16 January 1985

The Private Sector Industry-of Morocco: Constraints and Potential for Export

F.J. West, Jr. Project Director Sears World Trade Team Sears Word Trade 450 Fifth Str(ft, NW Washington, DC 20001

Submitted to USAID and TDP in accordance with the provisions and terms of reference as stipulated by TDP in contract letter to Sears World Trade, 14 October 1984. ER IEF ING OUTL INE

I. PURPOSE OF STUDY 2. STlDY TEAM 3. MAP 4. FORE IGN EXCHANGE EAIRNINGS 5. OPININS AN) FINDINGS ABOUT DONOR ASSISTANCE 6. INDUSTRY OVFRV IEW 7. STRATEGIC PLAN FOR EXPORT FISHERIES 8. TEC-NICAL ASSISTANCE PROGRAMS AND COSTS 9. SLUvWIARY 10. PRIORITY CONCLUSION FOR USAID II. RETURN ON USAID INVESTMENT FOR PILOT PROJECT PURPOSE OF STUDY

I. EXAMINE MOROCCAN PRIVATE SECTOR FISHERIES, ESP. AS RELATED TO EXPORTS AND FOREGN EXC-iANGE

2. DETERMINE: A) SIZE OF SECTOR B) PROCESS OF PRODUCT CATJ-I, PACKAGING, EXPORT AND SALES C) IDENTIFY CRITICAL BOTTLENEC

I. F.J. WEST S. PIEIRE O)iUUT PROJECT LEADER MANAGER, AGRIBUSINESS CONSULTANT TO SEARS WORLD T!ADE CHAIRMAN, SEARS WORLD TRADE SPECIALTIES: MEC-iANICAL VICE PRESIDENT, INTERNATIONAL ENGINEERING & AGRIBUSINESS -UDSON INSTITUTE SPECIALTIES: FOEIGN AREA STUDIES & SYSTEMS ANALYSIS 6. CDR. WILLIAM TURCOTTE, USN (RET.) 2. MARTHA BLAXALL CONSULTANT, COWMERCIAL FISHING 2.ECAMTIRTHACN(BLAXALLSI CHASE, BROMN & BLAXALL, INC. SPECIALTIES: ECONOMIC ANALYSIS SPECIALTIES: ECONOMIC BUSINESS MANAGEMENT & SMALL VESSEL ANALYSIS & FISI-ERIES (100 TONS) FISHING.

3. MAURICE CHERAMIE 7. E. BRIAN VEASY PRES IDENT, NEW ORLEANS PRESiDENT, MARION GROUP SPECIALTIES: CCMOERCIAL MARION, MASS. FISHING, U.S. & W. AFRICA SPECIALTIES: FISHERIES MANAGEMENT & TRADING 4. MICHAEL GARDNER FISHERIES DEVELOPMENT LTD. WARWICK, U.K. SPECIALTIES: TRADER IN FISHERIES, W. EUROPE & W. AFRICA // COAST RABATDEPLETED

$200M CASABLANCA

$200M, $loom SARDINES AGAD IR COASTAL FLEET 220M VMIITE FISH

LAS PALMASP'ALASj TAN TAN

"OFFSHORE" FLEET CEPHALOPODS & WHITE FISH FOREIGN EXCHANGE EARNINGS 1982

In Millions 1600 ­

1400

1200

1000

Boo USSR $20-80M Spain $20-40M 600 Spain/Maroc to Las Palmas $200-300M 4001

-Spain to Spain 200 $200-300M

01 TOTAL MOROCCAN EXPORTS MOROCCAN FISH EXPORTS BY FOREIGNERS

Fish a 10% Now Fish - 25% -40% of Moroccan Export Potential before value is adde. OPINIONS AND FINDINGS ABOUT DONOR ASSISTANCE

OPINIONS EXPRESSED TO TEM MOROCCAN FINDINGS I. FISHERIES SMALL SECTOR. I. OVER $500,000,000.

2. OVERFISHED. 2. BIOMA;S CAN BE HELD CONSTANT.

3. LNACCEPTABLE EXPORT 3. LIBERALIZED IN 1984 AND POLICIES BY GC. WILLING TO DO MORE.

4. FISHERIES MINISTRY ONLY 4. MINISTRY WANTS TO ACHIEVE A FEWS YEARS OLD. AND IS NOT BLREAUCRATIZED.

5. FISHING WILL SCATTER 5. FISHERIES ARE PRIVATE FOCUS OF AID PROQRAM. SECTOR EXPORTS.

6. AID DOES NOT HAVE THE 6. SELECT PROJECTS IN-HOUSE SKILLS. CAREFULLY.

7. DONOR ASSISTANCE UNNECESSARY; 7. FISHING SECTOR IN ITS PRIVATE SECTOR INVESTMENT INFANCY. LACKS SHOULD SUPPORT THE INTERNAT IONAL MAFKET. W/O PRIVATE SECTOR. IDENTIFIED MAR4FETS, NO ROI FOR PRIVATE INVESTMENT. INDUSTRY OVERVIEW

1. "OFFSHWE" - $.sooM FUTURE: EXCELLENT BOATS 1201 SPAIN 200-250 BOATS FISH FROZEN WOROCCO 180 CAPITAL INTENSIVE GOOD CATCH/YR/BOAT NICE PROFIT POSSIBLE WEEDS LAlRGE CAPITAL & CRGANIZATICN + TGTD INT'L MARKETS AND TRANSPORT

TAN TAN - LAS PALMAS - SPAIN ISSUE $500 M YR & LRG VALUE AaX)ED & GDP MJLTIPLIER

2. SI-RINP $4-10M FUTL.E: EXCELLENT/.9ALL 1983 tvtR $4M; SPAIN $20 M EEDS DEMCNSTRAT ION

3. COASTAL $50-100M FLrTI.E: PROBLEM MWAET: EXCELLENT PRICES BICMASS: CROPPING PROBLEM: LIMITED RANGE IN BOATS 1500 BOATS & 10-20,000 PEOPLE WEEDS TAFEETED PvKTS & TARGETED FISHING

4. SARDINES $50-00M FUTI;JE NEDILPA 68 CANERIES & 500 BOATS OBSOLETE B IWMASS COPFF i

STRATEGIC PLANNING BOTTLENEG

I. BIOMASS I. NO, GIVEN REASONABLE CONSERVAT ION. 2. ACQUISITION 2. FOREIGN FLEETS MJST BE DISPLACED. 3. FISHING METH-COS. 3. YES FOR COASTAL FLEET. NO FOR OFFSHORE FLEET. NO (FOR NON) FOR SARDINES. 4. PRESERVATION ON BOARE) 4. NO FOR OFFSHORE. (REFRIGERATION). YES FOR COASTAL WHITE FISH. MIXED FOR SAFOINES. 5. PRICES EX VESSEL. 5. NO FOR OFFSHORE AND WHITE FISH YES FOR SARDINES. 6. REFRIGERATICN ASHORE. 6. NO FOR OFFSHORE. YES FOR WHITE FISH. MIXED FOR SARDINES. 7. VALUE ADDED PROCESSING 7. NO OFFSHORE. YES ASHORE. COASTAL. MIXED FOR SARDINES. 8. TRANSPORT/DISTRIBUTION. 8. YES OFFSHORE AN) COASTAL. NO SARDINES. 9. POLICY INCENTIVES. 9. YES FOR OFFSHORE. NO FOR COASTAL AN) SARDINES. 10. STABLE, IDENTIFIED MARKETS. 10. YES FOR OFFSHORE AND COASTAL. LESS SO FOR SARDINES PROJECT COSTS COSTS (THOUSANDS)

PHASE I TA (TEC-NICAL ASSISTANCE) FY85 WHITE FISH 300 P ILOT PROJECT/EXPORT MARKET DEVELOPMENT

PHASE II HARVESTING TA FY86 -ELECTRONIC SEARCH 130 -LCNGL INING METHODS 160 -SHRIvW 75 -REFRI GERAT ICN 100

PROCESSING TA - PUBLIC COLD STORAGE 60 -CAN N METHODS 45 -VALUE ADDED METHODS 45

SAFINE MARKET DEVELOPMENT TA -PI LCHARS FOR u< 30 -PRIVATE LABEL MARKETS 40

LOAN CREDITS FY87-89 -COLD STORAGE 4,000-8,500 -EQUIPMENT I ,000

FOREIGN DISPLACEMENT STUDY 200 (FY 86) TRANSPORT/DISTRIBUTICN STUDY 150 (FY86)

SLVMARY OF COSTS

FY 1985 COSTS $ 300,000 FY 1986 COSTS $1,035,000 FY 1987-89 COSTS $5-9.5 MILLION PRIORITY CONCLUS ION FOR USAID

I. W/O INTEINATICNAL MAFR

2. THESE MA=

3. US PRIVATE SECTOR WILL NOT GET INVOLVED AT THIS STAGE: A GOOD DREAM, BUT NO SPECIFICS OF PROFITS.

4. SO, FIRST PRIORITY: US TEC-NICAL ASSISTANCE - FISH SELLERS - TO GO TO MAR

5. THIS PROJECT IS TIIE PILOT TEST/RISK ANALYSIS OF USAID'S LARGESCALE CONCEPT OF A PRIVATE SECTOR EXPORT PROGRAM. POTENTIAL EXPORT MARKETS FOR MOROCCAN W&HITEFISH Am'lD CEPNALOPODS POTENTIAL VALUE WfH/YR SPAIN , PESCOFINA, COMPESCA DELFIN, ALIMAR, PARAPESCA 10 GREECE PIPILEPILIUS 7 SUPERMARKETS 2 FRANCE ALLOM & MARSAILLES IMPORTERS 4 ITALY SLRQELA & KEY SUPERMARKETS, S.M.E. 8 USA SEARS W)RLD TRADE, SEAMARK. INTERNIAT 1NAL NIJLTIFOODS, SINGLETON SHRIMP, RED LOBSTER INNS 5 SAUDI ARABIA ALGOSIAI & SAUDI FISHERIES 4 GIULF STATES VAR IOUS STOCK HOLDER TRADERS 3 JAPAN NIQ

$B. 000. 000 WHO BENEF118? Fishermh Truckers ProcessOrt General Labor Forte

$7.'O0.000

7

$500. 000

AE

AID Project Funds "NNNxportEarnings 60P Expmnuion N

°N

\N PRIVATE SECTOR SEAFOOD EXPORTS

I. POTENTIAL IS REAL. EVIDENCE: FOREIGN(I FLEET EXPORTS OVER $500,000,000.

2. TODAY, MOROCCO EXPORTS FRQM vOROCCO (EXCLLDING LAS PALMAS) LESS THAN $100,000,000.

3. GOAL: MOROCCAN GDP AND PRIVATE SECTOR GROCWTH. PERMIT MARKET FACTORS TO DETERM I NE THE MONtEY CI RCULAT ION.

4. PRIORITIES IN A STRATEGIC PLAN FOR FISHERIES.

A. DISPLACE FOREIGN FLEET. TASKS: SLRVEILLANCE, NEGOTIATE, ENFORCE.

B. 1- ) MORE WHITE FISH IN MOROCCO. (BRING OFFSHORE FLEET HOMAE.) TASKS: LI BERAL IZE CURNCY REGULAT I IS AND OTHER STEPS TO FACILITATE EXPORTS.

C. EXPORT WHITEFISH TO OVERSEAS 'MARKETS. TASKS: IDENTIFY THESE MARKETS AND THE FISH. Table of Contents

Surrmary

I. Introduction A. Objective of Report B. Study Method

II. Overview of Export-related Fishing A. Resources I. Preface 3. Stocks 2. Topography 4. Landings B. Value of Exports from Moroccan Ports C. Value of Exports from Moroccan Waters D. Surveillance and the Foreign Fleets

Ill. The Moroccan Industries A. Coastal Fleet Industries I. Pelagics 2. White Fish B. High or Offshore Fleet Industry

IV. A Strategic Plan to Expand Seafood Exports

V. Action Program for USAID

VI. Appendices Tables

Table I. GDP of Morocco Table 2. Fishing Zones Table 3. Estimates of Sustainable Fields Table 4. 1980 Foreign Fishing Catch in Moroccan Waters Figure I. 1962-82 Landings in Moroccan Ports Table 5. Value of 1982 Moroccan Fish Exports, As Officially Reported Table 6. Valu of 1984 Moroccan Fish Exports, As Unofficially Estimated Table 7. Composition of Moroccan Fishing Fleet

Table 8. Sardine Canning Composition of Costs of Production Table 9. 1983 White Fizh Landings and Value at Agadir Table 10. Planning Strategy to Develop Export Fisheries Table I. Opinions and Findngs About Donor Assistance Table 12. Pilchard Potential in U< Market

Table 13. Potential Export Markets For Moroccan White Fish Table 14. Surmary of Plan For Exports Table 1S. Canned Pilchard Sales in the U< Table 6. Project Costs and Timetable Table 17. Maximum Sustainable Yields by Species

(App. D) Table 18. 1978 Average Trawler Landings at Las Palmas (App. E) Table 19. 1981 Bilateral Fisheries Aid to Africa

(App. F) List of Appendices

A. USAID/TDP Terms of Reference

B. Members of Sears World Trade Study Team

C. Interviews Conducted

D. The Economic Setting

E. Estimates of

F. Reported Landings at Las Palmas

G. Morocco and West Africa

H. Illustrative Budgets for Projects Recorrrnended

to USAID

I. Documents Reviewed.

J. The Sardine Canning Industry EXECUTIVE SUMMARY

In October, 1984, USAID and TDP asked Sears World Trade to examine the Moroccan fisheries sector and determine how Moroccan fisheries firms could best take advantage of export market opportunities, particularly in the U.S. and Western Europe. A team of experts with extensive backgrounds in fish harvesting, processing, and marketing, and with experience in economic development and international trade policy was sent to Morocco in late October. After site visits to the major fish ports and processing facilities in Morocco, the SWT team concluded that there were opportunities available for Morocen to double its exports of products over the next five years, and that USAID assistance could result in major increases in foreign exchange earnings from the fishery sector. The segment of the which offers the greatest potential for export growth is the whitefish and cephalapod (squid, octopus and cuttlefish) fishery. These species are in demand throughout the world, and Moroccan companies are finding profitable markets in Japan, France, Italy, Spain, and other nations in Western Europe. There are two parts to this fishery, a day boat coastal segment and a high seas, freezer trawler segment. Most of the high seas fleets land their catches at the Canary Islands port of Las Palmas, where they buy all of their supplies, equipment and vessel related services. Their transactions are carried out in dollars and other convertible currencies, and there is only a limited benefit to the Moroccan economy from these activities. Unless these fleets can be repatriated to Moroccan ports, an objective that both fleet owners and Government officials assert, Morocco will reap very little gain from this part of its fishing industry. The coastal whitefish fishery is beginning to qrow and offers considerable potential for rapid expansion of exports. However, the quasi-artisinal and traditional fleets must adopt modern, efficient fishing methods in order to protect the biomass. This includes electronic fish finding methods and longline gear. They must also introduce on board refrigeration techniques to preserve the quality of their catches. Once on shore, there is a need to expand the use of cold storage facilities, and to improve the distribution systems so that both fresh and frozen whitefish products can be processed and delivered to their markets with the highest possible quality. The sardine and mackeral fishery (pelagic species) has long been the most active sector in terms of domestic employment and export earnings. Moroccan cpnned sardines have been renowned world-wide for many years. There are considerable opportunities for further growth in this sector over the next five years, and recent changes in governmental policy will undoubtedly lead to a significant transformation in the structure of that industry and its international competitiveness in the immediate future. Specifically, the termination of a fixed export price for all Moroccan sardine canners is likely to generate a competitive environment within that sector which will result in a number of firms leaving the industry and the remaining firms becoming stronger competitors internationally. This should stimulate export growth in the next several years.

One barrier to more rapid growth, both for whitefish and for sardines, is a lack of knowledge about how to develop and serve foreign markets most effectively. Technical assistance is needed in market development, product development, packaging and transportation methods to exploit effectively those foreign markets where the demand for species readily available in Morocco is very large.

The Moroccan government in general, and the Ministry of Fisheries, in particular, are responding to the opportunities being identified by the fishing sector. World Bank and other organizations have encouraged Morocco to adopt a macroeconomic policy which is now providing incentives to export-led growth. Recent deregulation of canned sardine exports, other policy changes which are making it easier to export, and a new investment code to encourage U.S. and other foreign investment in Morccco should lead to an environment within which private investment will thrive and in which export growth can occur. Already several firms have undertaken major investments in modern plants which should significantly enhance Moroccan whitefish exports beginning in 1985. A key factor in the growth of the Moroccan fishery sector, and, therefore, in seafood exports from Morocco, will be the extent to which the foreign fleets now fishing within her 200 mile fisheries zone can be controlled or eliminated. The Sears Mission estimated that the value of illegal foreign fishing in Moroccan waters was in the order of $400-$800 million per year. An agreement recently negotiated with Spain will lead to a reduction in officially recorded Spanish landings from Moroccan waters by 40% by 1986. What must also be controlled, however, is the harvesting of shrimp, cephalapods and whitefish from Morocco in which hundreds of Spanish boats are now engaged. Similar unauthorized harvesting is being done by the Soviets, primarily in the pelagic species. Not only is this foreign fishing a threat to the future stocks available for Moroccans, but it is directly competitive with the efforts being made by Moroccan firms to sell their fishery products in third country markets. The foreign fleets annually take over half a billion dollars in fish from Moroccan water; the Moroccan fleet takes only a fraction of that amount. (See Chart 1.) It is therefore imperative that Morocco displace the foreign fleets from its waters. This is a political decision that Morocco must make, and it is inextricably intertwined with other political problems being faced by Morocco, including that of the southern Sahara. The technical means exist to deal with this issue.

