OBG talks to Javier Goñi, Chairman and CEO, Fertiberia Group

Interview: Javier Goñi

What sort of scope do you see for expanding fertiliser production in Algeria?

JAVIER GOÑI: The potential of the Algerian market is very high for many reasons. First, Algeria is rich in many of the raw materials required for producing fertilisers – it is notably one of the world’s major producers of natural gas, the most important input for making ammonia, which in turn is the major component in nitrogen fertilisers. Gas is transformed into ammonia, which is then either used to produce fertilisers or sold directly to offshore markets. Our Algerian company, Fertial, for instance, produces 1.4m tonnes of fertilisers a year at its Arzew and Annaba facilities. Although Algeria has great resources and a growing agriculture sector, its fertiliser sector faces lingering challenges, including logistical difficulties in distributing fertilisers, primarily due to security concerns.

Which markets are likely to drive growth in the fertiliser market in coming years?

GOÑI: Globally, the fertiliser market is a very mature sector, and can be positively or negatively affected by a range of factors that producers cannot always control. According to the latest estimates, the outlook for the global agriculture sector in the next few years is positive, driven by higher prices. This will directly impact global demand for fertilisers, which is expected to grow by an average of 2% a year to 2019.

Latin America will be the fastest-growing region for fertiliser consumption in the next few years, since areas under cultivation are set to grow substantially. There are also very favourable forecasts for the whole of Africa, which represents a great opportunity for Algeria to contemplate fertiliser exports in the medium term. As for the domestic market, it is set to continue to grow sustainably in the next few years.

New market niches are also arising, one example being precision agriculture, which is still in its early stages even in mature markets like Europe. The application of these new “agronomic” concepts in Algeria or in its neighbouring countries will undoubtedly take more time to develop.

What is the main obstacle that firms face when launching operations in Algeria?

GOÑI: As a whole, Algeria presents a great deal of business opportunities for foreign investors, and over the past few years it has undertaken several projects of prime importance in a wide range of activities to attract foreign capital. Based on our experience, we can say the Algerian administration is very demanding and strict with regard to legal issues. As is well known, since 2009 a foreign company cannot own more than a 49% stake in a newly established firm, which is commonly considered a hurdle for further investment. Bureaucratic procedures can also be particularly lengthy. That said, our experience here has been very positive and we have built a very trusting and close relationship with the authorities since the Villar Mir Group, with the support of its subsidiary Fertiberia, acquired a 66% stake in Fertial in 2005.

How can vocational training and research help make the agriculture industry more competitive?

GOÑI: It is absolutely vital that Algeria focus on vocational training. To better position Algeria’s agriculture sector globally, major efforts are needed to increase the use of technology. In this respect, things have progressed a long way. The Ministry of Agriculture allocates significant resources geared towards vocational training and research, and tax policies are favourable. Fertiberia, for its part, has set up a highly qualified agronomic service that provides Algerian farmers with land and crop analyses as well as advisory services. We have a team of 18 technicians working throughout the country to support and counsel farmers, as well as ISO-17025 certified agronomic laboratories in Arzew and Annaba performing some 2000 land analyses, thereby allowing Algerian farmers to develop the best practices for their own land.