The Challenges and Opportunities Facing Morocco’s Olive Oil Sector

Since olive oil pro­duc­tion was iden­ti­fied as a strate­gic sec­tor for eco­nomic devel­op­ment in Morocco more than ten years ago, local and inter­na­tional offi­cials have worked to make olive farm­ers more prof­itable and resilient to cli­mate change.

While these efforts have helped olive oil pro­duc­tion rise steadily from an aver­age of 41,800 tons per annum from the 1990/91 to 1994/95 crop years to an aver­age of 141,600 tons per annum in the past five crop years, the domes­tic mar­ket con­tin­ues to face sig­nif­i­cant chal­lenges.

“To effec­tively cope with pro­jected cli­mate changes and their impact on water avail­abil­ity, sec­tor stake­hold­ers and deci­sion-mak­ers in Morocco must plan timely adap­ta­tion strate­gies for both the short- and long-term for a warmer and drier future,” said Lisa Paglietti, an econ­o­mist at the United Nations Food and Agriculture Organization (FAO).

“These strate­gies will help the coun­try col­lec­tively strengthen a high level of com­pet­i­tive advan­tage for the olive oil sec­tor, capa­ble of endur­ing over time,” she added.

Officials from the FAO joined their European Bank for Reconstruction and Development (EBRD) coun­ter­parts, local offi­cials and stake­hold­ers at the 16^th edi­tion of Morocco’s International Agricultural Exhibition in Meknes to dis­cuss how to reform the sec­tor and build cli­mate resilience.

One key take­away was the impor­tance of invest­ing in new tech­nolo­gies and tech­niques to improve water man­age­ment in the region.

“It is crit­i­cal to pri­or­i­tize invest­ments and sup­port stake­hold­ers through inno­v­a­tive tech­nolo­gies and tech­niques to enhance water man­age­ment that makes every drop count,” Iride Ceccacci, the EBRD’s head of agribusi­ness, told the event.

“We are see­ing in the coun­tries where the EBRD is invest­ing across the south­ern and east­ern Mediterranean region that olive oil is an exam­ple of a sec­tor that can thrive even with the severe water scarcity it faces,” she added, cit­ing Morocco as an exam­ple.

According to EBRD offi­cials, Morocco is respon­si­ble for nearly five per­cent of global olive oil pro­duc­tion. In 2021, the sec­tor accounted for 13 per­cent of all agri­cul­tural work­days and 19 per­cent of the country’s food require­ments.

Officials at the exhi­bi­tion also dis­cussed strate­gies for address­ing mar­ket com­pe­ti­tion and meet­ing qual­ity stan­dards in the olive oil indus­try. They focused on imple­ment­ing food safety and envi­ron­men­tal cer­ti­fi­ca­tion, label­ing and trace­abil­ity sys­tems to build domes­tic and inter­na­tional mar­kets.

The event came on the twelfth anniver­sary of the FAO’s and EBRD’s orig­i­nal iden­ti­fi­ca­tion of olive oil as a strate­gic sec­tor to pro­mote eco­nomic devel­op­ment in Morocco.

Over the past decade, the two inter­na­tional orga­ni­za­tions have worked with the Moroccan agri­cul­tural min­istry and the Moroccan Interprofessional Olive Federation to train mill tech­ni­cians and agron­o­mists, run olive oil tast­ing courses and imple­ment sus­tain­able poli­cies.

According to the FAO, the com­bined action of poli­cies and the pri­vate sec­tor has led to a 40 per­cent increase in the area planted with olive trees in Morocco between 2009 and 2020.

The FAO and EBRD also imple­mented a sup­port pro­gram to estab­lish a dynamic and open mar­ket, focus­ing on adding value across the value chain.

“To achieve this, bet­ter reg­u­la­tion, bot­tling and cor­rect label­ing of olive oil were required, par­tic­u­larly for bulk sales,” Nuno Santos, a deputy direc­tor at the FAO, told Olive Oil Times. ​“Additionally, train­ing was pro­vided to address the lack of capac­ity in man­ag­ing an olive oil mill and prun­ing, in part­ner­ship with the EBRD.”

The pro­gram worked to build value from the bot­tom up by focus­ing efforts on extra vir­gin olive oil pro­duc­tion and encour­ag­ing pro­duc­ers to sell indi­vid­u­ally pack­aged brands instead of sell­ing in bulk to European or North American bot­tlers.

“Efforts were made to improve import and export man­age­ment through col­lab­o­ra­tion with the export pro­mo­tion agency,” Santos said. ​“This included ini­tia­tives to enhance qual­ity and trace­abil­ity, tran­si­tion from bulk to bot­tled olive oil, enforce food safety mea­sures and engage youth in the sec­tor.”

However, par­al­lel efforts to pro­mote domes­tic con­sump­tion have been ham­pered by high global olive oil prices and local poli­cies put in place to limit their impacts.

“During the event, we briefly dis­cussed the issue of price spikes with stake­hold­ers,” Paglietti said. ​“The prices of olive oil in the Moroccan domes­tic mar­ket are very high because the price of olives has increased sig­nif­i­cantly from 4 to 5 dirhams (€0.37 to €0.47) per kilo­gram of olives to 12 to 14 dirhams (€1.12 to €1.31) per kilo­gram.”

“Moreover, the olive oil stocks from pre­vi­ous years were depleted, and the har­vests were very poor for the sec­ond con­sec­u­tive year,” she added. ​“This increase in the price of olives is due to their scarcity.”

Despite imple­ment­ing export con­trols in October to lower domes­tic olive oil prices, Paglietti said prices remain well above aver­age in North Africa’s sec­ond-largest pro­duc­ing nation.

“The price of olive oil in Morocco has increased just as it has in other major pro­duc­ing coun­tries, with bulk oil prices reach­ing €7.50 €8 per kilo­gram this year, despite the ​‘con­trolled export’ which should, in the­ory, insu­late and make the inter­nal mar­ket less sus­cep­ti­ble to exter­nal influ­ences,” Paglietti said.

“In the E.U., prices have surged due to the col­lapse of oil pro­duc­tion, par­tic­u­larly in Spain. However, local pro­duc­tion costs can­not jus­tify this increase in Morocco,” she added. ​“As a result, domes­tic con­sump­tion has fallen even more dras­ti­cally. This sit­u­a­tion sug­gests spec­u­la­tion may be at play.”

The gov­ern­ment required olive oil sup­pli­ers to obtain export autho­riza­tion to pro­tect domes­tic prices and encour­age bot­tled exports. All export requests made this year have been approved, but accord­ing to local actors, the impact of this pol­icy has been lim­ited.

“There has also been lit­tle impact because the sec­tor has expe­ri­enced two years of severe drought. Bulk sales dom­i­nate the Moroccan mar­ket,” Paglieti said. ​“Only ten per­cent of the olive oil sold in the local mar­ket is pack­aged. This is very, very lit­tle.”

“Therefore, even if one or more buy­ers import olive oil, they will not be able to influ­ence the local mar­ket price, which is deter­mined by the bulk oil,” she added. ​“It’s a very com­plex equa­tion, but it’s the Moroccan real­ity.”

“This sit­u­a­tion makes gov­ern­ment strate­gies quite frag­ile and very dif­fi­cult to imple­ment effec­tively,” Paglieti con­cluded. ​“To com­pli­cate the sit­u­a­tion even fur­ther, the fore­cast for the next cam­paign is not encour­ag­ing, with very low pro­duc­tion. So, prices will remain very high, dri­ving more con­sumers away.”

• FAO
• FAO and EBRD