Based on the information gathered by the SWT team of experts, Moroccan seafood exports could be expanded by $5-$10 million by 1987 with limited international assistance. They could double within five years. Realization of these objectives will require continued reductions in the Spanish catch in Moroccan waters; adoption of the necessary fishery management and conservation techniques to preserve the biomass; Moroccan exploitation of fish now harvested by other foreign fleets, particularly the Soviets and the Spanish; and targeted technical assistance and demonstration projects geared towards improving Morocco's harvesting, processing and exporting marketing capabilities. The specific projects which USAID is recommended to undertake are:

o A pilot project to expand whitefish exports by $5 million by 1986. o Technical assistance in harvesting methods (electronic search, longlining, deep shrimp trawling, and refrigeration). o Technical assistance to the processing sector (development of "public" cold storage, improvements in canning and quality control methods, and value added whitefish processing). o Technical assistance in developing export markets for pelagics. o Feasibility studies on displacement of foreign fishing vessels and development of transportation options. o Loan credits for investments in cold storage and processing equipment. In conclusion, the Moroccan fisheries sector has the resources and the capabilities to increase markedly, Morocco's foreign exchange earnings, to develop a value-added processing industry on shore, and to stimulate a fisheries supply and service industry which can contribute to the growth in GDP. Fisheries development and USAID assistance should be carried out in the context of a strategic plan (see Table 10) which has identified The most profitable opportunities for the industry and can address them in an effective way. The recommendations in this report (Table 14) are intended to serve as the beginning of this kind of effort. CHART 1 FOREIGN EXCHANGE EARNINGS 1982

In Millions 1600

1400

1200

1000

800 USSR $20-80M Spain $20-40M

600 Spain/Maroc to Las Palmas $200-300M 4O0

-Spain to Spain 200 $200-300M

0 TOTAL MOROCCAN EXPORTS MOROCCAN FISH EXPORTS BY FOREIGNERS

Fish - 10% Now Fish - 25% -40% of Moroccan Expor Potential before value is added I. Introduction

A. Objectives. The purpose of this report is to examine the Moroccan fisheries sector and its potential to gain foreign exchange through exports, and thus contribute to the economic growth of the country. This is a subject of considerable concern to USAID and other donor agencies, because several studies have referred to the "great potential" of the fisheries sector, yet only limited export growth has been achieved by private sector initiatives. Therefore, USAID and TDP sponsored this study to focus upon private sector fisheries as a foreign exchange earners to identify the bottlenecks in the export process and to present for AID review specific projects to relieve the bottlenecks.

This study is the result of extended discussions among Moroccan, USAID and TDP officials. The exact Terms of Reference, as set forth in the IDCA/TDP letter of 17 October 1984 to Sears World Trade of Washington, D.C., are found in Appendix A. The work began on 18 October and concluded on 31 December, 1984. Ms. Martha Blaxall and Mr. William Turcotte were of special assistance in preparing this report.

This report includes:

Section I - general background;

Section II - a description of Moroccan fish stocks, export value, the share of the value taken by foreign fleets, and policy of the foreign fleets;

Section III - a detailed discussion of the existing conditions in the three Moroccan fishing fleets, pelagic, coastal and high seas.

Section IV - a summary of the constraints and bottlenecks which inhibit exports; and

Section V - conclusions, identification and preliminary description of projects aimed at eliminating the bottlenecks.

B. Study Method. Given the USAID/TDP objectives, Sears World Trade organized a study team to include economic analysts, fishing experts and traders from SWT in Washington and the SWT office in Rabat. The team members are listed in Appendix B. The Sears World Trade team developed the information for the study by document review, an extensive survey of private export­ oriented seafood firms in Morocco, extended discussions with Moroccan and U.S. officials and field trips to the ports, fish auctions, cold storaqe and processing facilities. Document Review. Detailed reports in French and in English were obtained from a number of sources. Of particular assistance were the Institute Scientifique de Poissons of the Moroccan Ministry of Fisheries and the National Maritime Fisheries Service (NMFS) within the U.S. Department of Commerce.

Survey. The SWT office in Rabat and the Moroccan Ministry of Fisheries arranged for extended discussions over a ten-day period with large, medium and small scale enterpreneurs in the fishing industry, with representatives of various fisheries associations, with fishermen, auctioneers and exporters. A total of 56 interviews were held with tishermen, private sector businessmen and Moroccan officials. Those contacted are listed at Appendix C. The Sears World Trade team had developed a study format and solicited information in these categories: -­ macro data about the Moroccan economic situation (Appendix D)

-- statistical information about the biomass and annual harvest;

-- government policies affecting fisheries and exports;

-- fleet composition and methods of catch;

-- refrigeration at sea and onshore;

-- processing;

-- transportation;

-- market prices in Morocco and offshore;

-- export market bottlenecks and development.

Field Trips. The Sears World Trade team was able to visit the ports and fishing facilities at Casablanca, Agadir and Tan Tan, to include the fishing boats, the loading docks, transpor­ tation facilities, auction halls, cold storage, processing, packaging and shipment facilities. The team was able to observe the quality and species of the fish landed, the handl­ ing and icing techniques, the auction and price mechanisms, the selection for export, and the cleaning, packing and storage methods.

1-2 II. Overview of Export-Related Fisting Industry*

A. Resources

1. Preface. It is not possible to reconcile the confusing array of data and reports related to Moroccan fish stocks. In this report the intention is not to try to do so; it is to provide the reader with a sense of the total picture and an understanding of the relative size and value of the various sectors.

2. Fishing Topography. Only the Atlantic grounds were examined in this short study, (The Mediterranean grounds con­ tribute about five percent of the value of the total fisheries sector, mainly in the pelagic species (sardines and anchovies) and some white fish which have adapted to the high salinity and warm waters of the Mediterranean). Morocco's 1,640 miles of Atlantic coastline are divided into three water temperature zones. From Gibraltar to El Jadida, 40 miles south of Casablanca, the average temperature is 720, too warm for the sardines and the fish which follow them. Also too close to Spain to avoid being overfished, this zone contributes less than ten percent of the value of the fisheries sector.

The second zone, with an average temparature of 650 extends from El Jadida to Agadir, currently the leader in Moroccan coastal fishing landings. Juvenile sardines tend to favor waters of 640, and the northeast winds funnelled offshore by the Atlas Mountain blow the warm coastal waters seaward, producing a nutrient-rich upwelling of the colder waters from the depths of the Continental Shelf. The phosporous and nitrogen compounds, exposed to sunlight, produce abundant plankton, a further attraction to schools of sardines. Hence, the area from Safi south to Agadir has comprised the tradi­ tional Moroccan fishing ground for sardines.

The third zone, with an average water temperature of 570, extends from Agadir, along the Western Saharan coast, to the border with Mauritania., These cold waters yield the largest pelagic catches and are the center for the modern stern trawler fleets, concentrating upon cephalopods (Saharan squid, octopus, cuttlefish) and, to a lesser extent, demersal white fish.

*This study does not address the artisinal fisheries in Moroccan villages, nor the efforts to distribute fish inside Morocco.

$2 In ratios of value, the zones (Table 2? are approximately as follows. Table 2

Fishing Zones

Zone Value of Total Catch 1. Mediterranean 5% 2. Gibraltar to El Jidada 10% 3. El Jadida to Agadir 20% 4. Agadir to Mauritania 65% Saharan Waters)

Source: William B. Folsom, 1975 Report on Moroccan Fisheries, NMFS, Dept. of Commerce.

3. Fish Stocks. The Moroccan waters are among the richest in the world, holding large stocks of surface-swimming pelagics,or blue fish, (most prominently including the European sardine), and of demersals, or bottom-dwelling white fish and cephalopods (Saharan squid, octopus and cuttlefish). Shrimp, lobster, and other species are slight by compari­ son. Reported annual landings from Moroccan waters have, in the past decade, varied between 400,000 and one million tons.

These data concerning biomasses and annual catches are disturbingly incomplete. The standard estimate is a sustainable annual yield of over 700,000 tons of European sardines and over 200,000 tons of demersal species, including cephalopods and white fish. Table 3 shows the 1982 estimate of the Ministry of Fisheries. Variations to this estimate are described in Appendix 3. Table 3 Estimate of Annual Maximum Sustainable Yields (MSY)

Pelagics Demersals (Sardines & Anchovies) (White Fish & TONS Cephalopods) Mediterranean 30,000 8,000 Atlantic - 435,000 69,000 Northern Zone

Atlantic - 410,000 316,000 Southern Zone 877,000 393r000

TOTALS - 875,000 TONS 393,000 TONS Source: Ministry of Fisheries *In this draft, Table 1 is part of Appendix D. in the final report, the tables will be renumbered. I1-:2 Systematic annual sampling of the several prime fishing grounds is not conducted and Moroccan and American ocean scientists expressed to the Sears team unease about the endur­ ance of the stocks because of foreign fishing methods and catches, much of which ignores prudent conservation. Modern can deplete any fish stock, no matter how massive, as shown in the North Atlantic in the early 1970s. Morocco and West Africa are placing a valuable natural resource in the hands of foreign nations with international reputation for massive harvesting. This is a concern for the pelagics and for the demersals and cephalopods taken mainly in the southern sector. the landings of the latter are made at Las Palmas in the Canary Islands, 100 miles off the shore of Morocco, and records are not available. However, a comparison of two FAO studies of landings at Las Palmas in 1978 and 1979, with the detailed information volunteered by several Moroccan fishing companies showed a decrease, over a period of five years, in the per vessel catch in Las Palmas of over 20 percent. Given the rise in prices, it is still profitable to use large stern trawlers (350 GRT and greater). However, there are decreasing returns for adding more vesselz and the Sears team was disturbed by casual and repeated reference to standard over-the-side disposal practices in the Southern Zone of incidental catches, which was less profitable per pound than filling the hold with cephalopods and more expensive white fish.

In the professional opinions of Moroccan and U.S. fisheries officials, the economically valuable species in Moroccan waters are being fully exploited and probably over-exploited, with foreign fleets accounting for over two-thirds of the catch. Despite these underestimates, Figure 1 shows that the 20-year trend in landings in Moroccan ports is upwards. The annual level has fluctuated widely, driven by the cyclical strengths of the upwellings which concentrate the pelagics.

11-3 Figure 1 1962-82 Fish Landings In Moroccan Ports

FISH LANDED IN MOROCCAN PORTS

r

400 THOUSAND TONS

3O0 $ ,, TOTAL/,,,/i

300

i,.--- I % ,. . _ _, - .

9 ,, . ",, / $ ",I f!\-,1 ",-IS - .1' /', ,,14 - v /

..... ',, /,/PLAGI//

• ... J" ,/SARDINES \ H4,x\ FISHS

1961 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81

Source: Banque Marocaine du Commerce Exterieur

IT-,3a 1 0 / 4. Landings. Table 4 are the reported catches of fish in Moroccan waters in 1980. Note that the reports equal or exceed the MSY shown in Table 3, and foreign fleets take most of the catch.

Tabie 4

Fishing Catch in Moroccan Waters (1980 Landings in Metric Tons)

Total Moroccan Percent Catch Catch Foreign MT MT Catch

Sardines 513.915 202.478 61% Jack 490.390 16,854 96% Cephalopods 142,155 12,884 91% Shrimp 13.375 0 100% All Others Including Whitefish 366,307 34.189 93%

Totals 1,526,132 MT 279.778 MT 72%

SOURCE: Banque Marocaine Du Commerc Exterieur May-June 1983

Data about these fish catches from Moroccan waters are underestimated. Reported Soviet catches, for instance, dropped from 500,000 tons in 1976 to zero in 1983. The reported Spanish catch in 1983 was of white fish was also quite low, although, the skill of Spanish fishermen is admired worldwide. Also, the data on landings in Moroccan ports are accurate but not complete. Legal taxes at the auction halls in Moroccan ports average 11-13%, and are deducted on the spot from the payments made to the fishermen, as are any bank or other interest notes due on fishing equipment. The incentive is not to sell at the halls. Prior studies have referred to substantial sales at sea to Spanish boats, thus avoiding all taxes. legal and illegal. Some modern Moroccan trawlers, landing their catches at Las Palmas, frequently and strangely have reported earnings so low they have not been able to meet their bank payments. The point in bringing up the subject is to warn the reader to use care in drawing conclusions from macro data; They may be precise down to the final ten pounds and still be very inaccurate, underestimating due to the catches which are not reported

11-4 B. Value of Exports from Morrocan Ports. In 1982, the Ministry of Fisheries estimated (Table 5) the export of fish and products at a value of $125 million, or 8 percent of the value of all Moroccan exports.

Table 5

Major 1982 Moroccan Fish Exports

Tons Landed Tons Exported U.S. $ Value of Exports THillions)

1. Benthics white 68,000 68,000 $68 fish & cephalo­ pods) landed at Las Palmas

2. Pelagics 230,000 45,000 51 (canned fish)

3. Benthics 43,000 6,000* 6 landei in Morocco

341,000 107.000 $125 million

Source: Ministry of Maritime Fisheries and Merchant Marine, Data on Moroccan Marine Fisheries. 1981 & 1982.

* Based on the estimate of the Director of the Auction Hall in Agadir that 10 to 15 percent of the fish landed in Moroccan ports eventually are exported.

C. Value of Exports from Moroccan Waters. Table 5 indicates that officially Morocco's fisheries potential for export is modest. Based on extended discussions with fishermen, boat owners and Moroccan fisheries officials, the Sears World Trade team prepared its own estimate, shown on Table 6. It is based on extrapolations and deduction, not on official reporting. The picture which emerges suggests strongly that the foreign exchange value of the Moroccan fisheries sector has been understated by a factor of four or more, because the value of the catches of the foreign fleets have not been estimated.

11-5 Table 6

Value of 1984 Moroccan Fish Exports, As Unofficially Estimated To Include Foreign Fleets

Category $ Value of of landing Tons Fish Landings

1. Pelagics 350,000 $ 35,000,000 landed for export by Moroccans

2. Benthics 10,000 $ 10,000,000

landed for export in Morocco

3. Pelagics 300,000 $ 30,000,000 (at 50/lb.) taken by the Soviet Union

4. Benthics 100,000- $90­ landed in 300,000 $300,000,000 Spain

5. Pelagics 150-250,000 $15-25,000,000 landed in (at 5g/lb.) Spain and in the Canary Islands

6. Landings 200-300,000 $400,000,000 at Las Palmas

7. Discards 50,000 $ 10,000,000 by Las Palmas Fleet

$580 ­ TOTALS 860-1,560,000 $810,000,000 tons

11-6 Table 6 makes four points. First, the '.uture of Moroccan fishing for purposes of export case value lies in the whitefish species (cephalopods and bottom-dwelling fish) in the south and not in the more numerous blue fish species (European sardines and otherpelagics). Second, comparing Tables 3 and 6, suggests that, due to foreign fishing pressures, the Moroccan sustainable yields are being exceeded. Third, the foreign fleets, especially the Spanish, must be displaced. Fourth, as these foreign efforts show, Moroccan fish are products which are easy to catch, easy to process and in definite demand in markets abroad, yielding large revenues. Each landing category is discussed below. 1. Pelagics Landed by Moroccans

The Moroccan pelagic catch rose by 100,000 tons between 1982 and 1984. However, the fishermen received an average only .74 DH per kilo, because the supply far exceeded the canners' demand and therefore the fishermen, competing among themselves, were offered practically the lowest price possible under Moroccan law. Excess supply, not the high rates of post-harvest spoilage, determined the low price.

2. Benthics Landed by Moroccans

Benthics (white fish, cephalopods and shrimp) landed for export in Morocco are handled by about six export buyers dealing in small volumes. The main transportation mode are refrigerated trucks taking the ferry across Gibraltar and driving across Spain on a two or three-day haul to the markets of France and Italy. Value added of over 100% is achieved by the simple, labor­ intensive steps of cleaning and packaging the fish.

3. Soviet Pelagic Fishing.

The FAO reported the Soviet catch of pelagics from southern Moroccan waters to be 515,000 tons in 1976 and the Polish catch to be 135,000 tons. Since then, the catch, as officially reported, has dwindled to nothing. In 1983, the magazine Infofish, reported the Soviet figures for fish imports on a worldwide basis to be only 64,000 tons, while the Soviets reported their worldwide catch at over 1,000,000 tons. Clearly and successfully, the Soviets are determined not to pay for fish imports, preferring instead to catch fish wherever they can.

Soviet and East European fishing is not accurately reported. Moroccan fishermen, however, vehement4 assert such fishing goes on. The Soviets can employ severa b(i'ep their fishing vessels in Moroccan waters. First, there are efforts to bribe officials to ignore the Soviet presence. Recently, a senior Moroccan navy officer in tni southern Saharan sector was jailed for accepting

11-7 such bribes. Second, the Soviets have offered assistance training, as payment-in-hand, particularly to the cognizant agencies whose budgets are severely constrained. At presentr 200 Moroccans are students in fisheries programs with Soviet Union. Third, the Soviets use military muscle. When Morocco seized a Soviet trawler in 1981, the Soviets deployed a cruiser to demand its release and the U.S. responded by ordering elements of the 6th Fleet to the area. Fourth, economic or geopolitical leverage can be used to link fishing to other negotiations or objectives sought by Morocco, such as international support for its claim to the Western Sahara.*

Many Moroccans whom the team interviewed put the Soviet annual catch, or take, from Moroccan waters at 300,000 to 500,000 tons of pelagics, or blue fish, mainly sardines and jack mackerel. It is difficult to assess the fair market value of the catch, because there are no competing buyers. At the moment, Morocco's MSY of blue fish exceeds the catch demands for canning purposes of both Spain and Morocco. For the amount of sardines they needed, the Moroccan canners in 1984 paid .74 DH per kilo. At that price, a Soviet catch of 300,000 tons was worth $30 million. The Soviets paid nothing, or at most a few million dollars.

