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Rabat – Sustainability transition is among the main goals of Morocco’s OCP Group – the world’s fertilizer giant – outlined as part of its core mission.
The reputed group has been strengthening its global visibility through its local and regional initiatives, seeking to promote sustainable growth and Africa’s potential to contribute to the world’s food security.
In a recently-published lengthy interview with Harvard Business School, OCP CEO Mostafa Terrab answered several questions – notably about the group’s transition into the global fertilizers market, a promising sector whose value was set at $195 billion in 2022. By 2023, the global fertilizer market’s value is set to reach $230.29 billion, Terrab noted.
Transition to fertilizers leadership
Asked about OCP Group’s transition from mining to fertilizers, Terrab said that the company was lucky as the group was not “just purely a mining company.”
He explained: “In the 1980s and 1990s, the company had developed an industrial part which was producing phosphoric acid, an intermediate product. It’s not the finished product as it requires some industrial processing. So there was already an industrial culture in the company.”
The transition comes as part of the group’s ambition to tackle internal challenges that a forensic work culture identified to move OCP from internal crisis.
The challenge stems from OCP’s previous focus on the mining business, or the selling of phosphate rock.
“It was certainly not profitable in that the price of phosphate had remained very stable even in nominal dollars for 30 years,” said Terrab.
The forensic work also determined that there was “no mismanagement,” but rather a lack of strategy to tackle the challenge the company faced.
For Terrab, OCP needed a kick through a new strategy and to move “down the value chain and into the business of our clients – fertilizer, which is plant nutrition.”
The only way out of the challenges passed through adding value to the phosphate rock by extracting finished products out of it, Terrab argued.
“The rest is history, as we were able to invest massively in fertilizer production and get the company out of its situation rather quickly,” he said.
Speaking about OCP’s transition following the new strategy, Terrab highlighted how the group managed to deal with between the mining and the new industrial activity – taking into account its capabilities.
The strategy, however, showed its fruits a few years following its adoption with fertilizer production capacity moved from 2 or 3 million to 12 million tonnes.
“It was a massive investment — amounting to $10 billion — and we need to make sure that it wasn’t risky also in terms of our ability to manage it.”
Genuine faith in Africa
Drought and other challenges Africa faces do not stop OCP’s ambitions to unleash the continent’s potential.
OCP, however, takes issue with the missed opportunities on the continent, which many reports identify as a problem solver for the world’s food insecurity.
Many reports show growing numbers of populations in Africa, where hunger and food insecurity are becoming an alarming, unprecedented crisis.
In a report in 2021, the Food and Agriculture Organization (FAO) documented that hunger had affected 278 million people in Africa.
“While most of the world’s undernourished people live inA sia, Africa is the region where the prevalence is highest,” the FAO report said.
Terrab reiterated OCP’s determination to assist Africa in becoming self-sufficient in terms of food security, but acknowledged the challenges the continent faces, including the weak uses of fertilizers.
“The average use of fertilizer in Africa in terms of kilograms is one-tenth of the world average,” he said. “The world average is about 150 kilograms per hectare. Africa is less than 15 on average.”
Terrab suggested that one way to look at the lack of fertilizer use is inaccessibility to them. This means that fertilizers are unreachable and not that African farmers don’t want to use them.
“They want fertilizer,” he said, stressing OCP’s approach to offer fertilizers customized based on farmers’ needs and their soil.
“We took the bet of saying that the African fertilizer market was not going to look like the others, the same way that mobile was more adapted to the African conditions,” he said, stressing that fertilizers were also adapted to whatever the situation is in African countries.
“We decided not to bring in the standard fertilizer, but to manufacture bespoke, so to speak, or adapted, customized fertilizer for the soil and the plant. It was very successful indeed.”
OCP is supplying about 40 countries on the continent with customized fertilizers depending on farmers’ needs and each country’s specificity.
Terrab described OCP’s work to ensure he strategy’s success as a “mass customization,” stressing that the group has a huge system that can make fertilizer customization “easier than an operator with a single plant.”
Emphasizing OCP’s team work, Terrab explained that the company follows a specific process to meet clients’ demands, including sending its staff members to analyze a particular region’s soil, the nutrients and the missing nutrients to come up with the appropriate fertilizer.
“I’ll give you a typical situation. Keep in mind that we’re an African operator. So when you say that we send people, we stay in Africa. We try to find partners, which are usually agriculture or agronomic research institutions,” he stressed.
OCP’s initiatives
OCP has reaffirmed its commitment to help Africa reach food security, and the company has mainly been doing this by assisting farmers across the continent in their endeavor to upgrade their agricultural practices and noticeably increase their productivity.
Terrab stressed the importance of keeping up with such initiatives amid global crises, notably the situation in Ukraine which Terrab says has been catastrophic for fertilizer-importing African countries.
The situation in Ukraine and other challenges could have meant a “catastrophe” for some African countries that import fertilizers, Terrab said, recalling nitrogen prices increases due to gas prices.
As gas and nitrogen prices skyrocketed, the price of fertilizers “reached way beyond the affordability point for some African farmers,” Terrab explained.
To mitigate this situation, OCP chose to come up with a program that would contribute to addressing farmers’ challenges. The initiative is a donation program targeting smallholder farmers in different African countries. “I forgot how many, but we’ve done targeted donations in probably a good 20 countries. It’s usually a customized fertilizer, by the way,” Terrab said of the program.
He argued that the donation project was part of a “bigger program” determined to serve the whole continent’s demand.
“Keep in mind that we’re the first African producer of fertilizer,” the OCP CEO said, stressing that many other countries on the continent have phosphate but haven’t invested in the fertilizer sector.
As part of its giant program, OCP has dedicated a total of four million tonnes of fertilizers, representing over double the number that the company usually dedicates.
“This was a big allocation of fertilizer to Africa,” Terrab said, emphasizing cooperation with the World Bank, USAID and other institutions to “make sure” that the fertilizers were channeled where “they should go”– especially smallholder farmers.
