Stakeholder Analysis on Moroccan Cereal Reform

1
Stakeholder Analysis on Moroccan Cereal Reform

• Nabil Chaherli (MNSRE)
• Jennie Litvack (MNSED)

2
Outline

• Need for the analysis,
• Implementation of the analysis
• Findings
• Utility of the findings
• Overall lessons

3
Pilot Summary

• In anticipation of the CAS discussions, country
  team and PRMPS jointly proposed to examine cereal
  reform possibilities using a formal model of
  stakeholder analysis.
• Consultants provided analysis of the interaction
  between stakeholders, how their positions may
  change as a result, and what reform measures are
  most likely to be agreed to given all the
  players positions and change across rounds of
  negotiations and trade-offs.
• The analysis is expected to indicate for the
  country team the stakeholders, their interests,
  strength and acceptable options on cereals
  reform.
• Work should help provide the basis for a
  systematic strategic vision within the CAS. The
  findings should also allow for better
  project-level design and implementation.

4
Goals of Stakeholder Analysis

• Locate potential gainers and losers of the reform
  and their respective positions, strengths and
  likelihood of compromise.
• Identify implementation challenges of compromise
  options and how supportive coalitions can be
  structured and maintained.
• Create optimal reform policies, in particular in
  relation to policies pursued in other sub sectors
  in agriculture and within the general
  macroeconomic context.

5
Cereal Reform Issue Framing Issues Critical
Path Timing
Structural Market Reforms

• Abolish wheat flour subsidy
• Marketing of wheat
• Tariff Reduction

WB Policy Initiatives
Cereal Reform
Compensation Mechanisms

• Direct Income Support
• Investment Subsidies

May 04
Summer 04
Long
CAS
6
Abolish the FNBT (Wheat Flour) Issue Range of
Policy Options
0
90
100
25
50
75
Abolish
Status
Keep some
Reduce FNTBT to 50 Dh/b Subsidies
Reduce FNBT to 100 Dh/b Subsidies
Reduce FNBT to 75 Dh/b Subsidies
the entire
Quo
segments of
FNBT
the FNBT
(the southern
provinces and
the army)

• The FNBT consumer compensation has many problems,
  including the fact that it is inadequately
  targeted, causes distortions and fraud, has an
  excessive net financial cost and constitutes a
  highly administered but poorly controlled system.
  
• It is currently as high as 143.38 Dirham/quintal
  outside the southern provinces and reaches 38.38
  Dirham/quintal in the southern provinces.

7
Marketing Range of Policy Options
0 5
40
60
65
75 80
100
Begin
Status
Introduce a
Begin process
Restructure
Continue
study of
Quo
standard cereals
of developing
or divest
development
SCAMs
marketing contract
a private
SCAMs
of a private
and a dispute
industry body
industry body
resolution procedure
and decide
Develop a market
future
oriented cereals
of ONICL
storage and
Develop financial
finance system
instruments, e.g.
forward contracting
instrument or price
risk insurance scheme

• The FNBT compensation system brings Government
  agencies into pricing and procurement decisions
  causing the market to be static with no
  competition or risk management mechanisms.
• ONICL is the wheat marketing board
• Government subsidizes storage at the rate of 2
  Dirham per quintal and transportation fees at the
  rate of 6.63 to 8.04 dirham per quintal.
• The marketing scale includes various reform
  elements, from the easiest to implement on the
  short term to the more difficult structural
  reforms.

8
Tariff System Range of Policy Options
Medium 20 to 35 Reduction implemented over 10-15
Years
Low 0 to 20 Reduction implemented over 5-7 Years
Medium Reduction implemented over 2-3 Years
Large 35 to 50 Reduction implemented over 5-7
Years
12
75
25
38
0
50
100
63
88
Large Reduction implemented over 10-15 Years
Low Reduction implemented over 2-3 Years
Medium Reduction implemented over 5-7 Years
Low Reduction implemented over 10-15 Years
Large Reduction implemented over 2-3 Years

• Currently all imported cereals entering the
  market are aligned on the guaranteed procurement
  price of soft wheat purchased for the FNBT
  system. These tariffs have an amplifying effect
  of world price fluctuations.
• The current tariff level on soft wheat is 55
  for prices (CF) below 1000 Dirham/ton and 2.5
  for prices (CF) above 1000 Dirham/ton.
•   The issue scale is based on two dimensions,
  the level of tariff reduction, and the
  implementation time. The scale is divided into
  three reduction levels (Low for 0-20, Medium for
  20-35 and Large for 35 and above) then
  subdivided into three implementation periods
  (10-15, 5-7, and 3-2 years).

