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AGRICULTURE, TRADE, AND POVERTY IN MOROCCO 173


on net, from an increase in wheat prices, but how would poor farmers be affected? The answer partly depends on Moroccan wheat import policy, the liberalization of which could partly offset, nullify, or even reverse the effect of higher world prices on domestic prices. Second, there is concern about the closed markets of trading partners. For example, if Moroccan farmers switch out of wheat and into horticultural crops, will there be export opportunities for these products in the E.U. or the United States?


The impact of agricultural reform on households has been difficult to address because the tools used to examine the economywide impacts of reform in agriculture have traditionally been able to assess only the impacts on a relatively small number of household types (Abdelkhalek 2002). Accord- ingly, identifying the households that are net sellers (which would gain from higher prices) and those that are net buyers (which would gain from lower prices) has been difficult.


Grain producers in Morocco are protected by tariffs on imports as high as 100 percent. This policy encourages farmers to grow wheat even if the costs of production exceed the costs of importing wheat. The high cost of production is partially absorbed by the government, which implements a complicated system of subsidies to mills and consumers. The cost is also shared by the consumers, who pay a higher price for wheat products than they would if wheat could be imported without trade tariffs. A policy that eliminated the border tariffs for cereals without any reform in the agricultural sector in developed countries would result in significantly lower producer prices for wheat and somewhat lower consumer prices for wheat products. This policy would benefit consum- ers, who would pay less for their flour and bread, but hurt producers, who would have to compete with lower-cost imported wheat. A study carried out by Ravallion and Lokshin (2004) is one of the few that has used household survey data to examine the distributional impact of trade liberalization in the MENA region. It focused on the impact of removing tar- iffs on imported grains. The study used a CGE model to simulate the effect of reducing and eliminating wheat import tariffs. The price changes associ- ated with different liberalization scenarios were combined with data on the sources of income and the allocation of expenditures for 5,117 households in the 1998–99 Morocco Living Standard Survey. The impact of each policy simu- lation on each household was calculated using standard methods of short- term welfare analysis. The results were aggregated to calculate changes in the mean income and incidence of poverty. According to this study, the elimination of wheat import tariffs would result in a 24 percent reduction in the producer price of grains and a 27 percent reduction in the consumer price of grain products. Not surprisingly, urban households would gain from the elimination of protection on grains because they are net consumers of


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