In Brussels, France, Italy, Poland and now Spain. It has been a week since farmers and ranchers took to the streets to protest the bureaucracy and conditions imposed by the Common Agricultural Policy (CAP), which hurt the profitability of their businesses compared to third countries such as Morocco. Adding to these challenges is the lack of generational change, photovoltaics and scarcity of water and land in the case of Spain, where investment funds compete for land against crops. For these reasons, a number of Spanish agri-food companies have shifted some of their production to other nearby countries by opening subsidiaries or purchasing shares in local companies. And among them, Morocco wins with cheap labor and a more favorable regulatory framework than that offered by the European Union. According to the latest data compiled by ICEX, the number of Spanish companies connected to the main sector in this country reaches 360, but when investees and subsidiaries are added, this number exceeds a thousand. Approximately “10% of Spanish companies in Morocco are directly or indirectly dedicated to the primary sector”, quantifies Juan Carlos Higueras, doctor of economics and professor at EAE Business School. These include well-known brands such as Juver (juices), Borges (oil and nuts) or Ebro Foods (with rice brands such as Brillante or Cigala).
This is neither a new phenomenon nor does it affect only Spanish production. European countries such as Portugal have also moved some of their agri-food businesses elsewhere to take advantage of what Morocco has to offer. In the case of Spain, “a significant development took place 50 years ago, but the final move came in 2012, with the signing of the free trade agreement between the European Union and Morocco,” recalls the director of the Spanish Federation of Trade Associations. and Fruit, Vegetable, Flower and Live Plant Exporters (Fepex), José María Pozancos. The country has a preferential agreement with Türkiye. European Union Almost all products have been liberalized, except for some products subject to quotas (such as apples and sweet almonds). Import tariffs for the remaining countries are generally 40%. On paper, there are safeguard provisions that could apply if imports harm European production, but these have never been activated. This was the beginning of the gradual transfer of Spanish agri-food companies, which account for more than 29,000 firms in the sector. This includes agricultural machinery companies such as Criado y López, seed companies such as Semillas Fito SA or olive companies such as Aliminter SA.
Most They are concentrated in the Souss ValleyIn the southern region of Agadir, and in the Grab areaBetween Tangier and Rabat. At this last point on the Moroccan map is Ebro Foods. In 2001, the company settled in the Larache region through the Mundiriz company and established the country’s largest rice production factory with a maximum annual production capacity of 50,000 tons with an investment of more than 15 million Euros. “95% of what we produce is consumed and sold in Morocco through our local brands, most importantly Cigala,” the company explains. “Depending on the year and as long as there is a surplus, up to 5 percent can be devoted to exports,” they add. Borges International Group is located in Marrakesh. The company assures that there is a well-established company called Borges Marroc, but “it has not been in business for more than 15 years.” They remain in the country through a 10% stake in the subsidiary of Framaco SA, founded in 2003.
Low prices and cheap labor
Spanish agri-food sector It also extends to other countries in the region, such as Tunisia, Egypt or Türkiye. It has crossed the Atlantic to Peru and Brazil, where there is a fruit and vegetable canning industry, but the numbers concentrated in Morocco are second to none. Spain is Morocco’s first trading partner in both imports and exports (14.4% Spanish). Spain’s gross direct investment in the primary sector in 2022 exceeded 23 million euros, and reached 14 million euros in the first three quarters of 2023. On the other hand, Morocco’s equivalent investment in the Spanish sector is symbolic. According to ICEX data, Spanish exports to Morocco reached historic highs in 2021 at 9.5 billion euros (28% more than the previous year) and represented 3% of Spain’s sales abroad. At the European level, more than 57% of Moroccan imports come from the European Union and more than 65% of Morocco’s exports go to Europe.
There are many advantages that this country offers to companies focusing on the main sector. In Spain, the agri-food business is approaching €140,000 million (10.9%) and employs more than 440,000 people, while in Morocco these figures rise to 12.65% of GDP and 35% of the population . total (about 37 million people) earning around 300 euros per month, a very low salary compared to the average Spaniard. Ponzanos emphasizes that this is definitely one of the main attractions: “The influence of labor in Spanish companies reaches 50% in some cases.” And the effects are felt most among the companies that grow tomatoes: Morocco’s share of tomatoes has increased by over 50% in the last 15 years. “In tomatoes, the impact on profitability is more obvious due to labor problems and the looseness of production models,” says Gabriel Trenzado, general manager of the Spanish Agri-Food Cooperatives.
lack of water and land There are other reasons too. “The cost and ease of acquiring land is much more affordable, although it is something that foreigners cannot buy when they are going to devote themselves to agricultural activities, but can rent it out and it is also very cheap,” says Higueras. . FinallyRegulatory framework benefits companies They move some of their production to Morocco. In this country, it is not necessary to comply with the law regulating phytosanitary products in the European Union or other regulations contained in the Green Deal or the package of measures from farm to fork, among other regulations that farmers have been complaining about these weeks. mobilizations.
The strategy followed by Spanish companies is to maintain their presence in Spain, although the bulk of operations and business are in Morocco. Higueras says that “the perception of greater displacement” can be avoided this way, because this way you can access certain European aid. However, he does not escape criticism. “What a concern They go to Morocco to export to the European marketTherefore, it affects the profitability of our production. This is unfair competition,” says Trenzado. After all, if there is no change between generations, free trade agreements will harm Europe’s primary sector and their costs are higher than in third countries, “we will be increasingly dependent on outsiders and there will be a supply crisis and war between producers “It will happen,” he adds.