Residents in the border town of Majdal Anjar broke a jar the moment the last Syrian soldier left Lebanese soil. It is a local ritual to signify that something has ended once and for all. But while the general atmosphere in the Bekaa is one of great relief and hope for a better future, it will take more than the symbolic breaking of pots to revive a local agro-economy that is plagued by smuggling, lacks government support and has no competitive edge.
“I will double my operation in the Bekaa valley as soon as some form of protectionism is introduced and smuggling is stopped,” said Musa Freji, President of the Tanmia Agricultural Development Company. He was referring to the roughly 25 tons of chicken breast that enter Lebanon, unchecked and unregulated every day. “It’s a huge operation,” he sighed. “In Lebanon the meat is divided in small in black plastic bags of 5 to 15 kilo and transported by small vans to snack bars, restaurants and supermarkets all over the country.”
Retailers make no secret about the reason for buying Syrian chicken. The meat is a dollar a kilo cheaper. The problem is that most Syrian chicken is not raised and slaughtered according to the international standards Tanmia claims to uphold, while the end consumer has no way of verifying production methods and origin of the meat. The problem is a frustrating one for Tanmia, which with 400 staff, is one of the largest investors in the Bekaa. It raises some 10 million chickens, producing roughly16,000 tons of meat and records revenues of roughly $20 million annually. With Hawa Chicken, Tanmia controls some 45% of the Lebanese market. The remainder is made up by smaller farms and Syrian imports.
But chicken is only one good in what is euphemistically referred to as “free trade” between Lebanon, Syria and other Arab countries, but what is in reality legalized dumping and smuggling. According to government figures, some 25% of Syrian exports to Lebanon are made up of fruits, vegetables and dairy products, but the Bekaa farmers say the real figure is much higher, a situation exacerbated by the steady stream of produce streaming in from Egypt and Jordan. In all three countries, government subsidies and the price of labor, land, diesel and water are much lower, making it very difficult for Bekaa farmers to compete.
According to the Food and Agriculture Organization (FAO), Lebanon’s cultivable area amounts to some 360,000 hectares, some 200,000 ha of which are located in the Bekaa Valley. Crops occupy about one-third of the cultivated area in the Bekaa, mainly cereals, potatoes, onions, sugar beet, tobacco and green vegetables. Though Lebanon exports some fruits and vegetables, it produces only 15% of its wheat needs, 45% of its vegetables, 10% of its sugar and 20% of its dairy products. Some 400,000 tons of wheat are imported from the United States, Syria sells vegetables and milk, which is also imported from Europe. It is not an ideal situation and one that could be redressed by placing a greater emphasis on increased local production.
“Everyone agrees,” Freji said, “that a free trade system is best for Lebanon. However, I think an exception must be made for agricultural and industrial production. Lebanon imports almost $10 billion a year and exports just over $1 billion. We should replace import by production to have a larger part of the population participate in the economy and prevent people from leaving the country. And I assure you that, if we are protected by import tariffs at a reasonable rate, agriculture will flourish in no time. Farmers will be able to make a decent living, while internal competition will ensure that prices will not spin out of control.”
Salim Wardy, director general of Zahleh-based Solifed that produces Domaine Wardy Wines and makes Ghantous Abou Raad arak and whose family has been involved in agriculture in the Bekaa for many years, also believes reform is important but does not support the introduction of import tariffs. “Agriculture in the Bekaa, and the whole of Lebanon, has been an absolute disaster for at least five years,” said Wardy.
“Psychologically, the Syrian withdrawal has been an important boost for the Bekaa, but economically it will take years and strong government measures to change the status quo. Lebanon is essentially a country without borders that serves as a dump for agricultural produce from Syria and other Arab countries. We need real borders, if one day in the near future we want to have a healthy agricultural sector again.”
Wardy does not favor the introduction of import tariffs, as it would endanger Lebanon’s entry into the World Trade Organization (WTO). Instead, Lebanon should just follow the natural agricultural calendar. “In the months we don’t produce certain crops,” he said, “we import them, whereby Syria and other Arab countries will be favored. However, in the months we produce, say potatoes, Lebanese production comes first and import will be limited to what is needed.”
Wardy believes it is not only a matter of stronger governmental protection. Lebanese farmers will have to improve production and marketing methods as well. “We must increasingly produce for niche products, such as cherry tomatoes, for both domestic restaurants and export. Packaging and marketing can be improved. In London they sell small cucumbers called “Lebanese cucumbers,” and they are not even Lebanese. We should increasingly market Lebanon as a quality brand, in tourism, wine, vegetables, anything.”
Dumping from the west
According to Freji however, trade relations with Syria and the Arab world are only part of the problem as Lebanon also serves as a dumping ground for western agricultural products. So, most of Lebanon’s wheat stems from the United States, while its chickpeas come from Canada. “Lebanon imports because it is cheaper, sure,” Freju said. “But why are American wheat and Canadian chickpeas cheaper? Because they are heavily subsidized by the American and Canadian government!”
Agriculture is the Achilles’ heel of free trade champions the world over. While the European Union and the United States relentlessly push for an increasingly free trade and free markets by breaking down custom duties and import tariffs, they have so far failed to change their agricultural sector, which is characterized by enormous government subsidies, export grants, and import tariffs. So, the United States paid farmers up to $20 billion in subsidies in 2003. The European Union spends almost $50 billion, or half its annual budget, on farmer subsidies, while the UK injects its agricultural sector with some $3.4 billion a year.
To illustrate the international dimension and magnitude of western agricultural subsidies take sugar. On April 28, the WTO ruled that EU should significantly reduce its subsidies on sugar beet production, as well as its export of subsidized sugar. The EU exports no less than 5 million tons of sugar a year, despite being a high cost producer. According to British development and relief agency Oxfam, the EU spends no less than €3.30 in subsidies to export one euro worth of sugar. What does this have to do with Lebanon? Some 7,000 hectares in the Bekaa are planted with sugar beet, producing some 300,000 tons of sugar a year, but the reality that it just cannot compete.
“Import prevention is not allowed by the WTO,” Freji said. “But a reasonable form of protectionism is allowed. The government will just have to strongly make the case for Lebanon. The country is not in a position to be more holy than the pope.”