INTERVIEW: Morocco’s Alf Sahel adapts to spot grain purchases, animal feed diversifications

Morocco's largest feed mill Alf Sahel has adapted its grain procurement strategy to a spot market approach, in contrast to European feed mills that tend to secure longer-term contracts, the company’s purchasing manager Anas Tajany said in an interview.

Since Alf Sahel started import operations in 2012, the company has had to change its approach to purchasing grains. Price volatility following the Russia-Ukraine war led it to change tack from securing long-term contracts to spot buying.

"Over the last two years, it was very challenging to be able to get demand for [our] products” amid a price downtrend and high inflation. Consequently, Alf Sahel purchases feed grains, like corn and soybeans, on the spot market, rather than buying forward, Tajany said.

“We used to buy forward for three-eight months in advance. Today, we are spot and hand-to-mouth,” he said.

This is quite different from the way feed mill companies in Europe operate due to differences in the length of contracts meat producers have with their clients, Tajany said.

“In Europe, they have one-two years’ contracts for meat to deliver to clients. Morocco is different -- we are more hand-to-mouth and [have] two-month [contracts].”

Alf Sahel procures corn from Argentina, Brazil and the US. It also purchases corn from Ukraine “when the quality is good.” Prices in South America were preferable from June until November-December, but the US will become more competitive than Brazil in January, Tajany said.

Differences in feed formulation

Another contrast the Moroccan feed mill industry has with Europe is the predominance of wheat in animal feed over corn.

In Europe, feed mills have local wheat harvests around their factories, so they can get wheat on a weekly basis, which is different than Morocco, Tajany said. European feed mills are adapted to use more wheat than corn and their feed formulation is based on wheat.

“For us, it's more of a US-based formula, based on corn, which is cheaper in the market. We try to include wheat or barley for quality. I don't think wheat will compete against corn in Morocco over the next few years,” he said.

Feed wheat prices do not often go below corn, and when they do, it is only for two-three month windows, he added.

Diversification of feed offerings

Alf Sahel is planning to expand its feed offerings to include aquaculture next summer.

Morocco has around 5-12 aqua farms that mainly do shrimp and seabass, Tajany said. “If we compare ourselves with Tunisia, Egypt or Turkey, they are bigger players in the production of fish protein.”

“It’s a growing market and it’s just starting,” he said. “As legislation [regarding the use of animal protein] will soon be available, we need to position ourselves well ahead to be able to satisfy the market.”

“It’s the future for us as a producer of feed,’ he said, adding that there will be demand for fish in local markets.

Challenges ahead

The biggest challenges facing the feed industry over the next few years are “the price of raw materials, price fluctuations, logistical issues, trade war and normal war, as these are all factors that impact the price of agricultural commodities, and thus directly impact the price [of feed] the company can offer its clients,” Tajany added.