Oil and food: Lebanon's trials

The two most important challenges facing agriculture in the 21st century are climate change and peak oil. Both strengthen the argument for enhancing local food production and reducing trade: if regulations are implemented in order to reduce CO2 emissions, then the price of imported food would climb. Similarly, it goes without saying that if oil production starts to decline, then oil will become more expensive and transport costs will rise, biofuel or no biofuel. I short, the expected developments in oil production, trade and use in the next decades will put the whole issue of trade (and fair trade too) under test.

What we are experiencing these days with the vertiginous ascension of oil prices may be a sort of a dry run for what is to come (although some experts seem to believe that this is It, and that the prices will not come down).

How are we dealing with this in Lebanon? Our current response may be an indication of what will happen when oil hits the fan.

Well, the increase in the oil prices is being felt. In today's oped in al safir, Houssam Itani indicates that the increase in fuel prices will cost the government an extra $300 million in electricity. No wonder power cuts are so frequent, especially in the rural areas. In my village, we haven't had electricity for a full 24 hours for years. Now it's 6 hours on-6hours off.

What are the implications on agriculture? I had mentioned earlier that harvests this year were exceptional, and that exports had increased. The bubble seems to have burst, because this report indicates that news are bad for the grape harvest. Grapes from the Bekaa are of course consumed locally, but they are also stored in refrigerated environments and then sold throughout the year on the local market or exported. The problem appears to be that the costs of transport (oil) and of refrigeration (oil again) are too high for export, and that the meager government's electricity supply is not sufficient to cover the needs. Moreover, this year's costs of production were high as the costs of pumping water for irrigation were very high (oil again). By the way, if you read the report i referred to above, note how the farmer who complains about not having received the government's compensation money after the July 2006 war gets told by a government official: "Hizbullah will compensate you don't worry".

Further North in the Bekaa, in the Hermel area, one of the poorest in the country, a milk collection center has stopped operating, in spite of the tremendous hike in world milk prices (which would make it really worthwhile to organize milk production). One reason: the increase in the price of fuel to operate the fridges and the collection vehicles (oil again). But note here the pernicious role of the private sector which creates unregulated cartels, imposes prices and corrupts cooperatives.

In summary, we are locally starting to feel the impact of the rise of oil prices on the food production sector. It does not look good. What is the response of the government? Nothing. The eternal laissez-faire. Not surprisingly, development organizations, with one agenda or the other are moving in to fill the gap.

There are a couple of things to be concluded from this not-so-dry run:

1. The government does nothing for many reasons, one of them is that its core belief is in the free market. It takes it for granted that the market will readjust itself. At what price? Look at the housing loans crash in the US. But if the farm sector crashes, this is not really the concern of this neolib government: its minister of economy and trade said it very clearly.

2. The government has also taken another option: to farm-out the agricultural sector to international NGOs. These NGOs operate independently from each other, and each has its own set of belief, policies and strategies. Some of them, especially (but not exclusively) those funded with USAID money, are here to promote Free Trade as cure-all magic bullet. They are happy to take the role of the state, and the state is happy to have its role taken. However, their goals are narrow, and not integrative. They can only scratch the surface, and suffer from a scaling-up problem. They contend (as I do) that their work provides examples and pilots for replication. Replication by who? Copy-cat development is not a familiar sight in Lebanon, in spite of the tens of millions of dollars that have been spent. Projects unfold and then fold, leaving behind them a trail of reports and few beneficiaries.

3. It is clear from the relationship between oil and food production that issues of agricultural development cannot be addressed piece meal, neither by ministries nor by specialist NGOs. Without an effective state structure, I don't think it is possible to have positive change. This is the only good reason to ask for a consensual government willing to invest time and effort in development. Unfortunately I don't think any of the current players is up to it.