9
Income Support Range of Policy Options
32.5
80
0
20
45
60
100
None
Selective and
Broad
-
based
Broad
-
based
Selective and
region
-
specific
income support,
income support,
region
-
specific
income
limited time
extended period
income support,
support,
of time
provided once (5 years period)
extended over
(15 years)
time (15 years)

• In order to make reform as income neutral for
  farmers as possible, an income support program is
  being advocated 400 dh/ha with min of 1200
  dh/exploitation and max of 4000 dh/exploitation
• It is of limited duration, delinked from
  current farmer production decisions, with minimum
  and maximum levels, sensitive to time and areas
  of drought, based on the area historically sown
  to cereals in a reference year, and on a register
  of eligible farmers.
•  The issue scale combines scope of income support
  and the duration of the support provided. It can
  be region-specific or broad-based, and can be
  limited to a 5 year period or renewed once or
  twice (that is 10 or 15 years total).

10
Agricultural Investment Subsidies Range of Policy
Options
0
100
30
10
60
80
Subsidies to all Farmers motivating
diversification
Subsidies for Small Farmers to motivate
diversification
Targeted Subsidies to motivate diversification
Subsidies go to small farmers on cereals only
Subsidies for all Farmers on cereals only
None

• Agricultural investment subsidies include a
  wide range of options from financial facilities
  to seedling, fertilizers, machines, technology,
  etc. that focus on support services.
•  The issue continuum combines two dimensions,
  the range of eligible farmers (whether small
  farmers are targeted or not), and the type of
  subsidies (whether they are aimed at motivating
  diversification or not).
• The lower end of the scale advantages small
  farmers that do not have diversification capacity
  while the upper end of the scale is beneficial to
  large farmers with diversification potential.

11
Current Supporters Opponents of Reform Pro,
Neutral or Anti on the Issues
12
Summary of Results

• Current Outcome indicates the results of the
  anticipated stakeholder dynamics on the issue
  given model results and analysis.
• Opportunity for Reform indicates changes in
  approach and strategies to overcome
  implementation challenges given model results and
  analysis.

13
Detailed Case Analysis

• Cereal Tariff Reduction

14
Tariff Reductions Strengths, Weaknesses,
Opportunities Threats

• Strengths Support from key domestic stakeholders
  for a 30 reduction phased in over 5 to 7 years
  is likely to be maintained. As a result, USFP
  (major political party--socialist) will also warm
  up to the idea of moderate reductions.
•  
• Weaknesses Most of civil society and
  Agriculture stakeholder, farmers, cereal
  producers, regions, as well as the syndicates
  will vehemently oppose any tariff reductions.
•  
• Opportunities Few opportunities exist given the
  current reform landscape without a significant
  change in approach by the Bank. 
• Threats The Min of Ags compromise position of
  moderate (30) reductions phase in over a long
  period of time (10-15 years) is politically
  untenable as the vast majority of cereal
  producers, farmers, intermediaries collectors
  can force the Ministry to advocate minor
  reductions, thus losing implementation support
  for reductions in general.

15
Tariff Current Course Outcome Description

• A large coalition, comprised of the Palace, PM,
  Minister of Commerce, Min of Economics and the
  High Commissioner for Planning support up to a
  30 reduction phased in over 5 to 7 years to ease
  political adjustments.
• However, such a reduction would significantly
  reduce revenue for the Ministry of Finance and
  the Min of Interior which only advocates small
  reductions phased in over a 10-15 year period.
  The rest of civil society, political parties and
  the agriculture producers will strongly oppose
  any significant tariff reduction phased in
  quickly.
• Both APM ONICL will likely exert pressure on
  both domestic international groups to help
  implement some reductions. APM will approach
  both Spain Italy to allow some adjustments on
  tariffs while ONICL will focus its efforts on
  garnering support from the main political
  parties, such as USFP.
• However, pressure from the agricultural ministry
  will lessen ONICLs demands for tariff reductions.

16
Tariff Reduction Strategy Summary

• Both the Bank and the IMF can initially advocate
  large reductions quickly.
• This gives leverage to both ONICL Director of
  Econ in the Min of Ag to make a Moroccan based
  domestic compromise position of medium reductions
  over 5 to 7 years quite palatable to several
  opponents of tariff reductions.
• Both the Bank the IMF need to continue to
  advocate high reductions quickly to make ONICLs
  compromise position more attractive than the
  Banks alternative of drastic fast changes.
•  This gives ONICL leverage to broker all
  opponents to accept at least moderate 30
  reductions.
• Even with this change in approach, analysis
  suggests that there will still be divisions on
  how fast to implement the reforms.

17
Utility of the general findings

• () Need to change our partnership strategy!
• () Reform is more/less difficult than we thought
  depending on the issue!
• (-) Some specific results did not make sense!
• (-) Pool of experts too limited!
• (-) Potential courses of action unclear

18
Overall lessons

• Stakeholder analysis should come at early stage
• Enlarge the circle of champions beyond line
  ministry (focus on Ag Ministry big mistake)
• Get to understand the dynamic rather than the
  static reform process
• Pro-reformers use the radical Bank position to
  help craft a compromise
• Better to train Bank staff to conduct the
  analysis rather than having consultants carry the
  task (skill mix and relation with client) .