*Morocco's richest fishing waters are off the coast of the Western Sahara. Morocco achieved independence from French and Spanish control in 1956. At that time, however, Spain retained authority over two small enclaves in northern Morocco - Centa and Melilla - and authority over the Spanish Sahara, a 100,000 square mile desert territory (about the size of Nevada) directly to the south of Morocco. Following the "Green March" into the Spanish Sahara by King Hassan II and 300,000 civilians to regain Morocco's claimed lands, in February of 1976, Spain withdrew its forces from that region. Morocco and Mauritania took over and divided the region. Seeking full independence, some members of the nomad Saharan tribes resorted to guerrilla warfare and were granted sanctuary and assistance by Algeria, Morocco's neighbor and arch rival. Under political and military pressure from the Polisario guerrillas, in 1980, Mauritania relinguished any claim to Saharan territory. Aided by Libya and by Soviet arms, the Polisario have continued to launch, sporadic military attacks from Algeria. A political settlement is supposed to be reached through a plebiscite. Unit it is, Morocco has need of interna­ tional support for its territorial claim and the political dispute clouds the issue of fishing rights in the Saharan waters, giving other nations, such as the Soviet Union and Spain, some implicit bargaining leverage with Morocco.

11-8 At least as serious as the lack of payment is the effect upon the biomass. The introduction en masse in the mid 70s into the North Atlantic of the stern trawler/processing/freezing resulted in an abrupt decrease in the biomass of species thought inexhaustible. Only the extension of the EEZ to 200 miles saved the biomass by placing the stocks out of bounds for nations without concern for conservation. Morocco does not have the research ships and crews to take the requisite samples. Fragmentary and anecdotal evidence suggests t.hat the biomass for the pelagics, and other stocks, are being pillaged. It is not known the extent to which the Soviets have begun to seek other types of fish from Moroccan waters. 4, Spanish Fishing From Spain - White Fish Landed in Spain. The Spanish are at least as secretive as are the Soviets about their fishing activities in Moroccan waters, only the Spanish catch dwarfs in value that of the Soviets. Spain still treats Moroccan waters as a colonial possession. As all colonies have done, Morocco will eventually displace the Spaniards, but not without economic and political struggle. With 17,000 boats, Spain accounts for 70% of the fleet of all of Western Europe. With a remarkable maritime tradition, Spanish fishing boats have for decades roamed the globe, earning a mixed reputation. The Spanish knew how to catch fish but questions were raised about care for conservation measures or moderation. Allegations of record falsification, wastage over-the-side of unwanted species and overfishing have been made. Gradually, the productive waters of the world have been closed to Spanish vessels. According to Infofish, the world catch rose from 66 million tons in 1975 to 76 million tons in 1983, while the reported Spanish catch over the same period decreased from 1.5 million tons to 1.1 million.

In A,,gust of 1983, Spain signed a treaty with Morocco agreeing to reduce its catch by 40% by August of 1986. However, the treaty contains no mention of what the catch was in 1983, or how the agreed reduction will be verified, and Spain has proven very firm in protecting its fish interests, sending gunboats on some occasions and using substantial economic leverage at other times. In 1975, a Spanish destroyer intercepted a Moroccan patrol boat and freed a Spanish vessel the Moroccans had seized for fishing illegally. In 1980, Spain refused to permit the transit across Spain of any Moroccan commercial vehicles, thus cutting off most Moroccan trade with Western Europe. Spain reopened its roads only after Morocco agreed to agricultural quotas and to a fishing agreement permitting Spain access to Moroccan waters. In the spring of 1982, the Moroccan navy bgan harassing the Spanish fleet in Moroccan waters, after Spain had signalled possible support for the Polisario. The harassment

I1-9 ceased after quiet talks between Spain and Morocco. In 1984, at an international political conference in Lisbon, the conferees noted that Spain, in pressing its fishing demands in Moroccan waters, possessed leverage by virtue of being Morocco's third largest trading partner. These incidents are illustrative of the complexity of the seriousness of the Spanish insistence, despite the 200-mile sovereign limit, to special fishing rights in Moroccan waters.

In 1984, there were at least 700 Spanish vessels, with home ports in Spain, licensed by Morocco to fish in Moroccan waters. The records of their catches, as reported for the first three quarters of 1983, amounted to an annual catch of 100,000 tons of white fish/shrimp. That catch - an average of 120 tons per year - would suggest that fishing in Moroccan waters is very poor and does not cover the costs of operations. On the other hand, deductive assumptions were also made based on extensive discussions and the SWT team's experience in estimating required catch versus selling prices and operating costs. It was assumed each of the 700 Spanish boats made about two round trips per month from Spain, or 24 trips per year and returned 20 tons of white fish per trip, or at least 400 tons/year. (For comparison, the trawler landings at New Bedford, Mass., were examined. A typi*A small vessel (81 GRT, 66 feet LOA, 1966 construction, six-man crew, 350 HP) made 26 fishing trips in 1982 and landed 342 tons of whit. fish. A medium vessel of 135 GRT and 75 feet LOA landed 470 tons, while a larger vessel (136 GRT and 83 feet LOA) landed 621 tons.) At $900/ton for white fish on the Paris market, the cost to Morocco in lost foreign exchange could be about $300 million. With a conservative value added, the Moroccan loss to this home-to-home Spanish fleet would be $600 million.

The Moroccan coastal fishermen at Agadir were more disturbed by the largescale effectiveness in their area of the Spanish trawlers harvesting demersals than they were by the Soviet pelagic trawlers.

5. Pelagics Landed by Spain

The second Spanish fleet operates in pursuit of sardines, from Spain and from the Canaries Islands (Las Palmas) where there are at least three canneries. Fishermen from the Canaries have for decades taken a portion of the sardines in the southern sector, before the sardines begin their annual northward migration towards Agadir and Safi. In 1983, The Spanish government agreed to enlarge the size of the next mesh used in fishing, despite the vigorous protests of the sardiie fleet from the Canaries. Moroccan sardine fishermen, alleging the migration size has dwindled, blame the heavy Soviet trawling efforts in the south,

II-10 not the Canaries fleet. The FAO report for 1982 places the pelagic catch by the Canary Island fishermen at 3500 tons. This could not sustain any viable cannery operation. Spanish reports to the Moroccan Ministry of Fisheries in 1982 projected the catch for the year from Moroccan waters to be 150,000 tons. Moroccan observers believe that the Spanish take annually about 250,000 tons of pelagics, vice the 150,000 tons which are reported.

6. Landings at Las Palmas

The Canary Islands are the supply, offloading and overhaul center for the international fleet trawling the coastlines of West Africa, Korean, Soviet, Spanish, Polish, Portugese, etc.. The port operation is impressive, including one of the largest shiplift systems (25,000 tons) in the world and ample capacity for outlift and full repair work. Allegedly a dozen Japanese and Spanish trading companies work as a cartel to control the price offered for landings of cephalopods and whitefish, which are frozen on board the trawlers. In 1984, there were 250 Spanish and 180 Moroccan trawlers licensed by Morocco to fish the rich cephalopod beds of the Sahara. (The rest of the lecensed Spanish fishing fleet had to fish elsewhere, generally much farther to the north.) Las Palmas is operated by Spain as a free port, with significant economic benefit to the islands in terms of all the industries which support the fishing fleet. A fishing captain is paid in dollars for his catch, no red tape and no questions asked.

The Saharan fishing has been excellent and the profits high. The Sears teamwas able to locate two FAO studies in the late 70s by two PHD students who were given permission to go to Las Palmas to observe the landings, provided they excluded from study Spanish, Soviet or Japanese vessels. The FAO authors warned their data understated the catch per vessel because there was no incentive for a fishing captain to report his full catch. Nevertheless, 87 Republic of Korea trawlers reported catching 81,000 tons in 1978, or 925 tons per trawler. At 1984 world prices, the value of the catch per trawler per year was $2,130,000, based on 140 tons of sea breams, 14 tons of croakers, 150 tons of octopus, 280 tons of cuttlefish, 100 tons of squid and 240 tons of other whitefish. See Appendix E for reported landings at Las Palmas. In 1979, a second FAO report said the average Korean trawler was landing 720 tons/year. In 1984, several Moroccan fishing executives from competing companies separately told the Sears team they expected their Las Palmas­ based boats to average between 650 and 860 tons per year, with a goal of 80% cephalopods/20% white fish. (Practically all the Moroccan boats are manned and commanded by Spanish or Korean fishermen; most of the boats are built in Spain or France and outfitted in Spain as a coventure.)

II-11 At 700 tons, each boat should bring in revenues of at least $1.1 million, even if the Las Palmas trading companies allegedly offer $2000/ton for cephalopods, or 40% below the world price, and $1000/ton for frozen white fish. (As a rough rule of thumb, a annually should gross its investment cost. Two Moroccan companies said their Las Palmas trawlers cost one million dollars per vessel and returned about that amount each year.) By 1986, Spain is supposed to reduce its catch (and so, presumably its fleet) in Moroccan waters by 40%. If the number of licenses is held at 430, (which is the current number of licenses), then Morocco will have 300 vessels with total annual revenues of at least $330 million in 1984 dollars.

Currently, from Moroccan waters thc Las Palmas-based fleet of 430 Moroccan and Spanishe-owned boats takes fish worth $400 to $500 million, assuming there are no catches by unlicensed vessels.

Since the Las Palmas trawlers freeze on board their catches of cephalopods and whitefish, the current system does not allow for adding value by further cleaning and packaging before sales to trading companies.

7. Discards.

Lastly, concerning the Las Palmas fleet there is the question of discards-over-the-side disposal of unwanted incidental catches, especially sea bream, is a common practice. A vessel on a two­ month voyage with limited holding capacity will, if unregulated, dispose of the less expensive species. Estimates of the ratios of discards were extremely high. Conservatively, if only one fish in five is discarded, then 50,000 tons go over the side. At 200/lb., the loss is ten million dollars. Technically, this is not a dollar loss, since the discards are replaced by more expensive fish. But the practice can affect the biomass and in the long haul deprive earnings to fishermen who will eventually seek the species now being discarded, as was the case ten years ago in the North Atlantic.

D. Surveillance, Policing and the Foreign Fleets

In 1983, the Bangue Marocaine du Commerce Exterieur reported significant catches in Moroccan waters by: Spain, USSR, Bulgaria, East Germany, Rumania, Japan, Greece and South Korea. Yet only Japan and Spain have written fisheries agreements with Morocco, and the Spanish compliance with its own agreement is open to interpretation. The standard explanation for this massive cheating and exploitation is that Morocco lacks the technical means - aircraft, radars, patrol boats, etc., - of detection and enforcement.

11-12 The subject of foreign fishing in Morocco, however, is much more complicated and sensitive. Some Moroccan officials denied there were any Soviet fishing boats in Moroccan waters. Others noted that the Moroccan navy, with jurisdiction for surveillance and policing, will not even discuss the subject, let alone share data, with the Ministry for Fisheries. The problem is at base political; the problem is not a lack of surveillance capabil­ ities. That latter claim is evasive or bureaucratic self-serving.

The Continental Shelf extends only 60 to 90 miles off the Moroccan coast; 99 percent of all fish are caught on the Shelf; most fishing is done much closer to land than the outer edge of the Shelf. Large trawlers, let alone factory ships, cannot hide; deep sea fishermen, with few other diversions, tend to study intensely the patterns and catches of other fishing boats. At sea fishermen use VHF and single sideboard radios to communicate among themselves and with the home office. When in port, they tend naturally to gossip among themselves. For instance, when the Sears team was in Agadir, the fishermen there described in detail three large Soviet trawlers they alleged were working at that moment 150 miles to the south.

Fish are not uniformly distributed along the Moroccan coast­ line; there are only two major and two minor fishing grounds productive enough to attract serious foreign fishing efforts. To maintain surveillance - to know who is fishing where - is a simple matter, cheaply done. All that is needed is to fly daily a few inexpensive, single-engine planes such as are rot:tinely used to spot or tuna (objects much smaller than trawlers), or to send out 40-foot deep-V modified sport- fishing boats (as is done by the Bahamas Islands), or ask the Moroccan fishermen. Of course, if goldplating is an object, one can insist upon small destroyers and radar aircraft. To eliminate the final ten percent of poachirg might require such fairly sophisticated means and NMFS and the Coast Guard have done studies of this for Morocco. But the vast majority of the poachers could be identified by simple means which are readily available and inexpensive.

However, there is no problem undertaking a serious effort at surveillance unless Morocco is prepared to take action and police the waters if poachers are identified and located.

The extent of policing is not so much a matter of technical capabilities as of political decisions. Policing involves international politics, plus military and economic power, especially since the two prime culprits - Spain and the Soviet Union - are extremely aggressive and employ a variety of means of persuasion and coercion in vigorous support of their distant water fleets.

11-13 The Moroccan fishing grounds are being policed when the political climate has decreed. In 1984, the Sears team was told repeatedly that there was no systematic, large-scale poaching on the Saharan cephalapod grounds (the most profitable fishing area) bedause Spain and Morocco had come to terms and Morocco imposed heavy fines on any unlicensed boat caught on the grounds.

In summary, unlicensed foreign fleets are tolerated not because of a lack of the technical means of surveillance. Surveillance is not undertaken because there is a political decision not to pursue the issue, since knowledge about poaching would demand police action. Such policing, undertaken against economically and militarily powerful nations with an array of negotiating levers, is a political decision which requires caution and shrewdness, given the strength of the adversaries.

11-14 III. The Moroccan Fishing Fleets

The composition of the Moroccan fleet is shown in Table 7. Table 7 1982 Composition of Moroccan Fleet

A - High Seas Number Gross Tons Per Boat Stern trawlers 225 350 (-at Las Palmas) (180) (350) Tuna boats 5 700 Sardine boats 2 450 Long line 1 120

B - Coastal

Stern trawlers 170 100 (white fish)

Sardine trawlers 150 50

Sardine seiners 450 45 Small boats 1500 3 Unpowered boats 5500 1

Sources: Ministry of Fisheries; Bangue Marocaine du Commerce Exterieur report of June, 1983.

About 6,000 fishermen - 90% non-Moroccans - are employed by the several major companies of the High Seas Fleet and earning very good wages. About 30,000 fishermen work in labor-intensive fashion in thousands of small boats along the coasts, earning much lower in-omes. Each fleet is described below. A, The Coastal Fleet Fishing Industries

1. Pelagics - The canning Industry In , the broad categories are blue fish or white fish. The demand for the latter is much higher, because the flesh is firm and tasty, while the blue fish is soft and oily. The pelagic, or surface swimming species (prominently including sardines and mackerel) are blue fish. In 1984, the Morocr.an, or "European" sardines sold at port for three to five cents a pound, while the white fish sold for 20 to 50 cents per pound. Most studies, however, of Moroccan fisheries, ignoring the value of the catches of the foreign fleets and the Moroccan landings at Las Palmas, have stressed the sardine industry as the essential sector, especially for exports. For instance, a recent report cited canned fish as "the most important fish export, with about 40% in weight and 43% in value ($51 milaion in 1982) of the total". About 80 percent of Morocco's canned fish (75% European sardines, 15% anchovies and ).0% chub mackerel) are sold abroad. France is Morocco's major client, (15% of sales in 1982), followed by Nigeria (13%), U.K. (10%), Soviet Union (10%), Italy (7%) and the FRG (7%). The comparative importance of the sector, however, has been overemphasized and the growth potential is uncertain, due to the production infrastructure in Morocco and to the stiff competition for international markets. Sardines remain plentiful, although the sardine biomass in northern Morocco tSafi to Casablanca) has dropped and the fish­ ermen have migrated to central Morocco (Agadir). The Moroccan fishermen attributed the biomass reduction to heavy Soviet fishing in the south, which depleted the pelagic stocks before they could migrate northward. Nevertheless, in 1984 more sar­ dines were harvested and landed in good condition than could be accommodated by the 68 major Moroccan canneries. Ten canneries are located at Essourea, 18 at Agadir and 36 farther to the north at Safi, where in previous decades there were ample concentrations of sardines. The canneries, established batween 1947 and 1952, use machinery with an a?erage age of 30 years and so far have remained price competitive on the world market against the Portuguese, Spanish, Italians and Norwegians due to the low cost of Moroccan labor (the 25,000 women who work in the canneries and the 6,000 sardine fishermen). Table 8 lists the composition of the costs for producing canned sardines.

111-2 Table 8

Sardine Canning Composition of Costs

Item Percent of Total Costs

1. Tin and carton 3? 2. Labor 15 3. Fish 15 4. 13 5. Energy 6 6. Overhead/Tax 10 7. (Profit) (8) 100

Source: Interviews with canners.

The average cannery can only process 20 tons of sardines per day, a low production rate. The standard procedure is for the canners to meet with government officials once a year to fix a minimum and maximum price to be paid to the fishermen. In 1984, the range was from 1.09 DH/kilo for good quality to .34 DH/kilo for spoiled fish which could be used only for . The canner then signs contracts with fishermen but does not guarantee that he will buy a minimum quantity; it is a buyer's market.

Using old wooden boats with minimum electronics (some 25-watt radars and, more rarely, flashing recorders), the fishermen go out a few miles to sea and follow the sardine migration. Range, however, is severely limited by the total lack of refrigeration, so catches and cannery production are cyclical. In the high season, boats could come back to Agadir with 2000 tons a day of good quality fish. Since the canner­ J.es in Agadir can process only 450 tons/day, and since there is no cold storage, the remaining sardines are sold for fish meal. Representatives of the canners inspect each catch and "offer" (actually, fix) the price. Since fishermen cannot recover costs at the price of fish meal, they regulate them­ selves and allow only enough boats to fish in rotation in the peak season to deliver 450 tons/day, for which the canners will give them a low price.

111-3 The harvesting techniques of the coastal sardines have not changed for centuries. Egyptian fishermen depicted in murals from Cleopatra's reign would recognize the procedures used today. The purse net enfolds and entraps the surface-swimming sardines, which are then scooped and shoveled into a concave hold whose wooden sides lack the insulation to hold ice, if any ice were used. As more sardines are dumped into the hold, those on the bottom are crushed and wasted.

