Borges, Ebro Foods, Juver… Spanish companies move their agri-food production to Morocco

In Brussels, in France, in Italy, in Poland and now also in Spain. It’s been a week since the farmers and ranchers took to the streets to protest due to the bureaucracy and conditions imposed in the Common Agricultural Policy (CAP) that harms the profitability of its business compared to third countries, such as Morocco. Added to these difficulties are the lack of generational change, the scarcity of water and land in the Spanish case, where photovoltaics and investment funds compete for land against crops. For these reasons, a number of Spanish agri-food companies have moved part of their production to other nearby countries through the opening of subsidiaries or the acquisition of stakes in local companies. And among them, Morocco it wins with cheap labor and a more favorable regulatory framework than that offered by the European Union. According to the latest data compiled by the ICEX, the number of Spanish companies linked to the primary sector in this country amounts to 360, but if the investees and subsidiaries are added, it exceeds a thousand. Approximately “10% of Spanish companies in Morocco are directly or indirectly dedicated to the primary sector”, quantifies the doctor in economics and professor at EAE Business School, Juan Carlos Higueras. Among them are well-known brands, such as Juver (juices), Borges (oil and nuts) or Ebro Foods (with rice brands such as Brillante or Cigala).

It is neither a new phenomenon, nor does it only affect Spanish production. European countries such as Portugal have also moved part of their agri-food business to take advantage of the advantages that Morocco offers. In the Spanish case, “there was an important development 50 years ago, but the definitive push came in 2012, when the free trade agreement was signed between the European Union and Morocco,” recalls the director of the Spanish Federation of Trade Associations. Producers and Exporters of Fruits, Vegetables, Flowers and Live Plants (Fepex), José María Pozancos. The country has a preferential agreement with the European Union by which almost all products are liberalized, with the exception of some subject to quotas (such as apples or sweet almonds). For the rest of the countries, import tariffs usually amount to 40%. On paper, there are safeguard clauses that can be applied when imports damage European production, but they have never been activated. This was the beginning of a slow transfer of the Spanish agri-food firms that make up the more than 29,000 firms in the sector. This also includes agricultural machinery companies, such as Criado y López, seed companies, such as Semillas Fito SA, or olive companies, such as Aliminter SA.

Most of it They are concentrated in the Souss Valleyin the southern area of ​​Agadir, and in the Ghrab area, between Tangier and Rabat. In this last point on the Moroccan map is Ebro Foods. The company settled in the Larache region in 2001 through the Mundiriz company and built the largest rice production factory in the country, 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, the most important of which is Cigala,” the company explains. “Depending on the years and as long as there is a surplus, up to 5% can be dedicated to exports,” they add. Borges International Group is located in Marrakech. The company assures that there is an established company, Borges Marroc, “but that it has not been active for more than 15 years.” They remain in the country through a 10% stake in the subsidiary of the company Framaco SA, established in 2003.

Low prices and cheap labor

The Spanish agri-food sector It also extends to other countries in the area, such as Tunisia, Egypt or Turkey, and has crossed the Atlantic to Peru, where there is a presence of the fruit and vegetable canning industry, and to Brazil, but the figures concentrated in Morocco are unbeatable. Spain is Morocco’s first trading partner, both in imports and in exports (14.4% are Spanish). Gross direct investment in the primary sector by Spain in 2022 exceeded 23 million euros, as well as close to 14 million euros in the first three quarters of 2023. On the other hand, the equivalent investment by Morocco in the Spanish sector It is symbolic. According to ICEX data, Spanish exports to Morocco reached historic highs in 2021 with 9.5 billion euros (28% more than the previous year) and represented 3% of Spanish 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 are destined for Europe.

There are many advantages offered by this country to companies dedicated to the primary sector. If in Spain the agri-food business volume moves close to 140,000 million euros (10.9%) and employs more than 440,000 people, in Morocco these figures rise to 12.65% of the GDP and 35% of the population. total (about 37 million people) who earn about 300 euros per month, a very low salary compared to the average Spaniard. That is precisely one of its main attractions: “The impact of labor in some cases amounts to 50% in Spanish companies,” Ponzanos emphasizes. And its effects are felt most in companies that grow tomatoes: Morocco’s tomato share has increased by over 50% in the last 15 years. “In tomatoes, the impact on profitability due to labor issues and the laxity of production models is clearer,” says the general director of Agri-Food Cooperatives of Spain, Gabriel Trenzado.

The lack of water and of land There are other reasons too. “The cost and ease of obtaining land is much more favorable, despite the fact that it cannot be purchased by foreigners when they are going to dedicate themselves to agricultural activities, but rather rent it, something that is also very cheap,” says Higueras. . Finallythe regulatory framework benefits firms that move part of their production to Morocco. In this country it is not necessary to comply with the law that regulates phytosanitary products in the European Union or other regulations framed in the Green Deal or the package of measures From farm to fork, among other regulations that farmers are complaining about these weeks. in their mobilizations.

A strategy that Spanish companies follow is to maintain their presence in Spain although the bulk of operations and jobs are located in Morocco. This is how to avoid “a greater perception of relocation,” says Higueras, since in this way you can access certain European aid. But he does not avoid criticism. “What worries is that they go to Morocco to export to the European market, thus affecting the profitability of our production. It is unfair competition,” says Trenzado. In the end, if there is no generational change, free trade agreements harm the European primary sector and their costs are higher than those of third countries, “we will depend more and more on outsiders and there will be a supply crisis and a war between producers,” he adds.

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