Interview with Mahmoud Oudrhiri, MAMDA Deputy Managing Director: “We have observed a spectacular jump in the insured areas”

The agricultural sector in Morocco is exposed to a variety of risks, the most critical of which currently come from climate change, leading to increasingly frequent and severe periods of drought, seriously threatening the country’s agriculture. The implementation of climate multi-risk insurance, operationalized by the Mutuelle Agricole Marocaine d’Assurances (MAMDA), therefore appeared to be a lifeline for many Moroccan farmers. To tell us about the success of this product, resulting from a public-private partnership, as well as the efforts undertaken and underway to support Moroccan agriculture in the face of the effects of climate change, Mr. Mahmoud Oudrhiri, Deputy Director General of the MAMDA, agreed to answer our questions during the Casablanca Insurance Meeting.

Climate multi-risk is one of the key themes of the Casablanca Insurance Meeting this year. What is the state of affairs in Morocco?

Morocco started relatively early. Already, in 1994, it set up the first program linked to the drought hazard for cereals, in the form of a State guarantee. And then there was a very important step in terms of agricultural insurance in Morocco, in 2011, when this program was transformed into an insurance contract. Where we moved from a simple drought guarantee to a multi-risk climate policy integrating six climatic hazards, and a state guarantee to a formal insurance contract as part of a public-private partnership between the Ministry of Agriculture, the Ministry of Finance and MAMDA. This multi-risk climate insurance is intended for large crops, that is to say cereals, oilseeds and legumes.

Compensation occurs when the yield observed at the level of a given municipality is lower than the reference yield of said municipality.

We talk about a success story when we talk about climate multi-risk in Morocco. What are the factors of this success?

I would cite perhaps three factors. I think the first is the model chosen by Morocco. And when we benchmark internationally, I think that the Moroccan model incorporates all the good codes and all the good practices that we find in the Spanish, Canadian model, etc. IIt is important to emphasize the choice of model and its relevance, which is a key factor for me.

As a second factor, we can cite the proactive policy of the State through the Ministry of Agriculture to absolutely want to develop the resilience of farmers. The State is there, it is involved in the entire process: at the financial level but not only since it intervenes in the definition of the product, the price of the expertise… The State also shows a certain agility to develop the product. Since 2011, we are on the fifth version of the product. This agility is very important for this type of program.

Last factor, and here I am going to preach for my parish! It is the operator and all the work done by MAMDA, drawing on expertise and experience of more than 60 years put to use in this major public-private partnership project.

In terms of the figures for this success, since the transformation of the program into an insurance contract in 2011, we have observed a spectacular jump in the areas insured which went from an average of around 68,000 hectares before 2011 to 1.2 million hectares insured by the end of 2023. Furthermore, over the last eleven years, no less than 4.5 billion dirhams in compensation have been paid, with an acceleration in recent years.

Over the last five years, we have paid more than 3 billion dirhams with a balance sheet which is very much in favor of the farmer, in the sense that on average, the farmer has paid 32 dirhams per hectare per year over the period, and received in return around 420 dirhams per hectare per year.

Success can also be measured by quality of service. Because, beyond the figures, I think that the operator has put in place all the human, financial, technical and technological means to upgrade its quality of service. Particular effort has been placed on innovation and digitalization. Thus, MAMDA has become in a few years one of the leading consumers of satellite imagery in Morocco, but also of agricultural indices and parameters such as the NDVI (vegetation index) or geographic information systems, or even drones. during the expertise phases. All this to better anticipate, better evaluate and better serve the customer.

This must have implied a vast transformation also at the level of MAMDA itself.

Yes, at all levels, whether human, financial or technological resources, with a lot of innovation to be there. Moreover, during the Casablanca insurance meetings, we saw on the one hand the Spanish case which is one of the world leaders in agricultural insurance and multi-risk climate insurance and on the other hand the case Moroccan which we can consider without any chauvinism on our part as the African leader in multi-risk climate insurance on African soil. We also regularly receive several delegations from friendly African countries who come to draw inspiration from the Moroccan model.

Concerning Moroccan farmers, how do you judge their level of awareness of this need to cover themselves, and how does MAMDA work to increase this awareness?

The question is very relevant. MAMDA, through its core business, has been operating in agricultural risk for over 60 years now. It therefore has very old relationships with the world of agriculture, and unrivaled knowledge of the field. These are risks that we are trying to popularize and make known. But not in the same way as for automobile risks or others, these are not products that are sold while waiting for the customer to pass through the agency. It is absolutely necessary to make climate risk coverage known in the souks, in the douars, etc.

It is thanks to this titanic work of the MAMDA sales force and thanks to the trust and experience of 60 years in a specific market that we were able to reach all these farmers and secure more than 1.2 million hectares per year!

The amounts and risks involved in climate change raise the question of the sustainability of insurance schemes. What about in Morocco?

Indeed, there has been a worsening of the risk observed over the last 6 years, and future prospects unfortunately confirm this worsening. This is a global phenomenon, which also makes the international reinsurance market for this type of risk increasingly tense!

Faced with this situation, there are two types of avenues that we can consider: how to limit the risk and how to mitigate it?

I think that one of the most serious avenues for limiting the loss experience of climate multi-risk consists of improving the volatility of cereal yields in Morocco. We are currently recording very low levels of performance which can be improved, fortunately!

There are several state and private initiatives working towards this objective and which cover the entire cereal production cycle:

1. Development and use of quality seeds that are resilient to climate change with very significant gains in yield (between 20 and 40% depending on the crops). On this point, we have everything we need in terms of research and development (thanks in particular to our research institutes like INRA, etc.) and in terms of financial incentives.
2. The transition from a traditional semi to a direct semi with yield gains of around 30%. Several initiatives have been launched in this direction by the Ministry of Agriculture. The “carbon farming” initiative can also be cited as an opportunity to be seized by farmers to reduce the carbon impact of their crops, receive remuneration in return while increasing their yields.
3. Improving the monitoring of production stages through good technical advice and the use of technology (weather prediction, data analysis, connected agriculture, etc.) to optimize phytosanitary treatments, fertilizers, etc.

In summary, initiatives to improve performance exist at all levels and substantial budgets are allocated to them. What we need today is to accelerate the pace of this transformation to be there as soon as possible!

The other equally important avenue is how to pool or mitigate the risk of drought for cereals with other climatic hazards such as frost and hail for arboriculture. And here I think that the Spanish case is very edifying. In Spain, the coverage rate for banana trees by multi-risk climate insurance is 100%, for apple trees 83%!

Interview conducted by Selim Benabdelkhalek