(Bloomberg) -- An online boycott campaign protesting rising food prices in Morocco has prompted the local unit of French dairy giant Danone to cut raw milk purchases and plan layoffs, underscoring the political and economic cost of simmering unrest in the North African monarchy.
The campaign, which began last month on Facebook, initially singled out Centrale Danone, mineral water company Oulmes and the country’s leading fuel distributor, Afriquia SMDC. It later expanded to include the country’s fish markets, as anger simmered over the uptick in consumer prices that hit 2.7 percent in April, its highest level since 2013.
The boycott added a new element to mounting frustration in the country. Morocco enjoys one of the lowest inflation rates in the Middle East and North Africa has been spared much of the post Arab Spring-spawned violence gripping other nations in the region, but officials are increasingly wary of the protests that have repeatedly erupted.
The tensions are starting to affect companies. Centrale Danone, which is almost wholly controlled by the French company, began this week implementing a 30 percent cut in milk purchases from around 120,000 farmers, spokeswoman Houria Sedrati said in an interview on Tuesday, attributing the decision to a decline in demand. “We don’t know when the measure will be reversed. It all depends on when demand picks up.”
In a statement Wednesday, Centrale Danone also said the boycott will “force the company to bring to an end short-term job contracts.”
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Others may be feeling the pinch, but are reluctant to talk. Meriem Bensalah Chaqroun, who heads Oulmes, said the company can cut prices if the government offers businesses tax breaks. Meanwhile, Shares of Total Maroc, the only listed fuel distributor, have fallen by almost 10 percent since the boycott began.
The boycott and Centrale Danone’s move come at a time when the government has been facing mounting criticism over its stewardship of the economy.
Officials have struggled to find a balance between cutting subsidies and trimming costs, on the one hand, and boosting development efforts in traditionally under-developed regions of the country, on the other.
The government’s failure to reach an agreement with trade unions over what would have been the first wage hike since 2011 encouraged lawmakers to demand measures to protect the purchasing power of Moroccans.
While some in the government have dismissed the boycott campaign as a fad, the complaints aren’t dying down. Catchy hashtags such as “let it curdle,”and ”let it rot” have fueled the boycott. So have videos circulating on social media comparing meat, dairy, fish and mineral water prices in Europe and Morocco.
To try to calm tensions, the government set up a hotline to handle complaints of high prices. It has also vowed to better organize the supply chain, trimming middlemen in a bid to lower costs.
Other measures to lower prices included capping fuel prices -- a move that came after the 2015 decision to liberalize the sector helped distributors realize increases in profits of as much as 300 percent.
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