Sardines, with a relatively high fat content and soft flesh, bruise and spoil more rapidly than white fish. To improve quality, pallets or horizontal shelves would be a means to distribute the crushing weight of the catch, while simple systems such as refrigerated sea water or chilled seawater would reduce spoilage. Chilled seawater requires only ice, insulated boxes and clean seawater. Under the current economic system, however, any such improvement only increases the costs to the fishermen, who will receive the same price for chilled or unchilled sardines. When the hold is full, the boat returns to port and the ten-man crew form a chain and, using small wicker baskets, remove the sardines scoop by scoop. The sardines are sprinkled with salt and ice and stocked in small plastic trays, one set upon the other on the dock, exposed to the sun. Ps the hold is emptied, open trucks are backed up, the trays set within the truck bed and a canvas thrown over the tops. The trucks are then driven for 30 minutes to six hours (or more) to the cannery, where the fish are reinspected for preservation and processed..

Estimates are that the lack of on-board and at-port refrigeration, and overstuffing of poorly designed ship holds, result in a spoilage rate of 50 percent. The Moroccan fishermen view this as an irrelevant statistic, arguing that the supply of quality sardine landings during the migration season exceed the canneries' capacities. During the offseason, the boats would have to travel for 48 hours just to reach the fishing grounds and the price of fuel ($1600 per trip) and other expenses, plus the cost of installing refrigerated holds, would exceed the price of the catch ($40 per ton with a capacity of 20-30 tons with moderate spoilage).

When the sardines migrate south beyond the coastal fishermen's unrefrigerated range, the canneries work fewer hours, having fewer tons of sardines to process. Although it will remain active for ten months a year, a cannery will average only 150 full production days, while the sardine Lishermen will average 270 days at sea.

111-4 Through 1984, the government Office du Commerce Exterieur fixed the price for the sale of canned fish abroad and among themselves the canners were able to agree to market shares - a convenient, regulaced industry with an assured profit, no risk, no reason to modernize and little incentive or room for the aggressive entrepreneur.

2.Demersal, or White Fish, Industry*

This section addresses the demersal fishing conducted from major ports by b 'ts between 30 and 80 feet in length, displacing five t, 100 tons. The average boat is wooden, ten to 15 years old, .'5 feet in length, and 40 gross tons with ten tons holding capacity. Her crew of eight makes trips of two to three days duration, trawling for total catch rather than for certain species, hauling the catch in over the side into a concave wooden hold with a token amount of ice. No gutting or cleaning of any species is done. At pierside the catch is unloaded by hand, arranged by species into shallow wooden display boxes, sprinkled lightly with ice and pushed on board carts into a large concrete auction haul. Buyers move from box to box and after a price is set, an official from ONP (Office Nationale du Peche) collects the taxes (about 13% of the price) and also deducts any amount the boat owes to any creditor. The net sum remaining is divided by the boat owner, after deducting all expenses, on the basis of 50 percent for the crew and 50 percent for the owner. Most owners are not the boat captains, and many owners have five to ten boats in their fleet.

Table 9 shows the composition and value of white fish landed at Agadir, Morocco's largest fishing port.

*White fish are landed by thousands of fishermen in hundreds of small villages along Morocco's northern coastline. These artisinal catches, however, are small and there is no transportation system to move these fish to central markets for export. Because this report is concerned with export potential, the village artisinal fishing system is not addressed.

III-5 Table 9

1983 White Fish Landings and Value

KILOS DH PRICE DH/KILO Ombrimes 2,081,016 14,051,116 6.75 Crevettes 752,706 8,321,123 11.05 Pageots(P) 969,546 7,882,200 8.12 Merlins 583,160 7,331,391 12.57 Saurels 3,764,609 4,634,580 1.23 Soles(G) 253,684 3,364,998 13.26 Pageots(G) 250,187 3,307,034 13.21 Calamars 207,553 2,937,902 14.15 Trash 1,231,438 2,718,515 2.20 Congers 433,030 2,660,583 6.14

Source: Director of the Auction, Agadir

At the 1983 exchange ratio of about eight DH to one dollar, these auction hall prices do not appear unduly low, compared to prices in external markets.

After purchase, the fish are moved on the loading docks at the rear of the auctioa hall and loaded by hand into trucks. Icing of the white fish, once landed, is done seriously, not in the token manner applied to the pelagic landings. The trucks then are driven to major cities, where the fish are neatly displayed in the local marketplaces or sold directly to hotels. And, of course, the Moroccan fishermen complained to the Sears World Trade team that the final price paid by the consumer was three times the price paid to the fishermen and that the middlemen did not deserve such profit.

About 10 to 15 percent of the white fish landed will be bought for export. Some will be immediately flown fresh to Paris and some will be trucked immediately, generally to Spain. Some will be blast frozen in the round and packed in small (e.g., ten kilo) packets, with species mixtures selected in accordance with the preferences of established buyers in the West European market.

111-6 Unlike the white fish, the cephalopods are carefully cleaned before freezing and some exporters are also beginning to filet the white fish. (To process fish, shrimp or cephalopods is a labor-intensive technique. The heading and filleting machines, and the materials for packaging, are not expensive and neither is Moroccan labor. In processing, the price of the fish is doubled and sometimes tripled.)

When sufficient quantity has been assembled, a refrigerated truck will make the two to three day drive to the export markets. In general, the Moroccan export sector is small, fragmented, highly individualistic and dependent upon the talents and business contacts of a few entrepreneurs acting on their own initiative. This particular export sector depends upon the daily catches of the coastal fishing fleet.

Licenses for all motorized fishing boats are strictly controlled. In the past two years, the government approved an increase of 25 percent in licenses for coastal fishing, to the consternation of the Moroccan fishermen's union, who maintained that the annual demersal catch was not increasing. Therefore the catch per boat was less and while the price of fish has risen, so too have expenses and adding boats decreased a profit margin which waj already nil for pelagics and small for demersals. On the other hand, the average coastal fishing boat changes ownership every seven years and the queue for licenses is long. These indices of demand suggest that coastal fishing for demersals is perceived as profitable.

The coastal fleet, however, is essentially a 36-hour fleet, retrawling the same waters day after day and gradually depleting the business. Many boats previously homeported at Safi have migrated 50 miles south to Agadir, which in turn is feeling the pressure of too many boats on the same grounds. The size of the juvenile fish accepted at the Agadir auction would be rejected (and fines would be levied) at the auction houses in the U.K. or in the U.S.

The fishermen could extend their range at sea only by investing in onboard refrigeration and simultaneously by being able to target higher quality species so that the higher invest­ ment and operating costs would be compensated by higher earnings per landing. At the same time, the Moroccan fishing crews would need to adapt to going to sea and staying at sea for an extended period. Species targeting through electronic sensors is common practice in modern fleets but the Moroccan coastal fishermen need to be shown that the sensor prices are not high and that they could learn to properly operate the equipment.

111-7 There is also' a small trend toward longlining, which is species specific, but the techniques are much less developed than, say, by the longliners in Florida.

The two techniques which justifiably cause the Moroccan coastal fishermen to feel threatened are the Portuguese gillnetters and the Spanish trawlers. If unregulated, either one can have a devastating effect upon a small fishing area.

The coastal fishermen recognize they should modernize many of their white fish techniques. They argue, however, that before such investment, they want a reasonable expectaion of gaining more revenues if they bring in a larger, or higher quality, or better preserved catch. They cite examples of boat owners who invested in refrigerated holds, received no increase in revenues for the fish landed, and toek out the refrigeration. The fishermen want more fish buyers, or as in Spain, a government guarantee of a reasonable minimum price per species, regardless of the volume brought in.

In the near to mid-term, white fish offer more opportunities for the coastal fishermen than do the pelagic species. In developing the white fish coastal industry, particularly for export, there are two challenges: one is technical means and the other is pricing structure. The need to modernize the technical infrastructure, especially refrigeration at sea and in port, is absolutely essential, as is species targeting through a diversity of fishing techniques and the employment of low cost electronics (fish finders, radars and position locators). Any such technical assistance, however, will be a flop unless it is linked to a system of prices and markets which reward the fishermen with higher revenues for quality fish. This means identifying several external markets, negotiating, after sample delivery, expected prices for fish processed for that market, and selecting and exporting the . This export prucess, aimed to bring revenues back to the fishermen, is not difficult to establish, although it does require legwork. B. The High Seas or Offshore Fleet

This is a separate and different sector than the coastal fleet. The high seas fleet is comprised of about 300 modern stern trawlers, say, 40 meters in length and 350 gross registered tons. This is a capital-intensive industry, with the boats costing up to one million dollars and sometimes more. Ten years ago, there were scarcely any Moroccan involvement in deep sea fishing and today most of what there is centers around investment in coventures, with the notable exception of three large, impressive, vertically integrated export fishing companies. Most of the high seas fleet is homeported in Las

111-8 Palmas, trawl the southern Saharan sector, unload their catch and are paid in Las Palmas. So the current economic worth to Morocco of its high seas fleet is low.

For decades Las Palmas has been the humeport for the international fishing fleet working West Africa from Gibraltar to Namibia. A free port with excellent facilities, a healthy climate and its inviting ambiance, Las Palmas has installed extensive cold storage facilities, facilitated international transport, attracted many fish trading companies and developed a wide range of service and support industries, to include major ship overhauls. It is less than 100 miles west of Morocco's rich southern fishing grounds. Under Moroccan law, Spain (to include Las Palmas and the rest of the Canary Islands) could technically be excluded from those fishing grounds. However, given the political uncertainties while the Polisario conhinue to claim the same region and given Spain's bargaining leverage on other economic fronts, Morocco has chosen to share with Spain the Saharan waters, under a mutually agreed licensing system. Presently, 250 vessels registered in Spain and 180 vessels registered in Morocco are permitted to trawl ol the narrow Saharan grounds. Moroccan registration means that a Moroccan citizen claims to hold at least 51 percent ownership of the vessel or the vessel's parent company.

A vessel will make annually about five trips of 60 days each to the Saharan grounds, trawling the bottom chiefly in search of cephalopods. The catch is frozen on board and sold in Las Palmas to Japanese and Spanish trading companies. A 350 GRT vessel will average an annual catch of six to seven hundred tons, with gross revenues of around one million dollars in 1984. Ninety to ninety-five percent of the crews and captains are Spanish or Korean. All are well paid; the captain will receive five percent of the catch revenues and the crew of 17 or 18 will receive 20 percent. All payments, currency, transactions and repairs are done at Las Palmas. Stern trawlers registered in Morocco range other ports of the coastline as well and there are some limited landings for export at Agadir and Casablanca, but Las Palmas is the center for the activities of the Moroccan high seas fleet.

A 350 GRT trawler will annually incur expenses requiring a cash outflow of $500,000 to $750,000. At a dollar a gallon, fuel will cost $150,000; wages will be $175,000 (or more if paid as a share of the catch and if the catch brings a gross revenue of $1 million); food, supplies and routine maintenance will cost $200,000; and interest, insurance, wharfage, depreciation and the like will take $225,000. These are illustrative figures only; cost data vary widely from trawler

111-9 to trawler, depending on capital costs and age. The costs of fuel, food, supplies and wages show less variance. The major point is that a fleet of 200 trawlers will pump many tens of millions of dollars into a local economy in terms of a demand for a broad range of goods and services. The money spread across this range creates in turn a multiplier effect, further stimulating the economy.

The Moroccan government therefore has urged its trawler fleet to homeport in Morocco. However, the cost of fuel has been lower in Las Palmas; Morocco has no service and repair industry at any port which compares with Las Palmas; most trawlers are built in Spain and equipped there or in France and the import into Morocco of needed repair parts has been a slow and exasperating procedure. Moreover, the trawler crews prefer Las Palmas and, being Spanish and Korean, must be paid in foreign exchange, a lengthy bureaucratic procedure in Morocco. At Las Palmas the landings are bought, in dollars, immediately by trading companies, who do not share their records with national governments. In Morocco, the foreign buyer pays the central bank, which converts the payment into dehram for the trawler owner, with a small percentage in foreign exchange for his direct export-related expenses, such as a trip to Europe. Before export, the fish must be approved by two sets of health officials, one providing a service and certification to the buyer and the other being a branch of the government bureaucracy, OCE, and reporting to OCE. Although OCE plays no useful role in the export of fish, a copy of all paperwork involved in an export transaction must go to OCE, which then collects one percent of the value of the export shipment.

Despite the obstacles, a major Moroccan company - Omnium Morocain de Peche, or OMP - has constructed a $40 million refrigeration and processing compound at the small port of Tan-Tan, 200 miles south of Agadir and just north of the Saharan fishing grounds. Construction is close to completion and includes: a shipyard with a 17 vessel capacity; cold storage of 5000 tons capacity; freezing (blast and tunnel) capacity of 160 tons/day; an ice factory with 80 tons/day capacity; and a fish processing and packing assembly line of 20 tons/day. Cannery and fishmeal factories are planned. Over the past four years, OMP has purchased for $57 million a fleet of twenty-seven 40-meter freezer trawlers. At Tan-Tan, the plan is to add twenty 22-meter boats for $27 million. These boats will make five-day trips to harvest the white fish which will be processed for export. With a total investment of $117 million, OMP has set goals of $100 million in export and $25 million in domestic sales.

III-10 In 1982, the Mii.istry of Fisheries estimated that from Morocco about 6000 tons of white fish were exported by the coastal fishing industry. The OMP objective at Tan-Tan is to export six to eight times that amount. The projection is based upon two assumptions. First, that it can be demon­ strated that Moroccan trawlers can operate as profitably from Tan-Tan as from Las Palmas. Most critical will be the estab­ lishment of service industries (dock space, spare parts, skilled labor, etc.) and currency facilitation for the payment of wages, imported equipment, etc. For Tan-Tan, OMP has obtained financing from France but none from Spain, because the challenge to Las Palmas is direct. It remains to be seen whether Spanish companies which supply the parts for the engines and gear on the trawlers will do business in Tan-Tan. As for currency flows, Morocco's strict controls on foreign exchange cannot be rigorously applied to the fishing sector if the goal is to capture a major part of the export market from Las Palmas. The high seas fleet have recurring expenses which can only be met by the liberal use of foreign exchange and in turn the fleet brings in more foreign exchange than it disburses.

The second assumption is that Morocco can find export markets for 30,000 to 50,000 tons of processed white fish. Japanese trading companies will come to Tan-Tan and purchase the cephalopods and white fish landed already frozen by the high seas trawlers. OMP, however, plans on 20,000 tons annually of fresh white fish landings from its coastal fleet of 22-meter boats. In addition, Tan-Tan will attract many other coastal boats now homeported in Agadir. At Tan-Tan, there is no auction hall and no routine transport to the markets in northern Morocco, a 10 to 15-hour drive. So the white fish processing concept of OMP depends upon the establishment of stable business relationships with reliable export markets reached by transport modes which permit a profit margin. In the first full year of operations, OMP, allowing for start-up problems, wants to export 15,000 tons of processed white fish. While that is a modest figure, it still means finding export markets for 600,000 pound of fish per week. Although this will entail a sophisticated marketing effort, it can be done.

OMP is not parastatal. In fact, at Tan-Tan the reverse is true, with OMP providing to the local community the infra­ structuze and services a government usually provides: tele­ phone lines, water, electricity and road repair. The harbor itself is too small for the project; if it is successful then the enlargement of the port to accommodate non-OMP trawlers should be a major decision for the government in 1986.

III-11 In summary, the Moroccan high seas fleet of 300 trawlers was in 1984 a profitable offshore investment for a compara­ tively few Moroccans. The fleet was manned by toreigners and based in a foreign port, where the catch was sold, the revenues were paid and most business was transacted, with little direct or indirect effect upon the Moroccan economy. With the development of Tan-Tan, Morocco has the chance to bring home its overseas fleet and its revenues. To do so, the government will have to adjust its currency regulations and exhibit flexibility in facilitating exports and permitting the imports of the goods and services needed to maintain a modern fleet. Tan-Tan will also result in a major expansion of white fish exports, with the coastal fishermen who move south sharing in the higher revenues. The fish are there to be caught and the refrigeration and processing plants are in place. What remains to be done is to secure a set of overseas markets which, on a reliable basis, can absorb the export capacity, which, at 30,000 tons/year, would be five times the white fish exports in 1982.

111-12 IV. A PROGRAM TO EXPAND MOROCCAN SEAFOOD EXPORTS

An analysis of the Moroccan fishing industry indicates that, especially for whitefish rather than sardines, there ate export market opportunities available now which can be exploited to generate considerable foreign exchange earnings. With small amounts of USAID technical assistance in harvesting, processing and market development, the whitefish/cephalapod exports from Morocco could increase by $5 to $10 million within 18 months, and by $50 million within five years.

Any serious effort to develop an export industry should follow a strategic plan which analyzes the factors of production and marketing in a step-by-step manner. Too frequently studies of the Moroccan fisheries industry have concentrated on one or two steps without addressing those steps within the context of an overall framework and thereby missing the linkages which must connect stock management, harvest, processing and exporting. To avoid this pitfall, the Sears team addressed the USAID/TDP request to identify bottlenecks to export within the framework of an overall planning strategy for the Moroccan seafood industry. The ten planning steps in this strategy are shown in the left­ hand column of Table 10. The right-hand column identifies, for each planning step, whether export bottlenecks exist for the Moroccan offshore fleet, for the coastal whitefish fleet, or for the sardine fleet.

Tabie 10 A Planning Strategy to Develop Export Fisheries PlDqing__Step Bottlenecks tD__Export?

1. Preserve Biomass. 1. GOM must enforce reason­ able conservation. 2. Harvest for Moroccan 2. Foreign fleets must be benefit. displaced.

3. Employ proper fishing 3. No for offshore fleet. methods. Yes for coastal fleet. No (for now) for sardine fleet.

1See Appendix J for a discussion of the sardine cannery industry.

1 4. Preservation of catch 4. No for offshore. Yes on board (refrigeration). for coastal whitefish. No (for now) for sardines. 5. Foster fair and incentive 5. No for offshore and prices (ex vessel). coastal. Yes for sardine fleet. 6. Promote refrigeration 6. No for offshore fleet. ashore. Yes for whitefish coastal fleet. Mixed for sardines.

7. Introduce to the industry 7. Yes for offshore and value added processing. coastal. Uncertain for sardines. 8. Establish transport and 8. Yes for offshore and distribution, coastal. No for sardines. 9. Create export incentives. 9. Yes - all.

