Through the Hays

EXPORTS

Agriculture exports grew 34.4% in 1H2013, following a decline of 4.1% year on year in the corresponding period of 2012. The upturn in fortunes suggests Lebanese exporters have managed to overcome the challenge of exporting through Syria, whose borders are largely closed. Lebanese exports traditionally head through Syria, Jordan, and Iraq to reach the Gulf and Egypt, with those countries soaking up 36% of Lebanese exports in 2012. Trouble in the region, however, saw exports for the year plummet by 6%. Of total exports in 2012, 52% went overland. Fast forward to 2013, and the export picture looks different. Exports totaled $102.6 million in 1H2013, with 19% of the total heading to Syria. Exports to Syria registered a monthly average increase of 16.1% in 1H2013, compared to the same figures the previous year, due mainly to shortfalls in Syrian agriculture output.

IMPORTS

While farmers enjoy higher-than-usual exports due to the quantity effect, agricultural products normally destined for Syria have begun to enter Lebanon at discount prices as liquidity dries up on the Syrian side. As an illustration, imports from Syria have grown by 21.5% over the first half of the year compared to the same period in the previous year. Overall imports rose 15.4% in 1H2013 year on year, following a decline of 3.7% in 2012. Despite the positive figures, local demand remains sluggish due to less-than-ideal economic circumstances, according to a Bank Audi report.

THE LAY OF THE LAND

Lebanon is divided into several agricultural areas, including: the coastal strip, the main products of which are citrus, banana, horticulture, and greenhouse goods; the Akkar plain and upper Mount Lebanon region, known for its cereals, potatoes, grapes, and vegetables; the Bekaa Valley, which predominantly grows potatoes, grains, fruits, and vegetables; the mountainous region in the middle of the country, dominated by orchards and vegetables; the Western slope of the Anti-Lebanon range, famous for its grapes, olives, and cherries; and the Southern hills, which are adorned with olives, tobacco, almonds, and grains. According to data from the Ministry of Agriculture, 43% of farms are located in the Bekaa Valley and the Anti-Lebanon range, while the Southern hills account for 22%, and the Akkar plain and the upper Mount Lebanon region account for 26%.

RISKY BUSINESS

According to the UN Economic and Social Commission for Western Asia (ESCWA), the fact that 96% of farms do not belong to a cooperative is a clear risk factor. While credit is available, only 1% of farms are thought to have accessed it, according to 2012 data from the Ministry of Agriculture. The largest risk to food security, however, is the Syrian crisis, unfolding only too close to home for Lebanon. In October 2013, officials warned that further disruptions to exports are a concern, while contaminated meat passing illegally across the border, as well as poor food supplies for Lebanon’s growing refugee population, are a severe risk. With over 750,000 Syrians now living in Lebanon, the Ministry of Agriculture has announced plans to combat food insecurity, including encouraging the export of more local produce, combating bovine afflictions such as mad cow disease, and intensifying other disease and pest control efforts in order to increase the health of the national herd. A campaign to vaccinate livestock moving into Lebanon from Syria is also set to begin in November 2013.

With the outcome of the Syrian conflict still uncertain, Lebanese farmers will continue to seek new ways to get their goods to market. While non-overland routes are seen as the best solution short term, the rising costs associated with maritime shipping mean that profits could be squeezed. Until the border with Syria reopens, exporters will largely be playing it by ear, while investors will remain at the gates.