Morocco PL-480 Title I program : update report

The report concludes that Title I resources have not distorted incentives for local production, consumption, or distribution, but may, through self-help, be contributing to the removal of distortions under the structural adjustment program. The Title I program has provided significant balance-of-payments support particularly in 1983-87, a role which was made explicit by a U.S. pledge to the consultative group to help Morocco"s debt problem and was justified by Morocco"s high debt service payments (68% of export revenues). It is unclear exactly how much foreign exchange help is provided by the food aid, since heavy subsidies "lead consumers to purchase more foodstuffs than they would without the subsidies, and so total import requirements are greater than they would be if the GOM were forced to eliminate the subsidy." Morocco has not purchased wheat on the cash market since 1979, benefiting from competition between donors. Most of the Title I assistance is wheat, and wheat"s role as the dominant commodity has "accorded the Title I program considerable leverage in agricultural sector self-help," except in the elimination of subsidies mentioned above. The model proposed to describe Morocco"s wheat situation is one where consumption is essentially "exogenous to economic events, while domestic production is climate-driven, and the residual is imported." Thus, P.L. 480 wheat imports are not serving as disincentives to local production (where producer prices are maintained higher than world prices), but rather climate is the constraining factor. The structural adjustment program being implemented in the country is resulting in the removal of some distorting policies on the agricultural sector, but Title I is not the leverage point in these activities. (Author abstract, from PN-ABD-893)