10. Develop export markets. 10. Yes, esp. for offshore fleet and coastal white­ fish. jtes._ ad 2: Management of Stocks: Preserve Biomass and Harvest for Moroccan Benefit. The first two steps deal with the assessment and management of Morocco's fish stocks. If fish stocks are harvested at levels beyond the maximum sustainable yield (MSY), the size of the stocks will decrease and catch levels will fall off. In both economic and biological terms, catch rates beyond the MSY will result in overexploitation and depletion of the fishery resource. Effective management is required to prevent this situation from occurring and to ensure maximum productivity from this renewable resource.

One such example is the Dover Sole. Although there are market opportunities in both Europe and the U.S. for quality sole, there is no statistical information about the size of the flatfish fishery in Morocco. The tiny "baby" sole being sold in the auction halls would suggest that targeted fishing on sole should be prohibited for a year to permit regeneration. With proper management, these stocks could be rebuilt as an export­ oriented commercial fishery. At the present time, however, there is toleration of the depletion of valuable stocks because the auction halls accept for sale juvenile fish which, if landed in other countries, would lead to fines against the landing vessel.

2 Lack of knowledge about the size of illegal foreign harvests also results in uncertainty about how much fish is being caught in Moroccan waters each year. Our analysis indicates that the combined legal and illegal foreign harvests may exceed the MSY in certain key species. Thus, dealing with foreign fisb.ng and introducing an effective manzgement regime is essential to ensure the long term viability of the re. ource and, therefore, the long term ability of the Moroccan fleetb to supply export markets. And, of course, the 300,000 to 600,000 metric tons of whitefish and cephalopods which are harvested annually by foreign fleets operating in Moroccan waters also deprive Morocco of some $400 to $600 million in export earnings. Surveillance and identification of the foreign fleets can be accomplished with the modest means in hand. High cost, goldplated technical surveillance and military systems are not needed. To take subsequent enforcement measures, however, is a serious political issue. The long term trend is toward enforcement of the displacement of the foreign fleets. This study has taken a first cut at quantifying the economic opportunity costs associated with tolerating the presence of the foreign fleets. Publicizing the economic costs of this toleration is the best and least cost means of gaining the consensus necessary for political decisions. (The support of the US Government, in the event enforcement is challenged by other nations, should also be addressed by the Department of State.)

Steps 3-5@ Fishing Methods. Refrigeration on Board and rlssEx vessel. Steps 3 - 5 deal with the efficiency of the harvesting sector and the importance of using modern techniques to maximize the catch in terms of the amount of fishing effort expended, and to minimize fuel and supply costs as much as possible. The coastal whitefish fleet needs assistance in using electronic fish finding methods to target the most profitable species and to minimize the harvest of juvenile stocks. Low cost electronics are essential to raise the catch per unit of fishing effort and reduce fuel consumption.

Use of longline fishing methods is also recommended for the coastal whitefish fleet. Longlining requires more labor than trawling, but is a "cleaner" fishing method in that it can target more effectively on the larger, more profitable species, such as ombrine, by using hooks of the appropriate size. Longlining yields a higher quality fish since it avoids the bruising and crushing which occur in trawling. This enhances the value of both fresh and frozen fish exports to U.S., European and Japanese markets.

3 Fishermen must expect a financial reward at least commensurate with the additional effort and cost associated with any new approach, if they are to be expected to use these and other modern methods to improve their harvesting capability or to preserve the quality of their catch through more careful on board storage systems and on board refrigeration techniques. While it is not possible to legislate prices in a competitive market situation, buyers have to pay a fair price for quality fish. This, in turn, means securing overseas markets. The fishermen and the buyers, be they distributors, wholesalers, exporters or value added processors, will be facing a market situation in which the profit margins permit each to receive a fair return and in which higher quality fish receive higher prices.

Currently, most fishermen are selling in a highly competitive market in which they are racing against time to dispose of their catch before it begins to deteriorate. This includes the sardine industry where there is a finite limit on the amount of fresh fish which the canneries can absorb in any given day. (As discussed in Chapter III, the current system of fixed prices by cannery buyer ; deters fishermen and boat owners from investing in new equipment and gear.) As a result, in order to create an incentive system which encourages both fishermen and buyers to take actions which will lead to long term development of their fisheries, the following additional objectives must be met:

1) Profitable export market opportunities must be identified and effectively exploited (Steps 8 and 10);

2) Shoreside cold storage/freezing capacity must be made available to permit fishermen and buyers to preserve peak period harvests for later sale (Step 6); ind, 3) Ex-vessel prices must be sufficiently above average cost levels to encourage use of modern fishing methous and quality cont:ol techniques (Step 5).

Step 6: Pr iding Shoreside Cold Storage/Freezing Capacity Inadequate shoreside facilities for storing or freezing catches which exceed available processing or handling capacity continue to be an impediment to expansion in the sardine and whitefish markets. This has been documented throughout this report.

Some private companies have constructed cold storage facilities (known as "frigos" in Morocco) for storage of their own boats' harvests in TanTan, Agadir and Casablanca. Most of these facilities are oriented towards the higher valued cephalapod and whitefish species and there is no "public" cold storage facility available in any of the major ports for the coastal fleet fishermen.

As for pelagics, when competition affects the canning industry, it is likely that refrigerated facilities will be constructed to smooth the flow of quality sardines and mackeral for the canneries. .ggressive canners eager to expand their market opportunities will have no alternative but to invest in freezing facilities to guarantee the continuing supply of sardines for their canneries. Price competition in their major markets will force them to operate at higher capacity levels than is currently the case so as to reduce unit costs to an acceptable level. This will mean shifting from the current supply dependence upon daily harvests to a system which supplements daily harvests with frozen inventories.

Technical assistance and loan credits will be needed to help the pelagic fishing industry sort out an appropriate strategy for the development of cold storage facilities and to assist in their financing.

Step 7: Adopting Modern Processing and Packaging Methods It is not economically sensible, given excess Moroccan labor, to continue to export whitefish in the round, leaving the processing and packaging costs and profit margins to the importing countries with higher labor costs. Each importing country, and in some cases, each market segment within a particular country, has different requirements. So knowledge of a market segment in one country does not necessarily qualify an exporter to produce in conformance with the requirements of other countries' markets. For example, whitefish fillets are the second most important seafood product imported into the United States. Whitefish fillets must be prepared and packaged in accordance with specific requirements, depending upon whether they are destined for the food service marketplace or the retail marketplace. Very little frozen whitefish is imported whole, and of that which is, an even tinier fraction is imported "round," or "entier," that is, with both the head and the guts in.

In Morocco, by contrast, almost all whitefish exports are sold "round" for markets in Italy and Spain. There is only limited experience in selling frozen fillets, and the quality standards do not meet U.S. requirements in terms of appearance, size and packaging. Thus, as it is presently operating, the Moroccan processing sector would have extremely limited market opportunities trying to sell fresh or frozen, round whitefish in the United States. Similarly, they would have difficulty selling round fish into Portugal or Denmark, both of which demand that their whitefish be sold without the guts. Yet with the right kind of equipment and technical assistance, Moroccan firms could produce fillets that would be readily acceptable in the United

5 States, or whole fish that would be acceptable elsewhere in Europe.

A similar problem exists in packaging. Moroccan "round" whitefish are currently sold in master cartons which are measured in kilograms (10, 15 or 20, for example). For the United States, frozen whitefish fillets are generally packaged in a master case which is either 40, 45 or 50 pounds in weight, with the smaller boxes inside weighing either 5, 10, or 15 lbs. The fillets must be either individually wrapped (if for retail) or "layer packed" for food service markets. In addition, for many retail markets, the fillets must actually be packed in 12 pound master cartons, with 12 one-pound individual packages inside. In all of these cases, the type of packaging materials, the information which must be printed on the boxes and the st2le of presentation are peculiar to the particular market segment purchasing the product. To learn all of this by oneself is an extremely expensive, complex and time consuming activity, even for a sophisticated producer with prior experience dealing with European buyers.

Step 8: EstablishTransportation and -istribt-io-y_

A similar situation exists in the transportation area. Most fresh and frozen fish exported from Morocco are shipped to Europe by trucks which ferry across Gibraltar or Marseille. On a limited be"is, special air freight rates for seafood products exist on Royal Air Maroc flights to certain European cities. The existing transportation routes and networks do not reflect a most effective system for larger scale shipments throughout Europe, North America and elsewhere in the world. The lack of container ship connections between Morocco and the United States was frequently cited as a major barrier to the development of frozen seafood exports. There is a serious need for an analysis of the transportation options between Morocco and the major markets for her seafood exports. The data in such a study would benefit a large array of export industries, not just the fisheries sector. There is no shipping company or central organization which can readily identify the transportation routes, modes, costs and options for a seafood exporter. There is no established distribution system aside from individual efforts. There is no way to know how transportation costs will affect the competitiveness of Moroccan seafood exports in these markets since no analysis has been completed which properly addresses this question. Yet this information is critical in assessing which market opportunities can be most profitably exploited.

Step 9: Create Incentives for Export from Morocco After two decades in which exports were regulated carefully by the government, Morocco has recently adopted a policy

6 environment which is "neutral to positive" for exports of fishery products. As of October 1984, the OCE regulation of export prices for canned sardines was eliminated, and canners are now free to establish their own export prices. In February 1984, certain customs requirements and procedures were modified to reduce administrative delays and inconveniences for exporters.2 Despite these and other recent improvements, there must be considerable change if an economic and financial environment conducive to repatriation of the Las Palmas fleet is to be created. One or more free fishing ports are probably required so that the Moroccan companies have the foreign exchange to pay their foreign crews, import spare parts, hire foreign mechanics, deal expeditiously with foreign trading companies and still realize a profit. The trend in GOM policy indicates a willingness to liberalize foreign exchange restrictions for the fisheries sector if Moroccan ports, instead of Las Palmas, are used for landings. These landings will not occur if export markets from Morocco are not developed.

Step 10: Develop Export Markets

Although all of the strategic planning steps must be addressed as Moroccan seafood exports expand, the most critical, immediate impediment to export growth is a lack of knowledge in Morocco about market opportunities and how they can best be exploited. Other studies have discussed how the import substitution mentality in Morocco in recent years has insulated Moroccan entrepreneurs from the competition found in most international markets. This is further compounded in the seafood area because OCE control of export prices and promotion has served as another layer of protection inside Morocco and because the Spanish port of Las Palmas has provided the export alternative outside Morocco. Seafood sales to the EEC have been additionally advantaged through an elaborate system of import quotas and tariffs which favor certain nations like Morocco. Also, the reference price system in the EEC, which imposes artificially high prices on imports in order to protect domestic producers, has created an artificial marketplace which offers an assured set, small share of the market at a relatively high price. The Spanish, through a different kind of import control system, have also permitted limited amounts of fishery products from Morocco in return for political access to Moroccan fishing grounds. Thus, small scale export of fisheries products has been profitable for a limited number of Moroccan seafood exporters who

2 The recently completed study by Coopers & Lybrand, entitled Private Sector Export Industry Promotion Project for USAID/Morocco, submitted to USAID/Morocco, November 12, 1984, describes in considerable detail the policy changes which have recently occurred to create a more positive climate for export growth.

7 have been insulated from normal competitive markets elsewhere in the world. Given this situation, it is not surprising that the Moroccan exporter is not only unaware of the market opportunities in the U.S. and less familiar European countries, but he is relatively unprepared for the necessity to merchandise his products in direct competition with many other sellers, and to price and deliver them so as to beat out the competition. He is used to producing his product, packing it in a traditional form, and selling it in a traditional market. The transition to the market-led expansion effort which he must now enter will require patience, dedication to the cause, and a considerable level of commitment. It will also take a great deal of technical assistance to show the Moroccan entrepreneurs how to make the transition to new markets. This technical assistance will need to be provided over a period of several years to ensure that the Moroccan participants gain the self-confidence and expertise to sustain their efforts for the future. The first step is to identify buyers, secure their price bids, examine transport costs, compare to domestic prices ex vessel and prices in Las Palmas, have che private sector companies and fishermen decide which buyer prices to accept, move the fish and close the deal. Studies of marketing are not needed. What is needed is a hands­ on marketing p:oject to sell the fish. Establish the distribution and market system by getting out and doing it, not by studying it.

8 V. AN ACTION PROGRAM FOR USAID Preface

In Morocco, as in all countries, USAID has been forced to judge among different sectoral requests for assistance. USAID has chosen to focus on population and health, energy and agriculture, and beginning in FY 85, on private sector export development. The fisheries sector in Morocco would qualify for assistance under two of these categories; it is an agribusiness industry, and it has significant private sector export potential. This potential has gone largely unrecognized by many observers because most of the catch has been taken and sold by foreign fleets without documentation of what was occurring. This study is the first effort to assess the value of foreign exports from Moroccan waters. Also, until very recently, withLn Morocco there has been a misperception that the fishing sector comprised only those individuals and firms involved in harvesting and canning the pelagic species of sardines and achovies. Within Moroccan export statistics, only canned fish is singled out as an agro-industry component. The importance of cold storage and white fish processing within the context of processed/manufactured products has not yet been included in official reports and trade statistics. The ongoing transformation of the fisheries sector provides an opportunity for USAID to leverage 'ts assistance for economic development and export growth, as measured by foreign exchange gained or GDP expansion per donor dollar allocated. Table 11 raises some of the reasons in the left column which have been used to explain past donor reluctance to support fisheries projects in Morocco and indicates in the right column the findings of this report.

Opinions and Findings About Donor Assistance Opinlions pressed to Team Moroccan Findings

1. The fisheries industry is 1. A $800 M business where a small sector, insignifi- small aid dollars will cant compared to agriculture, yield high ROI. 2. Overfished. 2. With accepted conserva­ tion techniques, biomass can be held constant and dollar value increased.

1 3. Unacceptable export 3. Liberalized in 1984 and policies by GOM. willing to do more. 4. Fisheries Ministry only 4. Ministry genuinely wants a few years old. to achieve is not as bureaucratized as other ministries where AID has major projects. 5. To help fishing will 5. AID has the mission of scatter focus of AID assisting export indus­ program. tries and fish are an export product in demand. 6. AID does not have the 6. It is possible to inhouse skills to get establish MOES criteria into fisheries. and schedules which will enable AID management review without a myriad of details and contractor requests. 7. No reason to help 7. AID now supports: fisheries. A) private sector development and, B) foreign exchange export programs. 8. Donor assistance is 8. Until recently, the unnecessary; private Moroccan fishing sector sector investment should has been artisinal and support the private it is still in its sector, infancy. It lacks the cohesion and informaticn to diversify fishing methods and to develop a stable set of inter­ national markets.

The primary conclusions of this report pertinent to possible USAID resource allocation are that the Moroccan fishing industry is in a period of transition and growth which offers potential for the rapid expansion of private sector export activity. To help this export expansion will require modest amounts of technical assistance in the areas of market identification and development, harvesting, processing and packaging methods, displacement of foreign fishing, and transportation/distribution systems.

2 Export Program Ejmw=

A. Phase I -- Pilot Project to Market Whitefish Effective marketing is the heart of any pilot effort to expand seafood exports. The pilot would also constitute a risk analysis test of the feasibility of USAID's largescale private sector export development initiative. To date that initiative has been analyzed only in general, macro terms, without a hands­ on effort to test the general principle that USAID can assist in the development of external markets. In whitefish, the necessary elements for such a test are present: the availability of a high quality export product with proven foreign demand; Moroccan entrepreneurs eager to expand their export markets and to utilize effectively whatever technical assistance can be obtained; USAID's interest to provide the technical assistance for the market development efforts necessary to export products; and Moroccan government support and interest to see that the effort succeeds.

A major event, the International Seafood Conference, will take place in Marrakech in October 1985. This offers a unique opportunity to demonstrate to more than 500 seafood buyers, from all over the world, Morocco's ability to participate in international seafood trade. Since there is little time left to prepare for this event, the pilot marketing project should begin soon. Because the greatest export potential for Morocco's seafood industry lies in whitefish (and cephalapods), the pilot project should begin in that part of the industry in FY 85, with other projects introduced in FY 86 and berond. If the pilot effort is successful, it should prove to the Moroccan industry that a market-targeting approach to export expansion can work and inspire the confidence for others to try their own hand with this approach.

Free market theory would argue that Morccco should be able to gain larger export markets for whitefish a. it adds licensed trawlers and displaces the foreign fleet. In -eality, unless an aggressive and informed export marketing effort is undertaken at the same time, other nations with established mrkets will resist the introduction of Motoccan producers into the I.S., Western European and Middle Eastern/Asian markets. The current dependency upon Las Palmas returns very small revenues to the Moroccan economy and has created a dependency which should be broken. Twice, Spain has closed Las Palmas to Morcccan landings to place pressure upon the GOM. For these several -easons, establishing external markets and a system of distribution to those markets should be the first priority for any U&AID assistance.

This is not an appropriate task for private capital investment at this time, because market companies work on small (about two percent) margins and large volumes, trading known

3. products to known buyers for known prices. In contrast, Morocco must gain external markets with, initially, comparatively small volumes, persuading buyers to take the products and bargaining about prices. A fish marketeer in the U.S. will do most of his business by phone and at the landing auctions. In the Moroccan case, a large amount of 6asic data collection and legwork must be done, bringing samples to buyers in diverse markets, establishing contacts, negotiating about prices, lot sizes and delivery dates, returning to Morocco and comparing the price offerings with auction hall prices and then arranging for the fishermen and small exporters to determine deliverable lot sizes and time schedules. The effort is so new that there are literally no existing data bases; they must be collected (negotiated, really) by people with fish selling experience whose objective it is to assist Moroccan exports, knowing full well that in many markets, there will be, or might grow, direct or indirect resistance from the large, very well established, internationally-connected Las Palmas market. In essence, we are talking about Morocco's ability to establish a displacement market, gaining revenues now going to Las Palmas, Spain and elsewhere. At the present time, Las Palmas has provided most of the overseas market for Morocco's offshore fleet, and Spain, Italy and France have been the major markets for the small exports of the coastal fleet. Most of the exporters are small, independent entrepreneurs, with a typical preference for these traditional markets. There is very little knowledge of other market opportunities and even less knowledge as to how they could be reached. Careful guidance and technical assistance will be needed to move these exporters away from their current dependence upon Las Palmas and other traditional markets and into new overseas opportunities.

