Mohammed Fikrat, CEO, Cosumar: Interview

Interview: Mohammed Fikrat

What investments are needed to help the development of an independent sugar value chain?

MOHAMMED FIKRAT: The Moroccan sugar value chain plays a major role in the economy. It contributes to food safety by ensuring a constant supply to meet local demand. Many investments have been pursued since 2008 to boost the sector’s performance. Our main challenge and objective is to upgrade and modernise the upstream agricultural segment by improving industrial equipment through the introduction of new technologies and closer proximity with the farmers.

As an integrated project combining up to 80,000 farmers, we need to promote and strengthen upstream agricultural output. Different actions have been undertaken to do so: the generalisation of monogerm seeds, and the development of seed  drilling and harvesting by machine, both for beets and sugar cane. Our goal is to boost yields rather than import raw materials. So far, we have seen very good results. Agricultural productivity has dramatically improved: sugar output increased from seven tonnes per ha in 2006 to 10.2 tonnes per ha in 2015, subsequently increasing farmers’ revenues.

Furthermore, downstream in the value chain, we invested over Dh5.5bn (€504.3m) in restructuring and modernising our industrial facility to improve the global production capacity of sugar facilities and refineries to produce up to 1.65m tonnes per year. These upgrading efforts allowed us to produce 510,000 tonnes of white sugar, extracted from sugar crops (beet and cane), in 2015, meeting 42% of the country’s sugar needs, with the ambition of reaching a 56% coverage rate in 2016. So far, we are on the right path and our current results are encouraging.

Which African markets are offering the best opportunities for export?

FIKRAT: The Moroccan market has reached a certain maturity that allows us to develop a strategic exportation plan and look for new international markets, especially in Africa, which is seen as the first source of growth. We have the ambition to become a regional agri-business player. This internationalisation is in line with the ambitions of our main shareholder, Wilmar, which aims at expanding across Africa.

Our surplus production capacity accounts for 400,000 tonnes of white sugar per year, which could be exported depending on the opportunities abroad. However, our main objective is to guarantee a constant supply to the local market.

We are currently exporting white sugar to nearly 30 countries in Africa and the Mediterranean thanks to the strategic geographic position of Morocco and its proximity to regions that have a deficit in white sugar. The regions with deficits are West Africa, the MENA region and southern Europe.

To what extent can integration contracts boost land consolidation and improve yields?

FIKRAT: On the upstream side, it is important to note that the Moroccan Confederation of Agriculture and Rural Development brings together the sugar sector’s actors. It is part of a larger organisation, the Moroccan Interprofessional Sugar Federation, which encompasses the entire value chain and improves dialogues between different actors.

Along with this professional organisation, we have pioneered a few incentivising actions in order to boost integration. For instance, we offer farmers pre-financing and sourcing for agricultural inputs due to their high level of debt.

In addition to technical supervision and improved access to irrigation water, we purchase the farmer’s total production at a contractual price. This ensures a constant income for the farmers. Additionally, our role is to provide technical and organisational solutions designed for fragmented lands which, to this day, are the major constraint of the sugar sector.