Open Discussion board: Will aggregation be the best resolution to place an finish to the dysfunctions of the wholesale fruit and vegetable markets and the plethora of intermediaries?

Par El Mostapha BAHRI, Marketing consultant Economist

Among the many issues which were raised because the Eighties and which have remained unresolved are the administration of wholesale fruit and vegetable markets and the problem of intermediaries.

A number of initiatives have been developed to unravel this drawback, such because the try to prepare farmers into sectors within the Meknes area, a venture initiated as a part of a partnership with the Japanese within the late eighties, and the reorganization of wholesale markets within the nineties created by the Division of Commerce, and so forth. These initiatives didn’t come to fruition.

Sadly, because the promulgation of Regulation No. 37-21 of 07/14/2021, nothing has been achieved for 2 years, in 2022 and 2023. It was mandatory to attend till 2024 for the general public authorities to announce the venture of “Direct advertising of vegatables and fruits with out going via wholesale markets”[2].

It was the Authorities Council that accepted on Thursday, June 20, 2024, “the draft decree establishing the measures regarding the direct advertising of vegatables and fruits with out the duty to undergo wholesale markets and this, throughout the framework of the agricultural aggregation system”. This decree goals, in accordance with the federal government spokesperson, “to rehabilitate the wholesale markets”.

This latter textual content “intervenes in software of the provisions of legislation n° 37.21 talked about above, enacting particular measures regarding the direct advertising of vegatables and fruits produced throughout the framework of agricultural aggregation [3]»

Nobody disputes that the reorganization of wholesale markets is certainly a precedence, given the elemental position that these platforms play within the meals provide chain. Their dysfunctions have solely had unfavourable repercussions on the financial system, on the provision of merchandise and on costs and subsequently on the buying energy of residents.

Nevertheless, and on condition that it’s too early to guage this new expertise, it’s important, earlier than implementing this main venture, to ask the next questions?

• Earlier than organising this new organisation, did the Division of Agriculture perform a examine on aggregation usually and the outcomes obtained for every sector, throughout the framework of the much-criticised “Inexperienced Morocco” plan?

Everybody agrees that every sector has its personal specificity, and that aggregation couldn’t give passable outcomes on the stage of all sectors. Certainly, and for example, the tomato isn’t the identical because the apple. The costs of the previous differ in accordance with a number of elements: the outcomes of the harvests, the amount put in the marketplace, the portions exported, and so forth.; particularly since this commodity isn’t storable, it’s both consumed or processed. Apparently and in accordance with some specialists, the agreements made between sure farmers and processors didn’t give the anticipated outcomes as a result of non-compliance of commitments by sure producers. Whereas the apple is a product that may be saved in fridges and the variations affecting its costs should not as important. Therefore the necessity to consider the outcomes of the aggregation on the stage of all of the sectors involved and to make changes to the aggregation system.

• Have the initiators of this venture sufficiently examined and studied the potential advantages of centralization and collaboration between the completely different market gamers? There’s a concern that the issuance of aggregation authorizations shall be seen as an approval resembling the mandate tiles that may enable sure producers to keep away from going via the wholesale market and monetize this benefit. Equally, what methodology of management shall be put in place to make sure the declarations of the aggregators and be certain that the native authority collects the taxes due?

Furthermore, promoting outdoors of wholesale markets isn’t new in Morocco. It has develop into a standard observe in a number of cities within the nation with a wholesale market. “Technological developments and the event of technique of transport and storage (multiplicity of the variety of storage depots for sure vegatables and fruits, usually in premises inside neighborhoods) and availability of technique of transport, more and more encourage the direct distribution of vegatables and fruits. Certainly, an increasing number of retailers (formal or casual) place orders by phone and deliveries are made both early within the morning or in direction of the tip of the day, ignoring the duty for vegatables and fruits to go via wholesale markets as supplied for by legislation (article 61, paragraph 4 of the legislation on freedom of costs and competitors). This methodology of distribution fits retailers in addition to intermediaries; the previous save the journey prices to go to the market (early) and the transport prices of the products bought, whereas the latter don’t pay taxes (7% on the proceeds of gross sales). Tax which, furthermore, constitutes the most important concern of the managers of those markets and of the brokers. It constitutes one of the crucial essential revenues of the communities and the brokers (5% for the group and 1 or 2% for the agent who usually doesn’t attend the transactions that are carried out by the wholesalers themselves”[4].

• Has this observe been considered? Will this new venture make it potential to transcend these practices?

Equally, one other phenomenon is starting to develop and tackle sure dimensions. That is the provision of sure retailers inside cities the place there’s a wholesale market, by intermediaries intervening downstream of the wholesale markets, on account of the truth that sure fruit and vegetable sellers keep away from going to the wholesale market to produce themselves immediately. They cost sure folks with this process. Furthermore, this new observe impacts the rise in client costs, given the liberty of costs and margins of resellers.

Lastly, it needs to be famous that any venture to vary the administration of wholesale markets dangers encountering resistance as a result of divergent pursuits of the actors concerned within the distribution channels, logistical issues and the brand new position that shall be assigned to the wholesale fruit and vegetable markets. By this new venture, which stays a significant step for the reorganization of those platforms, supplied that it’s commonly evaluated and the mandatory changes are made as it’s carried out. The institution of an advert hoc fee bringing collectively all stakeholders is prone to play this position and to publish an annual analysis report.

In the identical vein, the fee arrange for inspecting functions for aggregation shouldn’t be restricted to representatives of the Administration and needs to be prolonged to different representatives reminiscent of producers, customers, and so forth. The presence of representatives apart from these of the administration can be extra considered and likewise, throughout the regional commissions known as upon to hold out the management of the standard of merchandise and their conformity, or a minimum of when making choices regarding aggregation licenses (issuance, extensions or withdrawals). I consider that the period of commissions bringing collectively solely representatives of the Administration is over.

Good governance relies on lively participation, transparency, accountability, effectivity, respect for the rule of legislation, equity, consensus constructing and responsiveness. These ideas assist create an surroundings conducive to the event of those platforms and worth stability.

Subsequently, any fee should carry collectively members with diversified and complementary expertise, throughout the framework of session and participation, to be able to assure diversified experience and ample illustration. The presence of 1 or two exterior specialists supplies an exterior and neutral perspective on the functions and on the expertise of not going via the wholesale market. All members should be chosen on the premise of their capacity to evaluate this expertise and the functions pretty and with out battle of curiosity.

The composition thus outlined makes it potential to ensure that the choices taken by the fee at nationwide and regional stage are honest, balanced and based mostly on a complete evaluation of this new mannequin of reorganization of wholesale markets and the abilities of the candidates for acquiring the aggregation license, its extension or its withdrawal.

[1] LesEco.maof 3/01/2020

[2] Le matin.ma, from JUNE 20, 2024

[3] from 06/20/2024

[4] The issue of will increase within the costs of vegatables and fruits in Morocco: is it structural?, La Nouvelle tribune, January 5, 2024.