Food Subsidies In Morocco
From International Business Wiki
The key purpose of subsidizing food in poor countries is to assure some or all consumers access to a given quantity of food at fixed prices by the Government. (Andersen, n.d.) Consumer prices below open-market prices for one or more food commodities are a familiar feature of most consumer-oriented food subsidy programs. (Andersen, n.d.) Price reductions caused by subsidy programs may be large and as a result you may not find it uncommon that the subsidy reduces the consumer prices by half or more. (Andersen,n.d.)
A few decades ago, the Moroccan Government undertook the policy of basic food subsidies to aid in the fight against poverty. The “Caisse Général de Compensation” was established in the 1940’s as a stabilization fund of the internal prices in relation to the variations of the international prices. (Aloui & Zouaoui, 2002, pp.1-3) This fund has been primarily used as a mechanism to stabilize the consumer prices of basic processed food products such as oil, edible sugar, and flour since the early 1970’s. (Aloui & Zouaoui, 2002, pp.1-3)
(See Government Policy & Actions toward Poverty Alleviation)
Despite efforts by the Government to ensure that the program is as effective as possible, the program succeeds in meeting its objectives, but at a high cost (in budgetary terms). In social terms, the program is effective in the sense that food expenditures are higher for the poor. (Aloui & Zouaoui, 2002, pp.1-3). However, this effect is not fully captured since market prices often exceed target prices. (Aloui & Zouaoui, 2002, pp.1-3).
Moreover, lack of targeting of sugar and oil subsidies mean that only a portion, about 25%, reach the poor. (Aloui & Zouaoui, 2002, pp.1-3).
(See Government Policy & Actions toward Poverty Alleviation)
In general all social groups, including the poor, benefit from consumer food subsidies. With inadequate targeting, however, higher income groups benefit more in complete terms than the poor because the rich tend to consume greater quantities of subsidized goods. For example, in Morocco, those in the top quintile consume twice the value of subsidized foods as do those in the lower quintile. (Consumer Food Subsidy…, 1999).
(See Consumer Food Subsidy Program in the MENA Region)
With both the rich and the poor benefiting from consumer food subsidies, eliminating these programs would hurt both groups. The rich would incur greater total financial losses, while the poor would suffer severely in terms of consumption. In Morocco, an individual in the lower quintile of the populations derives an estimated 13% of total caloric intake of subsidized foods. (Consumer Food Subsidy…, 1999). Eradicating subsidies would most likely result in an increase in poverty by some percentage.
(See Consumer Food Subsidy Program in the MENA Region)
