New export strategy and facilities upgrades to citrus production in Morocco

Citrus fruit production has seen notable growth in recent years. However, the segment struggles to take full advantage of expanding output due to a lack of packaging facilities, which has led to losses and a drop in quality. The authorities are promoting supply chain coordination and integration to address these issues.

According to the Ministry of Agriculture, Fisheries, Rural Development, Water and Forests (Ministère de l’Agriculture, de la Pêche Maritime, du Développement Rural et des Eaux et Forêts, MAPMDREF), citrus production reached 2.3m tonnes in the 2016/17 season, up 20% over the previous one, partly due to a significant rise in rainfall. Thus, the segment achieved 83% of the goal to produce 2.9m tonnes per year by 2018, agreed in the contract programme signed in 2008 between Maroc Citrus – the association representing the segment – and government authorities. While production has increased, some areas require further improvement. The local market has seen waste and unprofitable prices: during the 2016/17 season, production exceeded the capacity of packing stations, according to Agri Maroc. The ongoing development of an export strategy and efforts to address local market challenges are likely to improve the situation.

EXPORT-ORIENTED: Between the 2011/12 and 2015/16 the segment produced an average of 1.9m tonnes a year, of which 488,000 tonnes, worth Dh4bn5bn (€370m-463m), was exported. As of 2016 the citrus production area comprised 122,600 ha, already exceeding the 2018 target of 105,000 ha. “Citrus production in Morocco is partly export-oriented, with major production centres located in Béni-Mellal, Berkane, Gharb and North, Marrakech and Souss-Massa, the latter of which accounts for about 60% of the country’s export potential,” Ahmed Darrab, secretary-general of the Association of Moroccan Citrus Producers (Association des Producteurs du Maroc, ASPAM), told OBG.

Although citrus fruit accounts for a notable part of agricultural exports – over one-third in 2014/15 – they have yet to reach the target of 1.3m tonnes set for 2018. In the 2014/15 agricultural season the kingdom exported 461,450 tonnes, and this increased to 520,500 tonnes in 2015/16. In the 2016/17 season the segment was estimated to export 600,000 tonnes.

STRATEGY: To bolster exports, the citrus segment is developing a strategy in coordination with the MAPMDREF’s Independent Institution for Exports Control and Coordination (Etablissement Autonome de Contrôle et de Coordination des Exportations, EACCE). “The strategy has a two-pronged objective: consolidating traditional markets and venturing into new destinations,” Darrab told OBG. “First, Moroccan citrus exporters want to improve their position in traditional European markets, such as France, Germany, Belgium, the Netherlands, Luxembourg and Scandinavia, in which they held larger market shares 30 years ago or so. Then, they want to diversify export markets. This includes efforts to explore non-traditional European markets, including Central and Eastern European countries such as the Czech Republic, Poland and Bulgaria. These efforts also reach beyond traditional destinations to African, South American and Asian markets.”

These goals have already been met with some success. “Moroccan exports of agri-food products are marked by significant efforts to diversify into new markets such as Asia, Latin America and Russia,”  Abdallah Janati Idrissi, general manager of the EACCE, told OBG. “Indeed, Morocco is currently Russia’s largest supplier of tomatoes, the second-largest of small citrus fruits and third-largest of general citrus fruits.”

DESTINATIONS & TRENDS: In the meantime, increasing international competition has led to Morocco losing market share in its traditional export markets. “Moroccan citrus production and exports have shifted away from large to small-sized citrus varieties as a result of international competition,” Darrab told OBG. “Morocco has lost out to other countries, such as Spain, Egypt and Turkey. This loss of competitiveness is particularly acute with regards to oranges, whereas with smaller citrus fruits (such as clementines and others) Morocco preserves an adequate competitive edge.”

In 2015, the EU accounted for the bulk of Moroccan citrus exports with 39%. Russia, the former top destination, was second with 38%, followed by Canada with 11%, the US with 9% and the rest of the world with 3%. In the latter category, the UAE, Norway and Côte d’Ivoire displayed the highest growth rates of 142%, 122% and 80%, respectively. However, exports to Russia and the US contracted by 6% and 2%, respectively, during this period. Meanwhile, exports to Canada were up by 56%, while those to the EU increased by 21%.

Small citrus fruits – identified by the EACCE as clementines, nador cott, nour, ortaniques and nova varieties – represented 77% of Moroccan citrus exports, compared with 21% for oranges. Exports of small citrus had a 9% growth rate in 2015, whereas orange exports expanded by 15%. Clementines topped the list of small citrus fruit exports, accounting for 54% of the total.

