Rising costs and disrupted trade routes have been taking a toll on Lebanon's agriculture sector, while climate change and growing demand for water and land for urban development and industry could see the country's primary producers come under increasing pressure in the years to come.
Most estimates put the agriculture sector's contribution to GDP at 4.5-6.5%. It provides employment for around 15% of the national workforce, with up to 30% of the population dependent on farming for their livelihood. There have been significant challenges over the past year, with rising fuel costs and the deteriorating security situation in Syria having a negative impact on the sector, as a result of falling sales to the Syrian market and the severing of trade routes to the rest of the Middle East, particularly the Gulf.
The border between Lebanon and Syria has been all but closed to trucks since late July, and while intermittent trade has continued, the worsening security situation has meant fewer exporters are willing to take the risk of using Syrian routes to move their produce. Prior to the closing of most land routes through Syria, up to 80% Lebanon's agricultural exports were shipped by road either to or through its neighbour.
To some extent the latter problem has been resolved, with an increasing amount of farm produce being carried by ship directly to markets or trans-shipped through third countries before being moved by land to its final destination. Though effective in circumventing the Syrian bottleneck, this process can slow down deliveries and add to transport costs, especially as there is a shortage of refrigerated vehicles to make the long haul to markets further afield. Less likely to be remedied any time soon is the loss of sales to Syria itself, with little sign of a return to stability on the horizon.
Efforts to boost sales to other markets have proved fruitful, however, with agricultural exports up by 2% year-on-year for the first three quarters of 2012, generating earnings of $152m. However, this increase has not flowed back to primary producers, according to Antoine Howayek, president of Lebanon's Farmers Association, with any gains being eaten away by high costs and low prices.
"Farmers have not been impacted positively by the extra demand. Prices in the local market are still far below expectations and farmers can barely make ends meet," Howayek said in an interview with the English-language Daily Star on December 27. "Increasing exports does not mean that the sector is doing well."
One part of the industry that has benefitted from the Syrian crisis is the olive oil segment, with a drop in imports from Lebanon's neighbour, which traditionally produces up to 10 times more olives than Lebanon and sells its oil for much lower prices.
Despite the fall in competition, however, earnings have not been strong. Even with a reduction in cheap imports, the domestic market is still unable to soak up all of the 40,000 tonnes of olive oil produced annually, according to the Ministry of Agriculture.
The longer-term prospects for Lebanon's farms and their contribution to the economy also appear fraught with pitfalls. According to a report prepared by the UN Adaptation Fund in 2012, the sector is particularly vulnerable to the twin problems of urbanisation and population growth, as well as to risks posed by climate change, which could see already-limited water resources become even scarcer. With the rising demand for land and resources posed by the spread of urban areas and higher levels of industrialisation, Lebanon's farmers face a future of trying to make a living on increasingly tight environmental margins. The UN report forecasts a decrease in productivity for most crops and fruit trees as a result of restricted water supplies and a dryer climate in the years to come.
Though there are a number of projects to mitigate the effects of water shortages, such as promoting irrigation and increased utilisation of greenhouses in cultivation, these will require far more capital than is currently available.
At present, Lebanon relies on imports to meet more than 85% of its agricultural needs, a figure that may increase in the coming years as economies of scale, scarce resources, low investment and rising costs all eat away at the roots of the sector.
© Oxford Business Group 2013
