketing channels are modernized.Reforms therefore need to be implemented to correct the distortionsintroduced by the current incentive system which is biased against the exportoriented products and is favorable to import substitute products. Suchreforms will have to ensure better allocations of domestic resources accordingto the comparative advantage of the country and to deal with the challenges facing the agricultural sector within the trade agreements signed by Moroccowith its trade partners.