Thursday, October 4, 2007

Lebanese farm exports increase

From Saturday September 29- As-Safir. My translation from Arabic, my comments in italics at the end.

"Major increase in profits from agriculture in the Bekaa this year, for the first time in a nearly a decade.

Exports of farm produce from the Bekaa has increased by 100%, although farmers say the cost of production has also increased by 50%. This increase in exports has been attributed to favorable economic changes in the Arab countries, poor climatic conditions (cold in the beginning of the season, drought in the end) in Saudi Arabia and Syria which caused a decline in harvests, in addition to the opening of the Iraqi market, which is the largest in the Arab World. These conditions meant that Saudi Arabia was unable to export to the Gulf countries, while Syria was unable to cater for the domestic and the Iraqi markets. Supply and demand did the trick, and monetary gains were up to 3 times higher than last year.

In monetary terms, the Bekaa has exported this year $46 million worth of farm produce, compared to $24 million last year. Prices have increased throughout the Arab world, including Syria, and the Lebanese produce is reaching European and African markets. Cyprus imported last year 4 containers of cherry against 118 this year. Russia imported last year 6 containers of cherries against 127 this year. The poultry sector was also positively affected, and exports increased from $330, 000 last year to $1.3 million this year, mostly to the Iraqi market.

However, the head of the potato growers union warns of an expected decrease in the prices of potatoes (the main export) in the fall as most farmers have shifted to potato planting after this year's gains. He also demanded the Lebanese government to continue its export subsidies program expected to be reduced by 20% this year.

Another exporter indicated that this year's crops went as far as england and afganistan, but that the government was to blame for the total lack of agricultural extension and export advice and the absence of anti-dumping laws.

One of the agribusiness owners indicated that the price increase in prices of input is "mad" and that the profits this year was due to the fact that many farmers had gone out of business and that the area planted with potatoes had been reduced by 25%, which resulted in profits for those farmers who had stayed in business.

These mega profits from crop production come after many years of decline during which agricultural lands in the Bekaa turned into sheep farms."

There is plenty to learn about food and farming from this piece of news:

1. Saudi Arabia, in good years, is a competitor to Lebanon for the Gulf market (check this post). Saudi agriculture is heavily subsidized, and this is of course not a "free Arab market". Poor climatic conditions (climate change?) affected Saudi production negatively this year, but this may not be the case every year.

2. The Iraqi market is open again. This used to be the main export market for Lebanon, and there was a time before 1991 when it was impossible to eat a decent orange in Lebanon as they were all exported to Iraq.

3. While this is really good news for some farmers, the amounts we are talking about are still small (our food import bill is nearly $2 billion). This increase in exports can at least partly explain the tremendous hike in fresh food prices Lebanon has been recently witnessing. Supply and demand and market forces again.

4. The people who stand to make most of the money are the large farmers (industrial sized) and the exporters who benefit from strong support from the government export subsidy program. Yes our government does not subsidize agricultural extension, but it does subsidize the transport costs. Many exporters I meet tell me that they make their money only on the subsidies from the state, and they decide where to export to depending on the percent of the transport cost that is covered by the state. This allows them to sell cheaper (and therefore buy cheaper) and cash the subsidy.

5. I've always maintained that cherries are the best crops Lebanon can produce especially in the marginal lands at high altitudes. It is not because I am a clairvoyant, but because I have worked for 12 years in Irsaal, a village in the anti Lebanon where 5 million cherry trees have been planted in the last 50 years, in an environment that looks like a rock desert in the summer, and like Tibet in the winter. The trees grow without irrigation, on snow melt and need very little care. Cherries are also one of the most demanded food products worldwide, but it doesn't travel too well. The middle and high altitude zones of Mount Lebanon could produce a very good crop (some already do).

6. There is great fear that the whole edifice will collapse next year as many farmers produce the same crop. This is a classic situation in which profits entice more farmers to expand their cropping area by borrowing money and then find themselves confronted with a glut, and suffer heavy financial losses. Usually, governments step in to prevent this from happening. In this case, the government is just an observer, and will not use these exceptional circumstances in order to try to organize a little bit the farming sector through appropriate policies and legislations-and the provision of farm extension, of course. I had previously indicated that with the increases in world food prices, an excellent window of opportunity has opened in Lebanon to revive agriculture, and had hoped that a government (?) would seize this opportunity.

7. Finally, it is interesting to see that the alternative to crop production is sheep production. This usually happens where there is too little water for crops, and explains why desert nomads keep sheep and do not till and sow.

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