Moroccan Citrus: Increased Production Brings Marketing Challenges

Moroccan citrus

Photo credit: istock.com/nimu1956

By Hassan Farouk Ahmed

Morocco’s citrus production reached 2.3 million metric tons (MT) in 2016–17, an increase of 15 percent over the previous marketing year. Orange production increased by 4 percent, to 962,250 MT, while tangerine and mandarin production increased 24 percent to 1,325,246 MT. Much of the increase in production was due to increases in the area harvested, as younger trees begin to bear fruit.

Orange exports are expected to reach 120,500 MT, while tangerine/mandarin exports total approximately 510,000 MT. An increase in citrus exports is mostly due to growing demand from Russia and the European Union (EU) coupled with an expected decline in citrus exports from Spain (due to quality issues caused by heavy, late rainfall). A prohibition of U.S. imports of Moroccan citrus was lifted by the U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) in October 2016, following the Moroccan plant protection authorities satisfying the U.S. requirements to effectively mitigate the Medfly issue.

The huge increase in Morocco’s citrus production in the 2016–17 season has been very problematic. Due to a lack of sufficient and modern packinghouses and cold-storage facilities, many farmers had to dump their products in markets, causing local citrus prices to drop to the lowest levels. Because of low citrus prices in the local markets, some livestock farmers were feeding their animals with citrus fruits.

Currently, Morocco has 53 commercially viable citrus packing facilities, with a total maximum capacity of 850,000 MT — about one third of the country’s production. The Moroccan Association of Citrus Packers has called for an assessment of needs to restructure/upgrade the current handling and packing sector that will include building new packinghouses and cold-storage facilities to be able to handle fast-growing production.

This difficult situation in the Moroccan citrus industry, however, has created excellent opportunities for foreign traders and investors. Opportunities include exploring the potential of investing in building new citrus packing facilities, entering in partnership with existing packing facilities to improve their management efficiency, or establishing trade ties and import agreements with major Moroccan citrus companies.

ORANGES
Morocco’s planted area for oranges has grown steadily in the last seven years, from 41,539 hectares in 2008–09 to 57,040 hectares in 2016–17, according to the estimate of the USDA’s office in Rabat. It is expected that 2016–17 orange production will increase slightly, by about 4 percent, to 962,250 MT, up from the previous year’s 922,729 MT.

Moroccan oranges are primarily of two varieties: Maroc Late and Navels. Moroccan citrus growers prefer Maroc Late oranges over Navels for their growing characteristics that enable higher yields and longer shelf life than Navels. Morocco’s domestic consumption of oranges for 2016–17 is expected to slightly increase to about 780,000 MT. Oranges are the most popular citrus consumed in Morocco, with annual per capita consumption estimated at 20 kilograms (kg).

According to Morocco’s statistics office, total orange exports in 2015–16 were estimated at 92,246 MT. The EU and Russia were the destination of 73 percent of Morocco’s orange exports in 2015–16, about 23 percent lower than in the previous year. These exports were mostly Maroc Late or Navel oranges.

TANGERINES AND MANDARINS
The area planted with tangerines and mandarins in Morocco has grown by 45 percent in the last seven years, from 43,668 hectares to 63,420 hectares in 2016–17, according to USDA estimates. Total production of tangerines and mandarins is estimated to increase by 24 percent over the previous year, to 1,325,246 MT. This increase in production is mostly due to improved irrigation practices and reinvigoration of old orchards that led to increases in the area harvested.

There are more than 40 varieties of tangerines/mandarins in Morocco, several of which are new hybrid varieties, such as Nadorcott (Afourer) and Nova that are gaining in popularity. These varieties have the advantage of being a higher quality. Their later harvest extends the marketing season through February, thus increasing their availability to the export markets.

Domestic consumption of tangerines and mandarins is projected at 815,000 MT in 2016–17, an increase of almost 40 percent over the previous season. The high quality, desirable taste and lower prices compared to other fruits have made tangerines/mandarins the second-most favorite fruit of Moroccans after oranges, with annual per capita consumption estimated at 13 kg.

