The fertiliser sector in Morocco is largely export-oriented, as the high price for the product constrains the potential for increases in domestic demand. Global demand for fertiliser is expected to grow in the coming years due to international population and income growth, which will require an increase in agricultural inputs to ensure sufficient food supply. The shrinking size of arable land will increase crop rotations, which will decrease the level of soil nutrients needed to grow healthy crops.

POSITIVE TRENDS: Combined, these factors will have a cascade effect on fertiliser demand, pushing it upward over the mid to long term. Furthermore, industrial agricultural activity is expected to expand significantly in emerging markets in Africa, Asia and Latin America, which will further drive up demand. From 50m tonnes a year now, the demand for fertiliser is projected to rise to about 70m tonnes in 2020, or an average growth rate of 3.6% per year, requiring an extra 2m tonnes of fertiliser annually.

These trends have been a significant boon for Morocco’s state-owned fertiliser and phosphate producer, Office Chérifien des Phosphates Group (OCP), which has a monopoly over the local production of fertiliser. The main fertiliser producer in the country has been facing challenges related to increased foreign competition. To counter this trend, maintain a strong export position in the international fertiliser market and capture the rise in demand – as well as to stave off increasing competition from producers in China and aggressive expansion campaigns from firms like Egypt’s Orascom and Saudi Arabia’s Maaden – OCP and the government have sought to expand output through infrastructure and production upgrades, as well as boost local demand.

PERFORMANCE: In 2012 OCP produced 4.5m tonnes of fertiliser, of which 4m were destined for export. OCP represents about 15% of global fertiliser production and it produces four types of fertiliser: diammonium phosphate (DAP), monoammonium phosphate, triple super phosphate and NPK, a mixture of nitrogen, potassium and phosphorous. In 2011 the sector generated Dh56bn (€5bn) in revenue through phosphate and phosphate derivates, and contributed 6% to GDP.

Elephant Vert, a Swiss firm that specialises in organic fertiliser, has also launched a fertiliser production plant in the region of Meknés that is spread over 10 ha. The Dh275m (€24.4m) facility, which is expected to create 500 jobs, will produce 60,000 tonnes of fertiliser, as well as 120 tonnes of organic pesticides for the local market.

International demand for fertiliser rose by 2.3% in 2013 over the previous year. While China is the largest producer of phosphate globally, with 37% of the market, most of the production is used locally. Although demand inched up by 5% at the end of 2013, the price of DAP fertiliser, which represents 50% of the world fertiliser market, fell by 26% y-o-y in December to $370 a tonne. Nonetheless, the long-term demand for fertiliser is expected to rise by 2% annually as agricultural activities increase, according to the UN Food and Agricultural Organisation. The International Fertiliser Association estimates demand growth for fertiliser slightly higher at 2.4% until 2015, citing the high price of cereals, which has been driving agriculture producers to increase the cropland surface areas. As a result, Morocco is keen to ensure that it is able to meet the expected increase in demand both abroad and at home.

EXPANSION PLANS: By 2020 OCP aims to boost fertiliser output to 10m tonnes, with 65% of the planned increases in fertiliser and phosphate mining capacity by 2015. A central feature of OCP’s expansion plans is situated in Jorf Lasfar, where the firm is building its Jorf Phosphate Hub (JPH). The JPH expansion project represents a Dh40bn (€3.6bn) investment. Two DAP production sites opened in 2013, which represent a total investment of Dh2.5bn (€222m) and will add 2m tonnes to OCP production, bringing the company’s total production to 7m tonnes annually. Four other production sites are also being built, which will provide a further 3.7m tonnes of annual output. The new facilities will include storage and packaging capabilities. A reverse osmosis desalination plant is planned to be constructed as part of the JPH. The facility will cover its own requirements in terms of fresh water and will likely supply the region with the fresh water production.

INTERNATIONAL PRESENCE: OCP is also aiming to consolidate its presence in emerging countries, such as Brazil and India, high-demand markets where exports have increased significantly – in the case of India, from 22% to 52% between 2000 and 2011. Indeed, in 2013 developing economies represented 70% of global fertiliser consumption, according to the International Fertiliser Association.

In 2008 OCP partnered with Bunge, a US-listed agro-industry and food processing firm, to form a joint venture, Bunge Maroc Phosphore, which specialises in producing fertiliser for the local market and provides Bunge’s South American operations with an additional source of phosphate-based raw materials. In 2013 OCP bought out Bunge’s 50% ownership interest in the fertiliser joint venture. The purchase will help OCP to reinforce its presence in Latin America, which is considered a key growth market. The company also launched a joint venture in 2011 with Toros Tarım, a Turkish agro-industry group, giving it a foothold in the Black Sea, Balkan and Central Asian regions.

AT HOME: Morocco is also looking to stoke domestic demand for fertiliser, both for the benefits it provides in terms of agricultural output – crucial in a country that in years past has seen significant swings in production due to changing harvests – but also in terms of encouraging a new, largely untapped market for phosphate products.

Currently, the Moroccan agriculture sector lacks a sufficient supply of fertiliser as it requires around 2.5m tonnes annually. Its consumption lags behind other countries: at present Morocco consumes 45 units per ha of fertiliser versus 120 units in neighbouring Tunisia, 250 units in Spain and 300 in France. Furthermore, only 20% of fertiliser sold is used on local cereal and vegetable production, although it accounts for 50% of agricultural land.

In 2012 the government announced the Samad initiative to expand domestic fertiliser consumption by enhancing distribution, maintaining affordable prices and improving access in remote areas. The government set a target of increasing domestic usage to 2.6m tonnes of fertiliser by 2020, up from 500,000 for the 2013 and 2014 agriculture cycle. The Samad initiative is part a broader agricultural development strategy, known as the Green Morocco Plan, which aims to increase agriculture output and inject about Dh10bn (€888m) in public investment by 2020.