To accomplish this objective will require expertise in market assessment, an understanding of the distribution systems in the target markets, and the ability to undertake comparative cost and price analyses which permit an evaluation of the most profitable opportunities. The pilot project would provide this expertise in an actual "hands on" project to open up new overseas markets, with a goal to sell a minimum of $5 million in whitefish and cephalapods in those markets. Through this approach, practical lessons about private sector export assistance can be learned, before large amounts of funds are expended in the fishing industry or in other potential export sectors. The pilot project would consist of a small team of analysts and seafood traders, familiar with Moroccan fish products, who would work with the Moroccan fisheries sector to open new whitefish markets in Europe, the Middle East and the U.S. This team would identify the species to be sold in these markets, including the appropriate product form and packaging, and would work jointly with the individual firms in Morocco to develop the capability to supply these markets on a regular basis. Technical experts in fishing, processing and packaging methods would be

4 brought into the effort. The major focus would be to go out and sell to the markets and to establish the commercial linkages for continuing export relationship.

The seafood marketing experts would visit the potential buyers with a range of sample products. The prices that these buyers are willing to pay and the quantities they are prepared to purchase would give the USAID technical assistance team and the Moroccan fishing companies the basis upon which to determine the actual rizarket opportunities for these species and their profitability for the Moroccan exporter. It would also indicate what commercial linkages would be easiest to develop. The precursors for the success of this project already exist: * Species of interest in these markets are available in commercial quantities in Morocco. These include ombrine (croaker) at 6.72 DH/KG in 1984, merlan (whiting) at 7.48 DH/KG, pageot (sea bream) at 9.34 DH/KG and sole at 17.71 DH/KG. * Several Moroccan firms are ready to participate in the effort when it begins. These include Omnium Marocain de Peche, Peches et Froid du Souss, Grands Entrepot Frigorifiques du Souss, and SECAL, s.a., among others. * Potential markets for these fish have been identified. Table 13 list ten countries and 25 potential importers which would be the initial targets fro the marketing teams. Sales target in each country for the first year are also indicated.

Potential Exio-o-_±_Brkgts for MoroQccan Whitefizh

Sales Target MDH/YR Spain Pescanova, Pescofina, Compesca, Delfin, Alimar, Parapesca 5 Greece Pipilepilius 7 Supermarkets 2 France Allom & Marsailles Importers 4

Italy Surgela & Key Supermarkets, S.M.E. .8 USA Seamark, International Multifoods, Singleton Shrimp, Red Lobster Inns 10 Saudi Arabia Algosiai & Saudi Fisheries 4

5 Gulf States Various stockholder traders Japan Nickerie, C. Itoh, Nippon Soissan, Toyota, Mitsubishi, Mitsui 10 Hong Kong Dairyfarm, Jardine, S.U. 2 Singapore Fitzpatrick & local importers _2 Potential export sales 50M DH First year

The pilot effort is designed to satisfy seven conditions generally required by USAID evaluators.

1. Adequate Project Scale. The $5 million export goal is ambitious, but not unrealistic. It will be a real test of the fishery sector's ability to export from Morocco rather than from Las Palmas, and it will be a test of the Government's willingness to respond positively to requests for policy changes which will rise during program execution. 2. Proper Timinq. The port of TanTan is completed and will be ready to process fish in March, 1985. The intent is to export much of the landings at TanTan. Furthermore; the timing of this pilot effort will be useful for the larger scale effort AID plans to initiate in FY86. Most importantly, Marrakech has been selected as the site for the 1985 International Seafood Conference, to be held in October. This conference is attended by 400 to 700 of the international market leaders in seafood. for that conference, this pilot effort should have prepared (iced) fish samples, price, quantity and delivery schedules, transportation options, and price and quality of major competitive species in the markets where the attendees at the Conference usually buy their fish products, plus sufficient visits to a diversity of markets to address cogently the special concerns of potential buyers. 3. Appropriate Coordinat.jn. Both the Moroccan government and the private sector firms are enthusiastic about the possibility of American technical assistance of white development. Both groups have pledged participation and support. The World Bank and European donor nations are not now contemplating such a program and no coordination is needed at this point. The limited amounts of foreign aid directed to fisheries in Morocco (and throughout West Africa), tend to be concentrated on biomass sampling, capital investment, infrastructure (such as ports and cold storage), and random assistance to artisinal fishing fleets. Export marketing has been ignored.

6 A missing element in this analysis is the response by Spain, which is concerned about the extent to which TanTan can attract revenues which would otherwise go to Las Palmas. Twice in recent years Spain has, to make a point, refused Moroccan landings at Las Palmas, and in neither case were Moroccan ports and export procedures able to cope with the catch. The Spanish lack of enthusiasm about Moroccan fish exports -- let alone coordination in the effort -- must be recognized from the outset.

4. Financial feasibility, The purpose of the pilot effort is to determine whether Morocco's quality whitefish can be transported and sold profitably in new export markets. The Las Palmas experience would suggest that whitefish exports are profitable. However, the peculiar characteristics of Las Palmas -- it is a free port with the ability to unload and sell the contents of an entire freezer trawler upon landing -- do not answer the question for Moroccan exports in other markets. Thus, it will not be known whether Morocco can compete successfully until this project, or another like it, is tried. 5. Relevant external economic conditionf. The international demand for fishery products in general, and for whitefish specifically, is growing, particularly in the developed countries. The long term trend is for a modest but real increase in demand.

6. Adequate benchk t. This study has identified landings, species mix, and prices offered at the domestic auction halls. Ex vessel prices in the U.S., the U.K. and the FRG are readily available. For other West European countries, a limited amount of research will be needed to find out this information. The critical question, however, -- what these markets will pay for each Moroccan species -- is a micro question which can be answered only by showing samples to a range of different buyers. 7. Private-enterre consi-eralima, In Morocco, the fishing industry is almost entirely in the hands of the private sector, and will soon be entirely privately owned. Thus, this effort would foster export opportunities for small, medium, and large firms, precisely the intent of the major export promotion program for Morocco planned by USAID. The International Seafood Conference, offers a unique opportunity to obtain price and market information about the competitiveness of Moroccan fishery products. In summary, this pilot project is keyed to the objectives outlined early in this chapter. It will show, for a relatively modest sum of money, whether or not a private sector export effort in a relatively developed industry can succeed.

At this stage of the Moroccan fisheries development, U.S. investors have reason for caution until it is clear that seafood exports from Morocco can be marketed in increasing quantities.

7 Once that trend and distribution system is established, the U.S. holds a relative advantage in the export of low-cost marine electronics. In processing machines and refrigeration, the FRG presents stiff competition, while Spain and Portugal have to edge in shipbuilding and outfitting costs. Investment in coventures in stern trawlers will be profitable if the licenses continue to be strictly limited and if the Spanish reduce their catch, as agreed by treaty. The most likely candidates to develop commercial relationships with Moroccan firms are U.S. seafood import firms -- again dependent upon Moroccan efforts to develop export markets. Budget E at Appendix D estimates the cost of the technical assistance pilot project to develop export markets.

B. Phase II. Development of Additional Seafood Export.

The pilot project for whitefish is intended to demonstrate that Moroccan seafood exports can grow rapidly with the appropriate combination of marketing expertise and technical assistance in packaging products to market requirements. If this is shown to be the case, we would recommend that AID move ahead with the projects which are outlined in Table 14. These include technical assistance in harvesting, processing, and market development. Loan credits are recommended to assist i.n the financing of equipment and cold storage facilities once the appropriate needs in these areas have been identified, and funds for feasibility studies are suggested in two areas which remain critical bottlenecks to further export expansion: inadequate transportation/distribution systems and displacement of foreign fishing. Each of these proposed projects is described below.

Technical Assistance for the HarvestingS.ctor

Although the recommendations of the Sears World Trade fisheries team include a "wait and see" attitude before substantial assistance in the sardine sector, there are two areas where technical assistance to sardine fishermen could bring considerable returns. These include the introductior of inexpensive electronic fish finding equipment and methods, and the installation of simple, effective, on-board refrigeration systems. About ten of the sardine boats have already been equipped with low cost, white line-type fish sonars in order to help them target on certain fish types, conserve wasteful steaming patterns, and permit precision in identifying in which areas fish are likely to be found at different times of the year. Such low cost but adequate fish sonars can be obtained for around $600­ $900, and location equipment can be purchased for about $800. Hence, the results of the current experiment with fish sonars, being conducted by Peace Corps volunteers, should be analyzed and promulgated by USAID. If promising, we would then recommend an TABLE 14

SUMMARY OF PLAN FOR MOROCCAN SEAFOOD EXPORTS

STRATEGIC PLANNING STEP BOTTLENECK TO EXPORT EXPANSION EFFORT? ACTIONS TO BE TAKEN rOLE FOR US AID POTENTIAL BENEFITS

------Whitefish Sardines ------­

1. Preserve end msasge !et at present. But Level of stocks Is By Morocco; Increase Is Support U.S. government Insure Long-tars flab Stocks. endangered by foreign fishing, salaries o scientists and technology transfare stability of the rseoarch budgets [through scientific and enforce- sector. asessments on Industry. meat advice. as Is foreign fishing); Improve- currently being done. anas In fishery management methods.

2. Me6isia use of Yea. Foreign fishing reduces market oppor- Reduction/eltainotion o Provide funds for a Gradual assumption by fishery resources tunities far Moroccan exporters. Unauthorized iLlegaL foreign fishing. policy planning effort Moroccan exporters or for Noroccan fishing Leads to depletion or resource bass. Enforcement of foreign to displace foreign part or 8800-800 miLLion tndustry. catch Limits. flest (FY US - 2OP.o0001. annual foreign catch.

3. Improve efficiency Yes. Use or Low cost electronics end tong- Provision of modern Provide funds for Leas- Expanded hervest& by in hervesting Lining techniques wouLd raise CPUE. target technical assistance on nical assistance snd coastal ftest of sector, fishing on healthiest stocks. Improve catch harvesting mathods demonstration end piLot export-qusLity fish. snd reduce fuel conauaptio'n. and techniques, projects an tong-Lining eLctroanic search (FY S8 - 130.000) nd shrimp harvesting (FY 80 - 875,000). 4. Preserve quality of Yea. Lack of refrigeration leads to Limited Provision of technical Provide funds for tech- Enhanced vaLoriestion catch an board. range end Less quality fish. assistance and loans for nicat eeistanca end pilot of coastal catch through smipL9 refrigeration project (FY 64 - 8100.0001. sharing In exports of systems. quality fish.

5. Ensure eavesat No. Yas. Let factor@ of production None. prices are above sort out sardine price fishermen'e coats. prabien.

B. Provide sharselde Yes. Limited facilities Yes. Limits year round DeveLupent of feasibility Provide technical assis- Transformation of cold storage/ to store export-bound production possibilities analyses to encourage tence funds to determine seafood processing and freezing capacity. inventory. end annual production Investment In -pubLic- share to build and hoe to &.portlng into year capacity. cold storage facilities. menage pubtlc* cold roune Industry. Bosle storeg facilities (FY SB for development of - 850.0001. end loan stability In export funds for cold storage markets for coastal (04-S miLLIan in FY 87-68). fishermen. 7. Adopt value-added Yes. Lock of technical Yee. Unavailability of Provision of technical Support technical essies- Technology transfer processing end knowledge end methods eaSt modern can and assistance$ feasibility tance In sardine Industry or modern techniques packaging methods. for filttatiit cleaning. assembly tine techniques analyses end loan to study naw cane, as precursor for packeging. etc. Lils markets. credits directed towards automated processing expanded exportsl market requirements. methods IFY 86 - 120.OOO)I expended U.S. equipment end to Introduce modern exports. quality control methods (FY as - 823.000) supply Loan credits for now (US) equipment purchases ($I million in FY 87-881. SUMMARY OF PLANTS TO DEVELOP MOROCCAN SEAFOOD EXPORTS

STRATEGIC PLANNING STEP BOTTLENECK TO EXPORT EXPANSION EFFORT? ACTIONS TO BE TAKEN ROLE FOR US AID POTENTIAL BEREFITS

------Whitefish Sardines

. Creste Incentives Yes. Current governmentaL poLicy is neutral - Policy Liberalization by Provide funds for tech- Sizasble Increase in for expert develop- not positive enough. Moroccan government. nical assistance end GOP from repatriation sent. E.q.. a from port may be policy guidaoce tkrough of float. necessary for large- t marketing prototype scats fisharies exports. (sea I10 betowl.

9. Davatop diversified Yes. Noset develop now markets. particutzrLy Anetreis of transport Provide funds for a Effective transport distribution and whitefish. optimns and public sector study of transport opt:on end prices to transportation investment requirements, options and cost. be njotleted with eyetems. FY 58 - s150O.000. pubLiciprivatn carriage. Distribution/trnSporL information made available to small. esporters.

10. Encourage and Yee. Without externel markbts, devalop- Identify end gain staLLs Support. In tie for If euccessful. ACPS promote eeport meat or the fiaherias Industry does not eccese to a eat of October 65 Seafood S5.0,OOO0 in foreign market developent. make sense and mitL not happen. International earkas in Conference. 'hands-ona exchange earnings from U.S.. N. Europe. Japer pilot project proeoting shitefish/caphatepod end Midest. Moroccan whitefish and exports In Loss then ceph3Lopode In US and to years. If not Europe (8300.000 in successful. provida FY 85 funds]. Use in the nar-tsre a "hands-on" piLot project warn-off about as a rist, anaLysia test Moroccan fisheries case before USAID Invents and provide. le038n& heavily In a multiproduct. to apply to other private sector export private sector project. export proposals. expanded effort to introduce these methods to more fishermen in all of the major ports.

Technical assistance in fishing methods is also needed for the coastal white fish fleet. As Tan Tan opens opportunities to the south, the coastal fleet fishermen should be prepared with' the knowledge and the access to equipment which would permit them to share in the benefits of richer fishing grounds. Technical assistance is needed in low cost electronic search methods and longlining.

Among the fishermen at Agadir, as anywhere, there is a "show me" attitude when current methods are questioned and new capital investment is suggested. Thus, the project would bring experienced U.S. fishermen and U.S. equipment to Agadir or TanTan, to provide a hands- on opportunity for the Moroccan fisherman to participate with his American colleague in the venture. The American fishermen would install the gear and go to sea with the Moroccan fishermen. (We also anticipate being able to recruit French speaking fishermen from among our fishermen in Louisiana and our French-Canadian fishermen in New England).

The same hands-on approach would be used to diversify fishing techniques. Over foul bottoms or in areas where trawling is too hit-and-miss, the technique of longlining (or setting out a thousand baited hooks), has been successful. In Morocco, longlining is beginning to be advocated and used on a small scale. It is a conservation-conscious approach which preserves juvenile stocks and, compared with trawling, has a low incidence of waste and unwanted side catches. It is labor intensive and can be employed effectively from small boats. As with the electronic gear project, the concept would be to bring to Agadir a few experienced American longline fishermen and the longlining gear. They would work for several weeks, at several different points throughout the year, with the Moroccan fishermen.

The intent of both of these projects is to illustrate how improved techniques and modest capital investments can return high .r revenues while leaving untouched the juvenile stocks and reducing the indiscriminate by catch. This is not just a case of economics, but also a resource protection measure. If the coastal fleet does not improve and diversify its fishing methods, over time the grounds near the major fishing ports will be depleted.

Each project, the electronic gear, and the longlining, would be carried out over a period of 12 months, including dissemination of the results, for approximately $150,000. (See Appendix G, Budgets B and C for more information).

Another area where technical assistance and a demonstration project are needed is in the area of refrigeration at sea. In this project, a team of U.S. experts will conduct cost-options analyses of simple technologies geared to the coastal fleet.

9 There are a variety of inexpensive methods employed successfully on U.S. wooden fishing vessels: CWS (chilled sea water), RSW (refrigerated seawater), brine tanks, proper use of ice, boxing and icing at sea, short shelving, etc. A design-to-cost study which would produce a complete blueprint of the options, design and costs of implementation could be completed for $100,000. A final demonstration in the harvesting area is recommended for shrimp. At the present time shrimp is an embryonic industry in Morocco. Harvests are small and harvesting methods are ancient. Very little is known about the size of the resource or its seasonality. Given that international markets for shrimp are enormous and profitable, several Moroccan firms have expressed interest in participating in a demonstration effort to learn more about the availability of the shrimp resource, and whether more modern harvesting methods could generate a larger yield. Since the United States shrimp industry is one of the most modern in the world, a technical assistance effort in shrimp could quickly determine the potential development of this sector. An exploratory fishing effort in shrimp would cost $75,000 in FY86 funds.

Technical Assistance and Loan Credits for the Processing Sector We have identified three areas in which the processing sector has an immediate need for technical assistance. The first is to develop a plan for constructing and managing cold storage facilities available to the small entrepreneur or fisherman who has neither the funds nor the necessity to own his own cold storage plant. The need for such facilities, "magasins generaux" for fishery products, will grow as export markets develop. One possibility may be to offer favorable credit terms to any private company constructing such storage, or to some other entity. The feasibility study proposed here would define the demand for such facilities under different export growth scenarios and examine alternative investment/financing schemes. The conclusions of this study would then determine whether and at what level AID credits for construction of such facilities should be made available in FY87.

The financial advantages of such cold storage facilities have been discussed earlier for sardines. They would permit the kind of market stability for fishermen which could enhance their incomes and create basic incentives to bring in higher quality sardines. By the same token, they would offer canners access to quality sardines throughout the year.

