Concerns grow over fuel prices driving up Morocco’s produce costs

Concerns are rising that higher fuel prices could push up the cost of fruits and vegetables in Morocco, as transport operators continue to complain about the level of government subsidies.

While industry sources say produce prices remain primarily driven by supply and demand, consumer protection groups are calling for stronger government measures to safeguard household purchasing power.

Hicham Meknassi, a trader at the wholesale fruit and vegetable market in Meknes, said the sector is “strongly governed by supply and demand,” noting that prices fluctuate significantly and farmers often bear market volatility alone.

Speaking to Hespress AR, Meknassi said rising fuel and input costs do not necessarily translate into higher market prices. “Farmers may incur high costs, but once they enter the market, they are forced to sell at prevailing prices based on demand, even if it means incurring losses,” he said.

He dismissed direct links between transport costs and rising produce prices, calling it a “pretext” sometimes used to justify increases. “Neither sellers nor buyers control prices, the market does. When demand rises, prices increase even if costs are low, and the opposite is also true,” he added.

Meknassi said higher transport costs, estimated at around 3% due to fuel increases, are typically absorbed by traders rather than drivers. For example, if the cost of a truck trip rises from 9,000 to 10,000 dirhams, traders pay the difference from their margins without any guarantee of recovering it through wholesale prices.

Bouazza Kherrati, president of the Moroccan Federation for Consumer Protection, criticized what he described as a “rent-seeking” system in the transport sector. He said fuel subsidies granted to truck and bus operators in recent years have failed to benefit consumers.

“The final consumer has not seen any positive impact on prices, purchasing power or service quality,” Kherrati said, adding that the subsidies lack proper oversight and accountability.

He also pointed to what he described as widespread irregularities in the sector, with some taxi and bus operators not adhering to regulated fares, particularly during peak periods, despite receiving government support.

Kherrati attributed this to weak monitoring mechanisms, saying it has fostered dependency among some operators who benefit from subsidies without providing fair service or respecting pricing rules.

He proposed the creation of a stabilization fund, financed when global fuel prices decline, to cushion the impact during price increases, similar to a compensation mechanism.

Kherrati also criticized the lack of a strong regulatory authority overseeing the fuel sector since its liberalization, unlike other industries that have dedicated regulators.

He called for urgent tax relief measures, including reducing value-added tax and domestic consumption tax on fuel. “It is unreasonable for the government to collect around 45% in taxes on each liter,” he said, urging a reduction to 25% to ease pressure on consumers and improve purchasing power.