Spanish paper “El Pais” has recently reported on some recent implications of the Agricultural Association Agreement between the European Union and Morocco that was implemented a decade ago.
Over this time, Moroccan sales of fruits and vegetables to the European Union as a whole have doubled, while these exports to Spain over the same period have actually quadrupled. The overall effect has produced a cut in prices in foreign markets, but has been detrimental to Spanish sales. Spanish pepper exports, for example, have decreased from 900,000 tons to 700,000 tons over this period.
The dynamics of the change of market structure is highlighted most clearly by Spain’s imports of avocados, raspberries, and blueberries, in particular, all of which have undergone anywhere between a thirty-fold and a one hundred-fold increase over this time.
The Spanish employers association FEPEX has—as a result of what it considers to be a concerning trend—urged Brussels to apply tariff concessions and the previously agreed upon entry price regime in a more fair and consistent manner. Specifically, Spanish greenhouse farmers allege that necessary inspections are not being carried out by EC authorities in compliance with conditions for their entry, while to the contrary, these mandated inspections are actually being implemented with respect to both EC farms and Moroccan tillage yields.
Undoubtedly, the overriding feature causing Spain’s shrinking share of the agricultural market is the disparity of its own domestic labor costs versus those of Morocco. The Spanish minimum wage currently sits at about 9 Euros/hour—exacerbated by automatic successive future increases, as well—while production in Morocco occurs at one-fifth of that cost.
When one considers not only the impacts of flooding European markets with drastically lower prices than what can be produced domestically; but also, when taking into account the pressure on Moroccan farmers to sell more and more of their yield to other countries and therefore reducing domestic supply and driving onion prices up to 30 dirhams/kg—as was the case just prior to Ramadan—it is no wonder why tariffs exist. Food for thought…