Morocco: Irrigation water pricing policy of large scale irrigation projects

In Morocco, the consequence of increased industrialization and a rapidly growing population accentuated by a progressive shift from rural to urban living. This resulted in the growth of requirements for the quality and quantity of water resources, and their more intensive and comprehensive use.

In Morocco, there are approximately 7.7 million hectares of arable land of which 1.6 million ha are potentially irrigable (1.3 million ha of perennial irrigation and 300 000 ha of seasonal irrigation), water resources availability being the limiting factor. As of now, irrigation accounts for 88% of the water use compared to 8% for domestic use and 4% for industry.

The government policy in the agricultural sector has always favored investments in the irrigation subsector. These investments have accounted for more than 60% of the total public investments in agriculture since 1965. The goal was to put under perennial irrigation 1 mill. ha by the year 2000. This is referred to as the "million-hectare" policy.

There are both Small and Medium Scale (SMI) and Large Scale (LSI) irrigation systems. The SMI projects range from few to several thousand hectares. They are mainly traditional systems some of which have been developed for centuries.

The implementation of pricing reforms requires a holistic approach. In Morocco it is part of a holistic approach called LSI Improvement Program with the main objectives of efficiency, cost effectiveness and sustainability of the large-scale irrigation subsector, divided in three major and interrelated areas:

1. The effect of fixed producer prices, at national level, for crops such as sugar beet, sugar cane and soft wheat prescribed in the mandatory cropping pattern has been often used as an argument to seek homogeneous water charges across LSI perimeters. This has led to the adoption of charges used in the existing projects that are far below those computed according to the law for new projects. It was difficult to make up for these distortions later on since the only possible increase of water charges provided by the law is indexed on inflation.
2. The application of the provisions of the Code concerns the recovery of the pumping charge. The recovery of this charge became effective in 1983. In many instances feasibility studies have often favored options of using the river as a conveyor of the water released from the dam and pumping it at appropriate sites to supply water to irrigation sectors instead of building a conveyance canal. In these situations as per the Code, energy costs are not recovered from the farmers as pumping is considered a design option. Energy bills are then paid by budget transfers to the ORMVA.
3. A comparison between 1979-80 and 1995-96 shows that prices of fertilizers, seeds and treatments for sugar beet have more than trebled, while the producer price has been multiplied by a factor of 2.41. As a matter of fact, sugar beet and sugar cane producer prices have been formally “liberalized” only in 1996. But, the prices negotiated between the producers and the sugar factories are kept almost at the same level to avoid increases in the consumer prices or in the budgetary burden for compensation.