ADDRESSING SANITATION ISSUES: One of the segment’s export-related challenges is adhering to destination-country sanitation rules. The US suspended Moroccan clementine imports from January to October 2016 following the discovery of fruit fly larvae in cargo. Another infested shipment arrived in Philadelphia in December 2016, leading to a second ban, albeit applying only to those coming from the affected area, Berkane.

To address these issues, the authorities and stakeholders are working on the development of sterile male fruit units of production, as male fruits are targeted by the flies in question. “Maroc Citrus is supporting the development of a sterile male citrus production unit in the vicinity of Agadir, in the Souss-Massa area, under the framework of €5m public-private partnership set to be operational in 2018,” Noureddine Jouaich, communications officer at Maroc Citrus, told OBG. “We are also considering developing a similar project in Berkane.”

DISTRIBUTION NETWORKS: Another challenge is gaining access to large distribution networks and becoming competitive with other countries. “Our priority is to adapt Moroccan citrus exports to large distribution networks, dominating developed export destinations, such as traditional European markets,” Brahim Hamadi, technical director at the EACCE, told OBG. “The case of Germany, the country with the largest citrus consumption potential in Europe, estimated at 1m tonnes per year, illustrates this well. Spain successfully invested in such large distribution networks and, ultimately, secured a strong position in the German citrus market.”

While Morocco has explored investment opportunities in sub-Saharan Africa, there are a number of logistical and tariff-based limitations. Thus, the country has made efforts to establish a trade and logistics platform in Abidjan, Côte d’Ivoire, and it plans to join the Economic Community of West African States.

LIMITATIONS: The segment has a number of local supply chain issues, particularly with packaging. This plays a key role in the exports supply chain, given that all citrus exports must go through a packaging station, which ensure that fruits are kept at a temperature below 4°C for freshness, flavour and quality. A January 2017 study by the Moroccan Association of Citrus Packers (Association des Conditionneurs d’Agrumes du Maroc, ASCAM) found that there is insufficient packaging capacity, and the existing 53 stations are concentrated in Souss-Massa (21) and Berkane (15). In Béni Mellal, for example, production was expected to reach 420,000 tonnes in the 2016/17 season, yet the region only has three packaging stations. According to local media, this area holds particular potential due to a recent rise in production, the construction of a Dh926m (€85.7m) agropole for the agriculture sector and the Regional Investment Centre Béni Mellal-Khénifra, which aims to attract investment into the area.

Khalid Bounajma, president of ASCAM, told local media in March 2017 that there was potential for 10 new packaging stations in Béni-Mellal, each with a capacity of 20,000 tonnes. Overall, Morocco’s packaging stations have a total annual processing capacity of 850,000 tonnes, or 36% of expected total production in the 2016/17 season, according to local media.

The productivity of packaging stations varies widely from one region to another. In some regions, they processed 10 tonnes of citrus per hour, Bounajma told media; in others, they achieved 40 tonnes per hour. In Bounajma’s opinion, this lack of profitability is responsible for slowing down investment. State support, he said, had focused mostly on production, representing only 3% of total investment in packing activities. ASCAM has requested state support to upgrade existing packaging stations and increase their overall number.

According to the UN’s Food and Agriculture Organisation, 40% of Morocco’s citrus production destined to the local market is lost, leaving local consumers with just 60% of initial output. This results from the fact that 40% of the fruit is not subject to cooling procedures, leading to lower quality and waste as the fruit make their way through the supply chain. Therefore, some stakeholders are of the opinion that the National Office for Food Safety should ensure domestic-oriented output is processed by packaging stations, which would require substantial capacity expansion.

Such challenges have caused clementine prices to fall to unprofitable levels, and as of early 2017 they cost a maximum of Dh0.50 (€0.05) per kg if sold wholesale, and Dh5-6 (€0.46-0.56) per kg to retail traders.

A potential partial solution could come by streamlining the process of getting goods to market. “The local distribution network is too complex; it involves a large number of players, especially intermediaries, who account for a large share of added value, weakening the price received by producers and inflating the price paid by end consumers,” Darrab told OBG. “Additionally, multiple product handling and delivery delays bear a negative impact on the product’s quality.”

There are a number of ways to address such difficulties. ASPAM is working with producers and packaging stations to organise citrus sales, allowing producer groups to sell their goods directly on the local market. This initiative is expected to develop distribution, as it eliminates intermediaries and improves efficiency.