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Rabat – Possessing over 70% of the world’s phosphate rock supplies, Morocco has long occupied a unique and significantly advantageous position in the world’s agricultural scene.
A recent report by Michael Tanchum for the Middle East Institute details Morocco’s growing gains in Africa owing to the OCP and the future that Morocco has as a global gatekeeper of the world’s food supply.
Nevertheless, Morocco is now facing a new set of challenges in its quest to extend its influence and maintain OCP’s global leadership position.
A global leader
Today, Morocco sits in the top 5 global fertilizer exporters, holding a firm footing even against global manufacturing giants like the United States. This rise was in no small part thanks to the country’s OCP Group, as the report explains.
Tuncham details the OCP’s history, which started as a mining company for phosphates, and eventually delved into other ventures, mainly fertilizer production in the 1960s.
Throughout the following decades, Morocco has worked on transforming the OCP Group into a well-oiled machine, and improving its output through various infrastructure build-ups and manufacturing improvements, he recounts.
This transformation was strengthened by a reconstruction of the company in 2008, which transformed it into the state-owned OCP Group.
“The restructuring and accompanying massive infrastructure build-up transformed OCP into a global leader in all phases of the fertilizer manufacturing value chain,” Tanchum says, “the centerpiece of its transformation was the construction of the world’s largest fertilizer production hub in Jorf Lasfar on Morocco’s Atlantic coast.”
OCP’s growth is not showing any signs of slowing either. In 2021, the group reported a net revenue of over MAD 57 billion ($6 billion), marking an increase of 38% from the same period in 2020.
The group’s success can be seen globally, as it dominates African markets with a 54% market share. OCP’s market shares in Europe and South America also surpass 40%, positioning the company as a strong player in those regions, the report details.
Even in the United States, which had been historically dominated by the fertilizer giant Mosaic, Tuncham details how OCP occupies a not insignificant 28% of the market, accounting for 60% of imported fertilizers in the country.
Read Also: Communities Push Back Against Mosaic’s ‘Stranglehold’ on US Farmers
The OCP Group’s rise as a global leader certainly also showed an impact on Morocco’s domestic economy, he explains.
The group occupies an important place in Morocco’s economy as the country’s largest employer with over 21,000 employees. And the group also plays an important role for Rabat as a soft power instrument.
OCP in Africa
The Moroccan group dominates the African fertilizer market, with over 50% of the market belonging to it. This dominance is further bolstered by Africa possessing over 60% of the world’s arable land, and over half of its citizens being employed in the agricultural sector, the MEI’s report explains.
Clearly aware of the significant advantages that further expansion into Africa can bring to the group, OCP launched its OCP Africa division in 2016 with subsidiaries in 12 African countries, such as Nigeria and Ethiopia.
OCP has also adopted an approach of direct assistance to smaller farms and farmers. The company’s African division in particular has launched various programs to help local farmers to better participate in the global value chain, Tuncham reports.
The group also launched its “Agribooster” program to “provide farmers with support for every aspect of the agricultural value chain,” according to the OCP.
The program focuses on educating and training small farmers with specialized services and equipment, with the goal of increasing yields and incomes.
In addition to that focal point, the program also helps African farmers by connecting them to insurance providers, international buyers, mechanics, and other institutions that can help them maximize their output, the report explains.
“The success of OCP Africa’s holistic approach demonstrates both the centrality of fertilizer to food security and the necessity of enhancing local participation in value chains for fertilizer manufacturing and food production,” Tanchum says
The program has created an additional yield of 33% across the board and has helped more than 600,000 farmers across the countries that it had expanded to, according to figures from OCP. These countries include some of Africa’s largest economies, such as Nigeria, Ghana, Cote d’Ivoire, and Senegal.
Corresponding to OCP’s increasing influence in the continent, various African countries saw considerable yield increases for various crops. Tanchum reports increases of over 60% in millet harvests in Senegal for example, and a 48% increase in corn harvests in Nigeria.
OCP’s presence in Nigeria can prove especially useful, according to the report.
“Since Morocco lacks sufficient gas resources of its own, Nigeria can provide the natural gas from which fertilizer’s other fundamental component, nitrogen, is produced, commonly in the form of ammonia,” the report details.
The Moroccan giant supplies Nigeria with over 90% of its fertilizer demands, according to industry figures.
For him, OCP’s success in Africa highlights the centrality of the fertilizer industry in agriculture.
“Morocco’s centrality to global food security rests with the fact that all food crops, indeed all plant life, require the element phosphorus to grow and Morocco possesses over 70% of the world’s phosphate rock reserves, from which the phosphorus used in fertilizers is derived,” he argues.
The huge importance of the fertilizer business in the grand picture of both Africa’s agriculture industry and global food security, is poised to position Morocco as an essential player in global food security, according to Tanchum.
OCP Group’s growth in the continent is not showing any signs of slowing either, with the Moroccan company increasingly keen to capitalize on its current continental dominance to further improve its outputs.
OCP Africa put MAD 13 billion ($1.4 billion) towards the construction of an ammonia and fertilizer plant in Nigeria, and there are reports of similar projects with many other governments across the continent.
For example, Tanchum says the group is betting a similar amount into an industrial fertilizer complex in Ghana, taking advantage of Ghana’s natural gas reserves to produce ammonia, among other useful chemicals.
With such a growing influence in agriculture- or food security-related discussions in Africa, Morocco has also managed to expand its soft power in the continent. This is perhaps evidenced by the significant diplomatic gains that the country has made on the Western Sahara question.
Since Morocco rejoined the African Union in 2017, 20 African countries have opened consulates and diplomatic facilities in Morocco’s southern provinces, which further supports Morocco’s sovereignty over the region.
Future challenges
Morocco — and OCP — is currently in a crucial period that will determine if its position on the global stage will continue to rise, as is the case with various international giants.
In particular, the COVID-19 pandemic and its economic repercussions, along with climate change and green energy concerns, are expected to pose the biggest challenges for OCP Group.
The world is at a critical forkroad when it comes to global food security, as the COVID pandemic caused food prices to rise exponentially worldwide. The poorest regions and countries in the global south were unsurprisingly the most affected by this spike in food prices, but the global price crisis also put the spotlight on Morocco as a central player in ensuring food security going forward.
Should Morocco manage to make its Africa fertilizer plants a success, it can become one of the largest geopolitical players on the continent by stemming this recent rise in world hunger, Tanchum argues.
“The future of Morocco’s role as a gatekeeper of global food supply chains will ultimately depend on its success at home in achieving energy transition to increase the sustainability of its fertilizer industry,” his report says.
Another asset that can undoubtedly be used in this regard would be Morocco’s extensive clean energy resources.
The kingdom is a regional and global leader when it comes to renewables: Morocco pledged earlier this year to reach 80% of renewable energy use by 2050.
Tanchum details, in this regard, how renewable energy can be used to improve the manufacturing and global production processes for OCP’s fertilizers, by using green hydrogen as an input to manufacture green ammonia.
OCP has already been making progress on this front:the company covered 89% of its energy needs with renewables in 2020, and aims to reach 100% in 2030.
The transition to green resources could make OCP’s production cycle more efficient, and bolster Morocco’s place globally as a central player in agricultural production cycles.