Similar and greater advantages exist for the white fish sector. A firm in Agadir with six large fishing vessels and a potential market in Italy for round white fish recently built a 100,000 square foot plant which can blast freeze 50 tons/day. The cost of this plant was $4 million. The company estimated

10. that, by merely freezing fish in the round and exporting them, the project payback period would be five years and the project profitability would be 20%. A similar "public" cold storage facility is needed for the coastal fishermen to participate in the export process. We estimate that the cost of the feasibility study would be $60,000 and the potential need for loan credits to finance the construction costs could be in the range of $4 to $8.5 million. A second project is to improve the quality and packaging methods used by sardine canners. Currently, one domestic manufacturer supplies most of the cans used by Moroccan canners. By and large, these cans are traditional, and given the monopoly situation in which it sits, this manufacturer has little incentive to innovate. This serves as a serious drawback to canners wishing to modify their packaging methods of reduce their costs if production (the current supplier's cans represent 34% of the cost of the final canned sardine product). USAID could provide funds for a feasibility study to investigate alternative sources of cans and how more automated packaging methods could be incorporated by Moroccan canners. A second problem is the quality control area. Continuous inspection and oversight on quality control methods is needed for most of the industry. The botulism attack that harmed Moroccan sales in 1982 created a lingering perception of inadequate control in this area. A second instance would devastate the export market. Outside experts could provide advice on quality control techniques for about $25,000.

As discussed earlier in this chapter, 90% of Moroccan whitefish exports, including those landed at Las Palmas, are frozen in the round without any other value being added. The pilot whitefish p-oject will identify markets which require value added products (filleted, steaked, headed and gutted, gutted, etc.) and equipment needed to produce these product forms and package them in accordance with market dictates. We estimate a feasibility study would cost approximately $40,000 to explore which types of equipment and processing/packaging methods make sense to acquire, and how they should be configured within Morocco. For example, one scena:io to explore is whether any proposed "public" cold Etorage facility should also set up a processing line which can serve smaller firms unable to acquire their own processing capability. Such "custom" processing facilities are common in the United states and may be an effective way for the Moroccan processing sector to develop. In any case, this kind of a feasibility study is needed and we are also proposing that approximately $1,000,000 in long term loan credits be allocated to assist in the financing of any equipment purchases which need to be made. There should be maximum use of U.S. exports in purchases with these loans.

11 Technical Assistance in Export Marketing of Pelagic Products The removal of OCE price control for canned sardine exports provides the opportunity for interested canners to develop new markets in countries where price competition is critical. This includes both the United Kingdom and the United States. Technical assistance will be needed to develop knowledge of market opportunities and expertise in effectively exploiting these opportunities. For example, canned pilchard sales in the United Kingdom J-'ve been growing slowly in recent years. In 1983, over 1.1 million cases were sold in the market, largely divided among Chilean, Japanese and Peruvian suppliers, as indicated in Table 12. If the Moroccan canners developed an aggressive merchandising strategy and had a reliable supply of sardines to support an expanded effort, it is possible that they could expand their share of the British market by $3-$4 million in the first year oi two. The possibility for rapid (volatile) shifts in market share is shown by the growth in Chilean imports between 1981 and 1983. USAID assistance in target marketing by experts on the U.K. market could be accomplished for $30,000. In addition to this potential market opportunity, there is also a specialty market in higher price, quality-oriented canned sardines. Generally, these are headless, skinless and boneless, and the current market is now dominated by Spain and Portugal. With effective market is now dominated by Spain and Portugal. With effective market research and targeting and technical assistance to transform production and packaging to market requirements, Morocco may well be able to exploit this market. Private label opportunities in this market segment are also worth exploring. Germany, Sweden and the U.S. have the greatest potential. We anticipate that $20,000 in technical assistance funds for market research and development could get this effort started.

Canned Pilchard Sales in the United Kingdom (number of cartons sold, in 000's) 1981 LM8 198

Chile 126 168 441 Japan 295 232 392 Peru 234 971 308 Others 545 6 3

TOTAL 1,200 1,378 1,146 (Source: Infofish Magazine, October 1984)

12 Development of a Plan for the Displacement of Foreign Fishing The importance of reducing and eventually eliminating illegal foreign fishing in the Moroccan 210 mile zone has been documented throughout this report. In assessing proposed solutions, we feel that there has been an overemphasis placed on the need for technical equipment in surveillance and enforcement. This is because both of these missions belong to the Moroccan Navy, and it is the Navy's duty to focus attention on their requests for sophisticated military ships and radar planes to develop the capability to deal with an unexpected confrontation with Spanish or Soviet warships.

The elimination of illegal foreign fishing is a political Lather than a technical problem. Therefore, the appropriate approach to the problem is to develop an action plan to phase out foreign fishing which takes account of the relevant technical, economic and political factors involved in the process. This plan would build upon the work already done by NMFS and the Coast Guard in laying out a step-by-step approach within the constraints of existing resources. Among the issues to be dealt with are: * A quantification of the dollar value of foreign fishing in Moroccan waters. * An analysis of treaties, international agreements and international forums which could serve as the basis for developing an internationally-supported phase out program. * Adoption of inspection and enforcement measures which have proved successful in the U.S. and elsewhere. * Determination of a "quid pro quo" policy whereby foreign nations are given legal fishing quotas for a period of time in return for which they must assist Moroccan fisheries development. (In the U.S. we call this the "fish and chips" policy). Development of this plan would require a sophisticated team with experience in international politics, economics, enforcement and surveillance. It is estimated that the necessary analyses to develop this kind of an action plan in coordination with MorQccan officials could be carried out for $200,000.

A Feasibility Study of Transportation Opin

Because much of Morocco's fish exports go through Las Palmas, there is very little knowledge within Morocco about transportation routes, modes and costs. This is especially true about Moroccan exports to the U.S. Although U.S. seafood imports

13 are now more than $4 billion, only $3 million were f,:om Morocco in 1983. Preliminary estimates indicate that refrigerated trucks with a capacity of 10 metric tons, of which there are now few in Morocco, may be the cheapest means of qUick delivery to Western European markets, and that smaller refrigerated trucks are needed for internal distribution. A study ot transport cost options would give Moroccan potential investors and private sector companies essential information they now do not possess. The cost of this study should be less than $150,000. Table 16 summarizes the costs of these various potential projects and the timing of the funding.

14 Table 16 PR0.IEU COSTS ANZ TIMETAIJ.

1981 Ile. 1987 IMe

CAENDAR YEARDUARTERS 1 2 3 4 1 2 3 4 1 2 34 1 2 34

FROJI1T CDSTE PPASE I (thousands,

FY I9E5 Pilot Project/Nitef st. Exports 300

PHASE 11

Harvesting TA/DFMOS Fi 198t - Electronic Search 130 " Longlining Methods W" " Shrimp Trawlig 75 z:::: : . - Refrigerition/lQ 100 -.

Processin; TA/DEN.S

- Public Cold Storage 60 - Canning Methods/QC 45 - Value Added Methods 45

Export Market Development

- Pilchards --for UK - - - - 30------Private Label markets 40 -­

Loan Credits FY 197 -ES - Cold Storage 4,000 - 8,500 ======- Equipment 1,000O::': :: =:::

Foreign Displacement Study 20C

Transport Options Study 151 ==== Appendix A

USAID/TDP Terms of Reference, 14 October 1984

General:

To identify how the Moroccan fishing industry can best compete in world markets and what the potential is for U.S. suppliers and investors to prticipate in the development process.

Specific:

I. Assess current harvesting and processing capabilities and types of investments needed to satisfy those market opportunities;

2. Assess the methods used by Moroccan fishermen and processors in harvesting, handling, processing, packaging and transporting their fishery products from the fisning vessels to the marketplace;

3. Identify market opportunities which are liKely to be most profitable for Moroccan seafood firms given the availability of fishery resources;

4. Indicate the best investment and export and import potentials for U.S. firms likely to develop commercial relationsnips with Moroccan seafood firms, and

5. Based on above, recommend opportunities for Moroccan seafood exports and kinds of technical assistance and financial support needed to realize tnose opportunities. -2

Appendix B

Sears World Trade Moroccan Fisheries Project 18-31 October 1984

1. Mr. F. J. West, Project Director Consultant to the Cnairman of Sears World Trade, SWT, Inc. 4500 5th Street Washington, D.C.

2. Ms. Martha Blaxall Chase, Brown, and Blaxall, Inc. 2301 M Street, N.W. Washington, D.C.

3. Mr. Moe Cheramie, President New Orleans Seafood Co. 6232 Old Dominion Drive McLean, VA 22101

4. Mr. Micnael Gardner Fisheries Development, ltd. Birmingham Road Saltisford, Warwick VS 344 TT

5. Mr. Pierre Oriot Manager Agribusiness Sears World Trade 4500 5th Street Washington, D.C. 6. Mr. E. Brian Veasy Marian Group 10 Dexter Road Marion, MA 02738

7. Mr. Fouad Filali Sears World Trade Rabat, Morocco 8. Capt. William Turcotte "Gem II" 10 Chartier Circle Newport, RI 02840 -3-

Appendix C

Interviews Conducted/People Contacted

I. Monsieur Rashid Benkirane Administrateur de Societes Unipeche Holding 30, avenue des F.A.R. Casablanca

2. Docteur Mohamed Bouayad Direzteur General Peches et Froid du Souss Port d'Agadir

3. Monsieur Mustapha Ben Mokhtar Bouzergtoun President Syndicat des Mareyeurs et Exportateurs de Casablanca Stalle 9 et 10 Port de Peche Casablanca

4. Monsieur Philippe Imhoos Administrateur delegue Cooperative Marocaine de la Conserve 26, dd. de la Resistance Casablanca

5. Monsieur Omar Kabbaj President maroc-Sierra Holding 72, Bd. Ibn Tachfine Casablanca

6. Monsieur Mohamed Kasidi President Aveiro Maroc Rue de 2 wars B.P. 117 Agadir

7. Monsieur Mahamed Laraki President et Directeur general Omnium Marocain de Peche Avenue des F.A.R. Tour Habous 20e Etage, Place Zellaqua Casablanca 01 8. M. Znami Belkody Vice President International Maritime Enterprises -4­

9. M. Abdelhay Harouchi SMACOP

8. M. Mohamed Tazi Kardar Fisheries S.A.

9. M. Mohamed Cherzaoui Representative of Marine Fisheries of Agadir

10. M. Mahfoud Agourzzal MEKNES

11. M. Mohamed Bouanani IMF

12. M. Mohamed Salhi Moroccan Canneries Society

13. M. Abderrahim Benmoassa Economic Counselor Moroccan Mission to the U.N.

14. Mr. Dave Burgess Director, Peace Corps in Morocco

15. Mr. Ron Bobel 16. Mr. John Harly TDP

16. Mr. William Fulsom 18. Mr. Lamar Test 19, Mr. Gerald Posner NMFS

20. Mr. Robert Chase, Diector 21. Mr. Malcolm Purvis, Agribusiness Officer 22. Mr. Jim Smith, Project Officer USAID, Rabat

23. Ambassador J. V. Reed 24. DCM Harmon Kirby 25. Economic Counselor Joel Spiro 26. Economic Counselor Jim Brown U.S. Embassy, Rabat 27. Minister Smili 28. M. Lahlou 29. M. Taxi Moroccan Ministry of Fisheries -6-

Table

Maximum Substainable Yields of Species

1982 1983 Pelagic species (in tons) (in tons)

Mediterranean 25,000 32,000 Atlantic-Northern Zone 250,000 to 400,000 435,100 Atlantic-Southern Zone 550,000 to 900,000 410,000

Total 82E,000 to .,325,000 100,000

Demersal species

Mediterranean (benthic) 8,000 8,000 Atlantic-.iorthern Zone (benthic) 50,000 to 60,000 69,0000 Atlantic-Southern Zone (cephalopods) 130,000 not available Total 189,000 to 199,000 not available

Other

Atlantic-Southern Zo.ne 250,000 to 300,000 316,000

Total 1,264,0000 to 1,824,000 1,300,000 APPENDIX D

Economic Setting. The current emphasis upon exports deserves a brief explanation. Morocco is a monarchy under the rule of King Hassan II, whose geopolitical views generally coincide with those of the U.S. In 1787, Morocco signed a treaty of Friendship with the U.S., which is the largest unbroken treaty relationship in United States history located on the northwest corner of Africa, Morocco has established a complex set of relationships throughout Africa, the Arab Middle East, and Western Europe.

The vast majority of the Moroccan population of 23 million are Arab Berbers. Arabic is the basic language, while the business class also speaks French and, to a much lesser extent, English. Population growth rate is 3.5 percent; half the population is less than 22 years old; the GDP growth rate is 3% and the GDP per capita income less than $800.

The composition of the GDP is shown in Table 1.

Table 1

GDP of Morocco

Sector 1983 Value Percent Share (Millions, DH) of GDP 1. Agriculture 16,000 17 (Fisheries) (1,000) (1)

2. Industry 30,000) 32 (Manufacturing) (16,000) (17)

3. Government & 48,000 51 Services

Total 95,000 100

Source: 1 BRD, Report 4893 - MOR, Moroccan Industrial Incentives and Export Promotion, 1983; Bank of Morocco, Annual Report, 1983.

Real income has not increased for several years and Morocco has encountered serious economic hardships. Debt, drought and recession combined in the past few years to force Morocco to undertake major structural adjustments to its economy. The external (balance of payments) and internal (treasury deficits? imbalances, added together, were estimated in 1982 alone to be 26 percent of the GDP, with a debt service of 46 percent. In the late 70s, the Moroccan economy came under pressure for several reasons. The Government's development program of import substitution led to large outlays of public investment in an effort to develop a capital-intensive infrastructure, while the war in the Western Sahara and the Algerian military buildings through Soviet arms purchases were requiring very substantial defense outlays. During the same period, the slowdown in the world economy led to a drop in the expected levels of overseas worker remittances, phosphate prices and tourism. The Government resorted to heavy borrowing, while devaluaking the currency and restri:ting imports. However, petroleum prices continued to climb, international interest rates climbed, the price of rock phosphate did not rebound, consumer subsidies proved difficult to reduce without seriously endangerin~g social stability and the war in the Western Safara continued. Ii,addition, a severe drcught began in 1981. Moroccan borrowing for its expansionary public deficit increased until, in 1983, the IMF estimated that the total extenal debt was $11 billion, or almost 75 percent of GDP, estimated to be about $15 billion.

Given this unacceptable level of debt and a dwindling amount of foreign exchange, the Government and the IMF in June 1983, drew up a stabilization program to reduce the current accou~nt deficit by devaluation, credi't restraint, reduction of public spending and trade liberalization. The Club of Paris agreed to reschedule Moroccan debt and $500 million in addi­ tional financial aid was pledged by a group of international donors. As a result, both the current account and treasury deficits as a share of GDP were reduced substantially in 1984.

However, such stabilization measures were concerned with reducing domestic demand to Qorrespond to available output. As control tools, these measuryes did not of themselves correct the fundamental structural causes of the economic problems nor enhance growth and productivity. Real per capita income in Morocco has remained flat between 10 80 and 1983. Among the structural weaknesses of the economy, a 1984 IBRD study* identified a Government policy bias against exports and in favor of import substitution, tariffs and other protectionist measures made it profitable to produce for the domestic market, while raising the costs of production and thus weakening export potential. These incentives, plus the imposition of cumbersome governmental procedures for export and a rise in the real effective exchange rate, discouraged exports and channeled production inward.

Under the 1983 agreement with the IMF, the Government changed its goal of import substitution and aimed at trans­ forming Morocco into an economy with a strong exporting sector, able to compete in foreign markets.

*IBRD Report 4893, Morocco industrial Incentives and Export Promotion, 11 January 1984. -5-

Appendix E

Estimate of Fish Stocks

Due to a lack of resources for scientific sampling, there is confusion among the estimates of fish stocks in Moroccan waters, as these citations illustrate. However, two observatious are clear. First, the estimates are very large. Second, the estimates a~e decreasing.

In 1975, William Fulsom, assigned a Fisheries Attache to the U.S. Embassy, cited several Moroccan reports in estimating the sardine (pelagic) biomass at 2.3 million tons, yielding an MSY (Maximum Sustainable Yield) at the 50 percent rate of 1.1 million tons. In 1980, the Ministry of Fisheries report an MSY of pelagics as 900,000 tons (value of US $130 million) and demersals as 400,000 tons (value of $520 million). In 1981, the Office Nationale de Peche reported the MSY of pelagics as 700,000 tons and demersals as 250,000 tons. In 1982, the Ministry estimated the MSY of pelagics (80% sardines) as 825,000 to 1,325,000, demersals as 190,000 to 200,000, and "other" as 250,000 to 300,000. Also in 1982, a Norwegian survey calculated the MSY as 340,000 tons in sardines and 340,000 tons in mackerel. In 1983, the M4SY estimate had been cut to 700,000 tons, with the warning that the Moroccan catch is "no more than one third on the average, the remainder is fished by Russian and Spanish boats." (Banque Marocaine du Summerce Exterieur, Monthly Information Review, May-June, 1983, p. 3)

The official Moroccan estimate, as cortained in the Ministry of Fishers proposed 1981-85 Development Plan, is that "these potentialities would allow to fish yearly 700,000 tons of sardines, ... 150,000 tons of other pelagic species and 250,000 tons of bottom-dwelling fisn (demersals)" (Moroccan Five Year Development Plan, Chatper III: Sea Fishing, p. 326). More detailed estimates by the Ministry for 1982 and 1983 are shown below in Table -7-

Appendix F

Reported Landings at Las Palmas

The size and composition of catch are difficult data to obtain. Two FAO studies by Ph.D. candidates were obtained. The first, published in 1979, noted that 87 RepuDlic of Korea trwalers reported a total catch in 1978 of 81,000 tons. The author warned the reported catch was understated by at least ten percent. Each trawler made four to five 60-day voyages from Las Palmas and averaged 240 fishing days pr year. The average trawler was 350 GRT and the average catch per voyage was 250 metric tons, The 1978 reported catch averaged 925 m. t. per trawler, with composition and prices as shown in Table

Table

1978 Average Reported Trawler Landings at Las Palmas

Composition Tonnage 1984 Price/lb 1984 Value

I. Sea Breams 140 450 $260,000 2. Croakers 14 650 60,000 3. Octopus 150 $1.50 450,000 4. Cuttlefish 280 $2.00 1,000,000 5. Squid 100 $2.00 120,000 6. Other 240 500 240,000 Total $ 2,-TLT=,

Source: Yamato, FAO CECAF Report, Ap. 1979.

