Friday, September 21, 2012

Morocco (Temporarily) Eliminates Import Tax on Wheat

This is important because in Morocco bread is water. Here is an article from Reuters on the temporary freeze of import taxes on soft wheat in order to stabilize supplies of wheat in the country.

 Morocco freezes import duty on soft wheat

Thu Sep 20, 2012 5:17pm EDT
By Souhail Karam

(Reuters) - Morocco will eliminate a 17-percent import duty on soft wheat from Oct. 1 through Dec. 31, to ensure a regular supply of the commodity to the domestic market through imports expected to be the biggest in 30 years, according to state run radio.

Bad weather slashed Morocco's soft wheat harvest to 2.74 million tonnes. Based on demand of 7.1 million tonnes last year, Morocco will need to import in excess of 4.3 million tonnes of soft wheat to fill the shortfall this year, excluding stock variations.

Yet, the state grains agency ONICL has yet to make its first foreign purchase under the current import program that started in June.
Last month, two soft wheat tenders of 300,000 tonnes each, under preferential trade agreements with the European Union and the United States, received no bids.

Local importers said high international prices, coupled with the 17-percent import duty and other charges, left too thin a margin, while domestic supplies could still provide for immediate milling needs.

But domestic supplies, considering the 450,000 tonne monthly milling needs, will be disappearing fast, especially when a little over half the soft wheat harvest ends in the formal distribution chain.

The remainder, 46 percent last year, is either consumed by farmers or goes to unorganized traditional milling.
In August, the state extended by a month the payment to local farmers of 2,900 dirhams ($340) for a tonne of their milling soft wheat, in an apparent bid to lure more sales.

When the price of wheat costs more than the price the state pays for the domestic milling soft wheat, authorities compensate licensed importers.

Traders in Casablanca said ONICL may need to launch its first tenders during the first week of October.
"Stocks will fall sharply by end-September, to less than a million tonnes. It's an unbearable position for ONICL. They will need to replenish them through imports to keep the minimum three months of needs covered," a trader said.

Morocco's soft wheat stocks should have stood at 1.75 million tonnes by end-August from 2.35 million tonnes by end-July, according to agriculture ministry estimates published in August. ($1 = 8.5757 Moroccan dirhams) (Editing by Carol Bishopric)

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