Seeking integration at home and abroad

Executive talks targets for agriculture with Maurice Saade of the FAO

Greg Demarque | Executive

 

In 2015 Lebanon’s agriculture sector witnessed several setbacks. Prior to the Syrian crisis, the sector had been picking up steam – exports of raw produce and agro-industrial products were increasing quite rapidly. The disruption of transit routes raised the cost of land transport – a change of route and the paying off of militias – until March 2015 when all borders connecting Lebanon to the Gulf market were closed. The food safety campaign also affected consumer confidence – particularly in dairies. But potential new markets present an opportunity to diversify exports away from an increasingly competitive Gulf market. Executive sat down with Maurice Saade, Lebanon’s country representative to the Food and Agriculture Organization (FAO) of the United Nations, to find out more.

E   What is the thinking behind subsidizing agriculture exports by sea – putting trucks on ships rather than packing produce in containers?

Well, the thinking is that the way the chain is organized now is by trucks so it is simply using the same chain. In the future this should be improved; it’s a temporary solution. We don’t know if it’s one or two years – [it] depends on the funding available – but essentially the government will subsidize the exporters [by covering] the cost of shipment. We’re not sure what has been the impact – the data is very difficult to get or is not available. The cabinet approved [the subsidization program] back in May or June 2015 but it took longer to put things into place; the season for exports – especially for fruits – peaks in July, August and September. At least they will have less [profit] losses and will not lose their clients in the Gulf; if you don’t deliver the client will move on to somebody else. That was the main concern, to at least ensure that the Gulf and Iraqi markets were not lost.

E   Has the influx of Syrian labor had an impact on host communities?

Not at all, quite the contrary. There is a large number of Syrian workers who traditionally accounted for 90-95 percent of agricultural workers in any case so prices have remained low and the abundance of labor also reduced production costs [for] farmers. Of course there are a few unskilled Lebanese workers displaced, but the net effect is primarily [positive because of] the availability of the Syrian workers who are more skilled, and also the vegetable and fruit shacks that emerged everywhere are run by Syrians, making consumers very happy because they are open 24 hours a day.

E   For FAO, is marketing raw produce a focus and is it more for local access to the market or for exports?

Local access is there. Lebanon is a free market; there are issues of ensuring wholesale markets but the potential for exports to the European Union is there. That’s where the Lebanese should focus because the Gulf market is there but it is very open for competition – [especially] if Iran opens up. In the EU market, the standards are much higher; quality, shape and also the sanitary and phytosanitary requirements are very strict. I’ll give you the example of potatoes. The EU provided Lebanon with an export quota of 50,000 tons and so far Lebanon has not used that quota for several reasons. The production in Akkar is very good because of the early season and producers [would be] able to export to the EU without much competition – [except] maybe from the Egyptians – but the Europeans want their potatoes nice and round and here they produce potatoes that are huge with lots of mud stuck in between. Europeans don’t like that so the Lebanese have to respond to the market’s needs and have not yet done so because they have been relying comfortably on the Gulf market. If they seriously want to plan ahead, especially if the export subsidy to the Gulf is not permanent, they need to think about improving the production chain, using less pesticides and fertilizers [and revising] post-harvesting methods [such as] crating and packing; that will give them access to the European market. [A quota of] 50,000 tons in the European market gives very good price margins.

E   Is there an effort to help smaller farmers scale up to join the value chain and meet these standards?

The most common, in other countries, is contract farming – essentially someone who has access to the European market making the deals. That company would usually have their own production, but if the demand increases, they start contracting with the farmers around them, imposing very strict requirements guaranteeing a price on condition that standards are satisfied. This has happened in Egypt and it’s working very well. This could happen in Lebanon, [but] not yet; we have in Akkar big companies [growing] potatoes but they are not yet at the contracting level with the other farmers. We think that should be a model that would work quite well. FAO, with the Ministry of Agriculture, could help the small farmers to upgrade, but if you don’t have a market, small farmers will not be able to make deals with the supermarket chains in Europe. They have to have some sort of integration with the agro-industry upward in the supply chain.

E   On food safety, FAO visited the slaughterhouses when the Ministry of Public Health shut them down for health violations. What’s the mindset and coordination when it comes to food safety in the agriculture sector?

FAO was the first one requested to help in the formulation of the food safety law back in 1998. We provided draft laws, legal and technical [advice] and we gave several scenarios. At that time our recommendation was that because Lebanon’s legal system is based on the French legal system, essentially each ministry has its own food safety and then you coordinate between ministries. The Anglo-Saxon system has a food safety administration: the [Food and Drug Administration in the United States]. So FAO was recommending that we follow with the existing French system for the [ministries] of agriculture, economy, health, tourism and whoever else is involved in food safety simply to coordinate and to make sure there is no overlap and no gray area.

E   That’s the problem and this is what the food safety law might address because it is so decentralized that nobody wanted to take responsibility until the minister of health stepped in.

Yes and no. In 2003 the United Nations Industrial Development Organization came up with a new proposal, the Basil Fuleihan plan, shifting the idea to having one agency responsible for food safety and nobody else, creating a new agency with inspectors responsible for everything. [This is important] especially when you are talking from farm to fork and you have lots of the food safety issues at the farm level, [such as] the use of pesticides. At the time then Minister of Agriculture Hussein Hajj Hassan said if you take away all this you have to close down the Ministry of Agriculture because [its mandate] is to work with the farmers. The new law is a typical Lebanese agreement – creating this new agency but keeping the others.

The good thing is we have a law because before we didn’t have a legal framework. The new agency has a dual purpose: the first is to coordinate and set the standards, and the other is to be an operational agency with inspectors. If it turns into an operational agency, it will be a layer in addition to the other ministries. The next step is to [issue] the implementation decrees and allocate the budget. This will take quite a while; to allocate the budget and recruit the staff might take years.

E   The food industrialists say even though the food safety campaign had very positive benefits for public health, it had repercussions on Lebanese products in foreign markets. What was the impact for the producers in the agriculture sector?

There was an effect primarily on the dairy sector; several factories in the Bekaa were closed. That had a major impact because consumers got scared and reduced [consumption] and this affected the price of milk sharply. The food safety campaign was very good because it raised awareness, but once you have a food safety strategy you adopt international standards. There are ways of closing shops; you audit and you don’t close a factory or restaurant based on one report. If there was a system adopted, it would be much smoother and more sustainable, not just based on political will.

E   What are the biggest risks in the food value chain and beside the food safety law and inspections what can be done to mitigate risks?

Awareness is very important and we already have good awareness. You need to work with other parts of the chain: transport, storage and cold storage. A lot needs to be done and that’s where you need the coordination among ministries. Who is responsible for controlling transport? Nobody. It falls between the cracks; that’s where the new agency should identify those gaps and suggest ways to control that.

Also a key part is what is happening at the farm level; the pesticide residue is a critical issue. [Concerning] food safety, if you have salmonella poisoning, you might end up in the emergency room, [but with] pesticide residues you don’t see them [or feel their effect] and 20 years later you have cancer. It is really the hidden danger of the food safety chain and this takes a long time to address because it is very complex.

Jeremy Arbid

Jeremy is Executive's in house energy and public policy analyst.

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