In 1981, a second FAQ study showed a growth in the trawler fleet at Las Palmas and a decr .ase in tne catch. As was true of the first study, the ground rule for doing the study was that uo statistics would be mentioned which pertained to Soviet, Spanisn or Japanese activities at Las Palmas. The study said the trawlers of other rations had increased from 105 to 1978 to 1972 in 1980, while the average Korean catch per fishing day had fallen from 4 tons to 3 tons and the average catch for trawlers of 310 to 400 GRT had fallen to 650 tons/year, of wich 350 tons were cephalopods. As with the 1978 study, te data was based on what the fishing captains and port authorities chose to tell the :esearchers. Appendix G Morocco and West Africa Preface. As suggested in the body of the report, many of the problems facing Morocco are common to states of West Africa. Discussion. Of the 21 nations which comprise the West African coastal sates, in 1983 Morocco had the largest catch (380,000 metric tons), the largest continental shelf (60,000 square kilometers) and the third largest population (23 mil­ lion).1 African fisheries have not received much aid, as shown in Table . The assistance which has been allocated

Table 2 Bilateral Fisheries Aid to Africa, 1981 1. Japan $8,000,000 2. Norway 7,000,000 3. Sweden 7,000,000 4. France 7,000,000 5. Canada 7,000,000 6. FRG 5,000,000 7. Denmark 3,000,000 8. US. 2,500,000 9. Netherlands 2,500,000 runs roughly 75% in capital aid and 25% in technical assis­ tance. 3 The small amount of US aid was heavily allocated to agriculture (75%) and artisanal fisheries (21%), with no allocation for processing or marketing. 4

The importance of Morocco in any analysis of West African fisheries is apparent. Between 50 to 60 percent (depending where the Saharan coastal boundary with Mauritania is placed) of the 1982 reported West African catch came from Moroccan waters (to include the Western Sahara). 5 No Soviet and

IG. S. Posner and J. Sutinen, Overfished Stocks, Under­ nourished People, and Underbenefitd Coastal States of West Africa, November, 1984, AID Project Development and Support, Design Officer: AFR/PD, Helman. Project Manager: AFR/PA, Charles S. Gordon, Table 1, Appendix B. 2 1bid., Table 5, Appendix B.

31bid., Table AF I, Appendix B.

4j. Josupeit, A Survey of External Assistance, FAO Fisheries. 5posner, op.ci_t., p. 24. other foreign fleets are equally active off the shores of Morocco and of other West African states and the facilities the Soviets and Cubans are building on the small islands of Sao Tome and Principe, 200 miles off the shore of Guinea, add to concerns about continued exploitations.

Many of the issues Morocco is acidressing are the same facing other West African states, including those of sharply divergent political views. For instance, a 1984 article from the Third World Review had this to say:

Small fry, tig catch (Howard Schissel reports on Mauritania's struggle to protect and develop its fishing industry)

Mauritania is one of the countries most deeply con.'erned by its losing battle for control of its $1 billion a year industry.

Although the Government of President Khouna Ould Haidalla has intensified efforts since 1980 to achieve mastery over this vital natural resource, the organised pillage of its maritime wealth continues virtually unabated by ultra-modern fishing vessels from Europe and Asia in connivance with Mauritanian businessmen and Government officials.

Mauritania's 900 kilometre long coastline is considered one of the richest fishing grounds in Africa, but only since independence in 1960 has Mauritania sought to exploit its fisning potential. With the vast majority of the Moorish population traditionally engaged in nomadic animal husbandry or subsistence farming, the country lacked expertise and capital to launch a modern fishing industry. To exploit its fishing resources the Guvernmnt relied on cooperation agreements with Western, Asian, and Soviet bloc nations.

By thte end of the 1970s, this form of collabo­ ration was judged unsatisfactory by the Government. Of the $1 billion a year fish harvest the State exchequer was receiving a mere $25 million. Economic planners in Nouakchott reckoned that it was possible to earn up to $350 million a year in the medium term if State control could be effectively exercised over this sector.

Moreover, if properly managed, fishing is a renewable natural resource and can remain a long-term money-spinner long after Mauritania's reserves of iron ore, currently ito principal export, have been exhausted. Exports from the Food and Agricultural Organi­ sation (FAO) and the British-based White Fish Authority advised Mauritania on protecting its fishing grounds from organised poaching. A 200-nautical mile exclusive zone (EEZ) was established and efforts were made to reinforce coastal surveillance.

But Mauritania has found it difficult to enforce its authority over this zone. With only limited coastguard and air patrol capacity, it is practically impossible to prevent unauthorised vessels from fishing. Ships captains are alzu willing to risk minor fines if they are caught fcz illegal fishing because the possibilities of high profits are too attractive.

Another move taker oy Mauritanian authorities was to put an end to license granting for fees to foreign fishing companies. Starting in 1980, fishing was restricted to Mauritanian-controlled companies or joirt veutures with foreign governments or private businessmen. By the end of 1983 there were several totally private Mauritanian: fishing companies and -almost a hundred Mauritanian owned fishing boats.

Many Mauritanian businessmen are linked to powerful Spanish economic interests in :he Canary Island port of Las Palnwas. They finance the purchase of often outdated trawlers to Mauritanian businessmen in exchange for fish deliveries to Las Palmas, thereby nullifying government attempts to have fish landrd for processing in the port of Nouadhibou. The Sptnish connection" is also a convenient way of skirting Mauritanian exchange control regulations. Mauritanian owned boats also violate fishing regulations by trawling in restricted zones, but complaints by ar;Isanal fishermen rarely reach senior government officials.

One of the key problems in the fishing industry is fraud. Forner Prime Miniter Maaaouya Ould Taya called for "an end to the archaic policies in the fishing sector which have led to the flourishing of fictitious companies and all sorts of irregularities.' Powerful pressure from Mauritanian businessmen in the fish.ng sector, La Federation des Industries et Arinements de Peche (FIAP), have led to the failuce to set up a single centralized Lody to oversee the flsning industry. -Il-

Appendix H

Illustrative Budgets for Projects Recommended to USAID

Budget A: Implementation Plan to Displace the Foreign Fleets

Purpose: develop, with GOM officials, a plan of impIementaLion for displacement of foreign fleets.

1. Senior policy analyst

$400/day x 160 days $64,000 Overhead @ $100% 64,000 Two trips to Morocco for 14 days each 28 days x $50 per diem 1,400 airfare for two R.T. 1,600

2. Research Assistant

$15J/day x 160 days 24,000 Overhead @ 100% 24,000 One trip to Morocco 14 days x $50 700 airfare 800

3. Consultant on costs for alterna­ tive surveillance platform

$300 day for 10 dys 3,000

$197,000 -12-

Appendix H Budget B: Technical Assistance In Electronic search and Trawler Technique

Purpose: demonstrate increased revenues through techniques which apply modern, low cost fishfinding gear and do not randomly drag the grounds I. Three day trips to Agadir by four French-speaking American fishermen $400/day x 120 days $48,000 Per diem 6,000 Airfare 9,6000 2. Project management/coordination

$400 per day x 60 days 24,000 3. Three sets of: a) position locators 6,000 b) fish finders 6,000 c) radios 2,000 4. Installation 1,000 5. Overhead 25,000 -13-

Appendix H

Budget C: Technical Assistance in Longlining Techniques

Purpose demonstrate acceptable levels of revenues for catches made by targeting a species and using conservation measures which protect the biomass and do not deplete the grounds.

1. Three ten-day trips to agadir or Tan Tan by four French-speaking fishermen

$400/day x 120 day $48,000 Per diem 6,000 Airfare 9,600

2. Project management/coordination

$400/day x 60 days 24,000 3. Two sets of longliving gear 40,000

4. Installation 2,000 5. Overhead 25,000 -14-

Appendix H

Budget D: Low Cost Refrigeration For Wooden Boats

Purpose: 'develop a blueprint for the coastal fishermen of the Costs. designs and uses of a variety of refrigeration techniques used successfully on board wooden fishing boats.

I. Three American fishermen for a two-week trip to Morocco, witn experience on board: a) a wooden sardine seiner; b) a wooden shrimper; and c) a wooden trawler.

$400/day x 56 days $22,400 per diem 2,800 airfare 2,400

2. Project management/coordination

$400/day x 30 days 12,000

3. Researcher to price options and equipment

$150/day x 30 days 4,500

4. Report preparation

$400/day x 60 days 24,000

5. Overliead 25,000 -15-

Appendix H

Budget E: Establ.ish A System of International Markets

Purpose: Moroccan white fish is a product with proven demand but to date Las Palmas, not Morocco, has placed the exports. Morocco is determined to change this and to gain the foreign exchange. To do so, USAID technical assistance is essential to go out and secure those markets - the best teaching method of all.

1. Three American and one European fish traders

$350/day x 300 days $105,000

2. Project design and management

$450/day x 100 days 40,000

3. Financial analysis

$300/day x 70 days 211-000

4. Transportation analysis

$300/day x 70 days 21,000

5. Overhead 54,0000

6. Travel anI per diem 46,000

Total $287,000 Appendix I.

Documents Reviewed

I. Institute Scientifihue des Peches, Captures des Bateaux Espanols, 1982, Office National des Peches, Casablanca. 2. CECAF, Statistical Survey of Las Palmas Based International Trawlers for 1980, LUDP, FAO, Dakar, Senegal, August, 1981. 3. Ibid., 1979. 4. Delphi Research Associates, Fishing Investment Opportunities in Morocco, Delphi Press, Washington, D.C., 1983. 5. Government of Morocco, Five Year Development Plan Prospectives, 1981-85, pp. 326-344. 6. US Department of Corrmnerce, Spanish-Moroccan Fisheries Agreement, NMFS, Washington, D.C., March 83. 7. IDCA/TDP, US-Moroccan Fisheries Cooperation, NMFS, Washington, D.C. March 83. 8. Infofish, Fishery Corrrnodity Situation and Outlook 1983/84, Infofish Magazine, New York, NY, 1983. 9. Coopers & Lybrand, Private Sector Export Industry Promotion Project, USAID/Rabat, 12 Novembir 1984. 10. Gerald S. Posner and Jon Sutinen, Overfished Stocks, Undernourished People and Underbenefited Coastal States of Western Africa, USAID, Washington, D.C., November 1984. II. Department of Corrrnerce, Fishing Market News, 1984 "AFS, Washington, D.C.. 12. Dawnkist !,iernational, Price Lists for October 1984, FOB Gloucester, Gloucester, Mass., 15 October 84. 13. Marine Foods, Price L;sts for October 1984 for Holland and Frcnce, Paris, France, October 1984. 14. Department of Comnerce, Persian Gulf Markets for US Fishery Products, N/FS, Washington, D.C. April, 1983. IS. US Department of State, Fisheries of Morocco, 1980, US Embassy, Rabat. 16. William Fulsom, The Fisheries of Morocco, 1975, NMFS, Washington, D.C., No. 77-08-010. 17. William Fulsom, Mauritunia's International Fishery Relations, NMVFS, Foreign Fisheries Leaflet No. 76-4, April 1977. Appendix J.

Sardine Industrj A. Market The sardine industry contributes in third conned product from one of the reported value of Moroccan much fisheries exports, but less a factor when all exports is (including from Moroccan watlers the foreign catch and estimated Las Palmas landings) are (Table 6). Export value $37,000,000 of the conned product was in 1983, with about 68,000 its forms tons shipped, and in all sardines represent a product world market value of $48,000,000. The has remained stagnant, as has in the market Moroccan participalion - except in 1982 when a botulism temporarily incident impaired Mcoccan sales.

International markets within highly product quality ranges sensitive to price. For are example, in 1983 Italian sardine prices increased by 7% in the (A market and Italian market fell from 25% to 11%. Buyers share consistent generally want reliable delivery, quality and packaging appearances. markets, Buyers in European while sensitive to price, are less so than ir.developing nations suLi as Nigeria.

B. Process of Production Most studies have concluded that irrmediately investment is required in all key divisions of the are old, lack industry. Fishing boats refrigeration, have no fish-finding pile load fish such capability, that the bottom catch are no off-loading assistance crushed, and have (17 crewmen form a human a 3 kilo basket). chain passing Distributions to canneries are generally by open or other scurces truc,7. Even when lOT refrigerated are used, they are slowly trucks loaded (over 4 hours) and are during the loading (truck wide open loading crew was about 9). canneries, only 2 or Of 68 3 are reasonably modern. The basic equipment from the rest have 1948-52 era. Government inspections seem to maintain quality assurance--a with risk always, but especially equipment from such such vintage. 20-25% of Canneries ut*lize about their capacity, using a minimum almost of permanert labor and entirely temporary labor at minimum wage the (!abor is abundant).

Centrally administered inefficiencies characterize maintenance of this traditional fishery. While port customs vary, one to port can quickly sunrnarize as follows: (I) The needed comoetitive was determined, export price of canned sardines prior to 1984, oy OCE and all input factors were bureaucratically allocated. (2) No real internal competition has existed. Canneries meet the OCE price and receive regardless a shore of production, and, of their individual skills, fishermen share the good v-6 fish price, 1.09 LDH/I

(3) The few efficient and potentially etflcient canners compete within the allocation system for lorries, contracts with boats, and most importantly, quality fish for canning. In the system in effect through October 1984, a canner hod no incentive for investment in a system of boat cooling, materials handling, refrigeration for buffer inventories.

(4) Fishboats and catch are in excess.

(a) In Agadir, the main landirg port, when catch exceeds 450T/day, the balance generally goes to fishmeal, despite quality.

(b) Generally, about 70% of the catch goes to fishmeal and 30% to canneries.

(c) No refrigerated capacity exists to buffer against bad fish deliveries, adding some uncertainty to the daily production levels of canneries.

(d) The quality/price level of fish value is allocated to boats, despite arrival time and actual catch quality.

(e) Good fishermen are penalized by the fish allocation system. The system minimized incentives to improve efficiency or quality of catch.

(f) Each boat, based on aggregate data, averages .74 DH/KG; the breakeven point just to cover boat operating costs is .70 DH/KG.

C. Preference for Traditional System.

This systen of inefficiencies rests on the assumption that competition would upset the traditional cannery preference for shared survival versus better c(rpetitors winning larger shares of production.

D. Social Contribution

The system, despite its many ineffiencies, has maintained a competitive world price and has contributed to near maximum, though marginal, employment. This is well known to the government, which cannot see alternative empl,--ment opportunity. Currently, about 26,000 mostly ,art-time employees are invloved in cannery operations.

V-7 E. Fish Stocks This traditional employment with its many planned inefficiencies is premised on an inexhaustible sardines. supply of Yet assurances of the biomass in the northern southern sectors and remain far too uncertain. Differing surveys have estimated maximum sustained yields from 600,000 to 1.4 millions tons annually. Estimates vary, exists but rough agreement that Soviets are tcking about 300 kt, Spanish Moroccans 250 kt, and 300 kt. These estimates could be low; we believe them to be high. do not Consequently, the resource may be at the point of overfishing. The point is that to assure the data are there adequate planning for this resource. It too is important to observe that the fishing has moved steadily only adding to south, not the costs of fish distribution and boat operation, but raising questions as to stock. Though not hard survey data are available, a spckesman representing 120 sardine Agadir offered boats in the view that the noryl northerly migration interrupted by heavy is Spanish and Soviet fishing south of Tan-Tan. F. Winds of Chnne In September 1984, OCE ceased their central price setting role. This much criticized activity, nevertheless, basis fer provided the the aforementioned quota system to the production system and served to protect the many marginal producers, both in catching and cannery operation. In uncertainty, response to the new the Agadir Cann ry Association adopted and the OCE price continued the allocation system between the fishermen. canners and The researches have identified some initial cutting to European price brokers, and this may set the stage for the beginnings of legitimate competition which efficient would favor the more producers. In turn, if this crack in the system coniin-ued, allocation one could expect more private investment cannery operation in and in refrigerated'lorries to bring fish to market. quality In turn, this would lead, no doubt, to establishing delivery canneries contract with the more efficient fish boats stimulating greater incentives for fish handling, location catching, and technology. TIese changes will, however, strong social upset the structure or the traditional fishery operations, could lead to reduced unemployment, and will, undoubtedly, cause some political trouble. What eventually happens as a result of the drift toward freer market prices remains trends to be seen, but should be examined before any extensive AID-sponsored investment aid is undertaken. With the removal of government price setting, the wi!l go through industry a sorting out period of two to four years, more efficient anneries as the expand and the inefficient close down. The government will receive repeateK requests reintervene to take steps to in order to rescue the inefficient canneries quality control and but firm government inspectors will he required because the inefficient canneries will run risks to stay in business

V-8 Spain has agreed to reduce its pelagic catch ftom Moroccan waters by 10% in 1984. The Moroccan canneries should insist on monitoring techniques to insure compliance with the agreement and should continue to complain about the foreign fleets, because complaint does lead to action. U.S. assistance, however, in biomass sampling, surveillance or policing should be cautiously evaluated, because the problem is not a lack of techniccl means; it is a political issue. If the Soviets are permitted continue to to seine, the benefits to Morocco should be equal to one-third the value of the catch, or over 10 million dollars a year in currency, goods or services. The more efficient canners will eventually determine if they have a price edge in the international market, which iK highly sensitive to small price changes. If they can export more, then they will invest in on-shore cold storage in order to produce more cans. Markets currently permit the lack of refrigeration and large post-harvest losses to persist because, even with these inefficiencies, the supply of pelagics exceeds the internctional demand for Moroccan product. Market expansion should emphasize the excellent quality of Moroccan sardines and anchovies. In the U.S., Moroccan surdines are little known and research is need-d in terms of wholesaler or retailer brand labeling which would give an identity to the Moroccan product. At the other end of the price range, pelagics as a nutrient for drought-stricken nations deserve careful analysis.

V-9