Just when you thought crude oil prices have been a major hurdle for Moroccan households, the other oil is now becoming a source of problems in itself.
In major markets, high quality olive oil can carry hefty prices. In Morocco, prices of olive oil have been climbing to levels as never seen before. For a product that has played an ancestral role in the local culinary habits, the current price of MAD 45 per liter (even spotted in some areas at MAD 60) may seem as an outrage for the Moroccan households and restaurant owners. Prices have been expanding since November 2005, in particular for the top brands such as Lesieur's Mabrouka, Oued Sous of Agadir-based les Huileries du Sud Company, all the way to the highly sought after Beb Mansour.
The extent of these price increases was rather unexpected because the liter used to be sold very recently at MAD 28. Today, though, the long isles that used to carry vast quantities of olive oil appear empty as if there were a major shortage. What lies behind this interesting phenomenon, which is expected to last this entire year, is the wholesale purchase of Moroccan olives by Spanish companies. Between November 2005 and January 2006, Spanish buyers visited almost all Moroccan olive traders, purchasing an estimated 25,000 tons of olives. Poorly organized, Moroccan producers sold nearly all their production leaving the domestic market literally dry given the higher revenue they would make by selling to foreign buyers. Their negotiated wholesale prices with the Spanish, which were between MAD 3.5 and MAD 10 per kilo, were unprecedented in Moroccan olive history.
Good for the Moroccan producers but here's the next thing: Spanish buyers are not showing any sign of slowing down and continue to place orders, risking the complete collapse of the domestic olive and olive oil markets. Another contract for 10,000 tons of olives is in its final phase and increased interest from the Spanish is focusing on the rich producing regions of Souss, the Gharb, and the Haouz where they are currently looking for deals.
The explanation behind this trend may be the result of the poor harvest season of 2005-2006 that affected Southern Europe. The major producers of Spain, Italy and Greece, the world's largest olive oil producers were affected by a frost which led to a poor olive harvest. Spain, which typically produces 1.3 million tons of olives per year, saw its output dwindle to less than half at 600,000 tons. The same event affected other European countries.
Naturally, the Europeans have been looking at other producing countries to fill the gap, turning not only to Morocco but also to Tunisia, Syria, and Turkey. Turkey and Syria in particular have a much stronger position than Morocco in that they are much more introduced into the global olive and oil markets, where they hold an estimated 7% market share each. Morocco is generally on par with Tunisia with a market share of 2% each.
But the aggressive Spanish buyers are not the only reason for Morocco's olive and oil shortages. Although not as bad as in Europe, the 2005-2006 harvest season was not as good as it has been historically. From a historical average of 100,000 tons, production fell to 60,000 tons. In this case, the weather cannot be blamed but one should recognize that farmers and the government have both neglected the country's olive groves and failed to push for a modernization of the sector. The producers have resisted any renewal of their plantations and refuse to invest in maintaining their groves. The government, for its part, has not intervened and the domestic market is moving toward a structural deficiency with major shortages looming.
The North Africa Journal 2006