Data from the Moroccan statistics office indicates that total tangerine/mandarin exports in 2015–16 were 481,385 MT, about 16 percent higher than the previous year, with Europe and Russia being the top markets. Currently, there is increasing emphasis on expanding the market to the Middle East and Africa.

Morocco’s tangerine/mandarin exports to the United States (mostly clementines) totaled 38,550 MT in 2015–16, about 23 percent lower than exports in 2014–15, due to the ban imposed by the United States in early 2016. USDA’s APHIS issued a federal order on January 29, 2016, banning imports of tangerines, clementines, mandarins and sweet oranges from Morocco, when Medfly larvae were found in a shipment of clementine during port inspections. The United States subsequently reopened its market to Moroccan citrus on October 13, 2016, after APHIS determined that the recommended pest risk mitigation measures and cold treatment implemented by Morocco were working effectively.

It is expected that Morocco’s export of tangerines and mandarins for 2016–17 could reach 510,350 MT, an increase of 6 percent over 2015–16. The increase in exports will likely come from demand in expanding markets in the Middle East and Africa.

ORANGE JUICE
The citrus-processing sector in Morocco is facing stiff competition from the fresh citrus market in sourcing raw materials. This is mainly due to the low prices offered by orange juice processors compared to prices offered by the fresh fruit market. There are five citrus-processing plants currently operating in Morocco, of which three are producers of single-strength orange juice that can hardly meet demand from the local market. Fresh oranges delivered to juice processors are currently estimated at about 53,000 MT annually.

The local market consumes more than 70 percent of the overall orange juice production. Morocco’s orange juice consumption is currently estimated at about 50 million liters, of which 20 million liters come from local processing of fresh citrus; the rest is imported juice and concentrates. It is projected that Morocco’s orange juice imports will increase slightly in 2016–17 to 4,000 MT, while juice exports are estimated to be about 3,000 MT.

EXPORT POLICY AND GOVERNMENT SUPPORT
Due to its impact on foreign exchange revenues and job creation in Morocco’s economy, the citrus sector has received a great deal of attention from the Moroccan government. The government plans to provide support with an ambitious strategy to increase annual citrus production to 2.9 million MT by 2018, and to allocate 200,000 MT of fresh citrus production for juice processing.

Morocco’s citrus exports are mostly carried out by the private sector through integrated cooperatives of small farmers and private companies. In several cases, the exporting companies are technologically advanced and have shown great ability to adapt to constantly changing production and control requirements. Some of these companies meet the import market’s standards such as International Organization for Standardization, Hazard Analysis and Critical Control Point, and European Good Agricultural Practices.

Non-EU export destinations, commonly known as “contract markets,” include Russia, Lithuania, Saudi Arabia, Canada and the United States. These markets have accounted for over 65 percent of Morocco’s total exports in the last few years.

All exported food and agricultural products are subject to quality control by the Ministry of Agriculture’s Export Quality Control Office, which ensures that the standards and requirements of the importing country are actually met.

AREAS OF INTEREST FOR U.S. CITRUS INDUSTRY
Morocco currently has a free-trade agreement (FTA) with the United States. Moroccan citrus exporters, however, have not realized the full benefits of the FTA due to export logistics limitations (shipping and cold storage) when import windows in the U.S. market are readily open. U.S. citrus traders and investors could take advantage of the current situation in the Moroccan market by exploring opportunities in several areas:

  • Investing in building new citrus-packing facilities in Morocco, taking advantage of the incentive that the government of Morocco provides to foreign investors
  • Entering in partnership with existing packing facilities to improve management efficiency and export opportunities
  • Establishing trade ties and import agreements with major Moroccan citrus companies, via establishing presence of a U.S. company in Morocco

Hassan Farouk Ahmed is the founder and chief executive officer of HFA Global Consulting & Trade Services in Columbus, Ohio.

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