21 April 2007
Morocco is working to double the area planted with olive trees by 2010, aiming to reach 1m ha, and to attract local and foreign investors in the cultivation of olives.
98% of global production of olive oil and table olives comes from the Mediterranean region. The biggest producers are Spain (36%), Italy (25%) and Greece (18%), according to a report published by the United Nations Conference in Trade and Development (UNCTAD) in 2006. However historically dominant in this sector, their position is being eroded partly due to rising labour prices and the lack of available labour.
"Foreign investors are starting to take an interest in Morocco, and given the difficulties in recruiting a qualified labour force in Europe, we think this trend is set to continue in the coming years," Youssef Mahrouch, President of Ola Capital, told OBG.
Ola Capital, a large investment fund specialised in agro-industry, was formed as a joint venture between Crdit Agricole du Maroc and Socit Gnrale Asset Management in September 2006. With a total capitalisation of Dh1.8bn ($219m), the fund is planning to develop an agro-industrial production capacity of 30,000 tonnes of olive oil a year, by financing integrated industrial projects of over 400 ha in size.
"The government's concessions of land and the fiscal incentives will support these investments," said Mahrouch.
Among the measures implemented by the government is the offer of long-term leases on agricultural land, along with certain fiscal incentives to plant olive trees. These incentives serve a dual purpose: to attract foreign investors into the market, but also to lure farmers planting illegal crops to convert their production to olives.
"The conversion of certain agricultural lands to olive plantations seems to us a good start. But this initiative would benefit from being generalised, both in terms of space covered and in terms of industries involved," said Ahmed Ouayach, the president of the Moroccan confederation of agriculture and rural development.
A number of Moroccan investors, such as Brasseries du Maroc and Les Celliers de Mekns, as well as foreign capital such as Abu Dhabi-based Al Qudra Holding and the Morocco-UAE Development Company (SOMED) have started planting olive fields.
As a result, olive yields reached 700,000 tonnes of olives in last year's season, up from 500,000 tonnes a year before, revealing the success of the government's initiatives.
According to the International Olive Oil Council (IOOC), the price of olives rose from Dh4 ($0.44) to Dh6 ($0.66) a kg in 2006. The rise in olive oil prices internationally is testimony that olives can represent a lucrative agro-industrial segment.
However, olive prices have increased due to the relative fall in production internationally. Figures from the IOOC reveal that global olive oil production dropped from 2.82m tonnes in 2006 to 1.83m tonnes in 2007.
Production has decreased because of what are seen - both by the UNCTAD and the International Olive Oil Council (IOOC) - as normal fluctuations in production by the two biggest producers, Spain and Italy. The important reduction in yields last year was due to the widespread frosts in Southern Europe, which killed off many olive trees, except in Greece. As a result, more and more producers are turning towards North Africa, in particular and Morocco, to invest in olive trees.
"Drought is a recurring problem, not only in Morocco, but throughout the Mediterranean region: thus it is not a competitive disadvantage," Mahrouch told OBG. "With new technologies contributing to water saving, Morocco can gain an advantage in this area."
According to Moha Merghi, the general secretary of the ministry of agriculture, the average consumption levels of olives in the Mediterranean region is relatively low, standing around 2kg of olives a year per person. Consequently, further investments into new production techniques and extra production capacity in Moroccan olive production will boost a rise in export capacity.
Morocco is working to double the area planted with olive trees by 2010, aiming to reach 1m ha, and to attract local and foreign investors in the cultivation of olives.
98% of global production of olive oil and table olives comes from the Mediterranean region. The biggest producers are Spain (36%), Italy (25%) and Greece (18%), according to a report published by the United Nations Conference in Trade and Development (UNCTAD) in 2006. However historically dominant in this sector, their position is being eroded partly due to rising labour prices and the lack of available labour.
"Foreign investors are starting to take an interest in Morocco, and given the difficulties in recruiting a qualified labour force in Europe, we think this trend is set to continue in the coming years," Youssef Mahrouch, President of Ola Capital, told OBG.
Ola Capital, a large investment fund specialised in agro-industry, was formed as a joint venture between Crdit Agricole du Maroc and Socit Gnrale Asset Management in September 2006. With a total capitalisation of Dh1.8bn ($219m), the fund is planning to develop an agro-industrial production capacity of 30,000 tonnes of olive oil a year, by financing integrated industrial projects of over 400 ha in size.
"The government's concessions of land and the fiscal incentives will support these investments," said Mahrouch.
Among the measures implemented by the government is the offer of long-term leases on agricultural land, along with certain fiscal incentives to plant olive trees. These incentives serve a dual purpose: to attract foreign investors into the market, but also to lure farmers planting illegal crops to convert their production to olives.
"The conversion of certain agricultural lands to olive plantations seems to us a good start. But this initiative would benefit from being generalised, both in terms of space covered and in terms of industries involved," said Ahmed Ouayach, the president of the Moroccan confederation of agriculture and rural development.
A number of Moroccan investors, such as Brasseries du Maroc and Les Celliers de Mekns, as well as foreign capital such as Abu Dhabi-based Al Qudra Holding and the Morocco-UAE Development Company (SOMED) have started planting olive fields.
As a result, olive yields reached 700,000 tonnes of olives in last year's season, up from 500,000 tonnes a year before, revealing the success of the government's initiatives.
According to the International Olive Oil Council (IOOC), the price of olives rose from Dh4 ($0.44) to Dh6 ($0.66) a kg in 2006. The rise in olive oil prices internationally is testimony that olives can represent a lucrative agro-industrial segment.
However, olive prices have increased due to the relative fall in production internationally. Figures from the IOOC reveal that global olive oil production dropped from 2.82m tonnes in 2006 to 1.83m tonnes in 2007.
Production has decreased because of what are seen - both by the UNCTAD and the International Olive Oil Council (IOOC) - as normal fluctuations in production by the two biggest producers, Spain and Italy. The important reduction in yields last year was due to the widespread frosts in Southern Europe, which killed off many olive trees, except in Greece. As a result, more and more producers are turning towards North Africa, in particular and Morocco, to invest in olive trees.
"Drought is a recurring problem, not only in Morocco, but throughout the Mediterranean region: thus it is not a competitive disadvantage," Mahrouch told OBG. "With new technologies contributing to water saving, Morocco can gain an advantage in this area."
According to Moha Merghi, the general secretary of the ministry of agriculture, the average consumption levels of olives in the Mediterranean region is relatively low, standing around 2kg of olives a year per person. Consequently, further investments into new production techniques and extra production capacity in Moroccan olive production will boost a rise in export capacity.
© Oxford Business Group 2007
