The Souk El Tayeb farmers’ market on Beirut’s Armenia Street has an established feel to it. There are many regulars to be seen on both sides of the small stands. Regular customers are crowding the isles on the main market day, which is a Saturday. Facing the customer streams are market traders peddling fresh produce, flowers, preserves, nuts, hot sauce, chocolate, manakeesh, and an eclectic mix of village goods. Their display tables tend to be crowded, too, as the growers and purveyors of artisanal or small-scale agro-food products make the most of the presentation space that they lease from the market operator – the Souk El Tayeb social organization – for a fee of $12 per day.

The organization does not collect exact visitor stats, but managing partner Christina Codsi estimates that over half of the market’s patrons on an average Saturday are locals and regulars. Although, she notes that during the summer, the market also sees many tourists and visitors from the Lebanese diaspora, in addition to a heightened influx of foreign expatriates who reside in Beirut. According to Codsi, the farmers’ market started out as a social venture in the mid-2000s on a rationale of providing market access to small scale – usually not land-owning – farms with produce and agro-food products.

Neither Codsi nor her social co-entrepreneur, Kamal Mouzawak, have a farming or food trading background. They wanted to allow farmers to bypass wholesale markets that then and now dominate the distribution segment of the agricultural value chain, but cut into farmers’ earning margins while being organizationally opaque and obscure in standards and rules. “When we studied this back in 2004, we realized that a lot of potential for small farmers existed in accessing urban markets,” Codsi tells Executive.

Souk El Tayeb has not always looked as solid as it does nowadays. The twice-weekly affair not only has a stable home in a covered hall with an adjacent, small management tract, but is co-located with a “farmer’s kitchen” restaurant – Tawlet – and a rural-to-urban retail outlet called Dekenet which is especially strong in food preserves and processed items such as jams, molasses, and oils. Both are parts of the Souk El Tayeb organization, which also includes guesthouses and a community kitchen. By contrast, during its first 15 years, the Souk El Tayeb market led a nomadic existence, popping up in open-air locations around Beirut’s affluent neighborhoods.

A tale enhanced by shocks

Whereas there are no exact metrics for comparison of same-stand sales at Souk El Tayeb for daily, weekly, monthly, and annual visitor numbers at the current location, Codsi confidently confirms the market’s growing reach in its urban catchment area. Vendors have told her they are increasing their sales in the past 12 months, while she has also observed that the location has been working well. “We know that demand is strong because the farmers run out of stock all the time. Since day one after opening last year, we had an invasion of people,” she says.

And this is where the Souk El Tayeb venture tale turns Lebanese-metaphorical. “The past three years were turbulent and many things happened,” Codsi says, an epic understatement. As she continues her narration, she mentions three disruptions to the operation in less than two years, shocks that were also key moments in shaping the nation’s mindset.

These disruptions began with the nomadic market’s closure during the thawra protest waves of October, November and December 2019, which continued with the Covid-19 induced lockdown periods of spring and summer 2020. Finally, there was the total disaster in August 2020, when what became the current site of the organization, quite literally was blown to shreds.

This is to say that Armenia Street in its entire length is situated in the area that was hardest hit by the August 4, 2020 port explosion, and the present, permanent location of the Souk El Tayeb is in one of the most devastated parts of the central-northern section of Beirut, which was turned into an urban disaster zone by multitier criminal negligence.

“These moments make you think of the end of the world but then there comes a moment when you know that you need to move on,” Codsi reflects. The market vendor’s reported increase in their sales, and the growing footfall at the operation has to be seen against the backdrop of the restart of Souk El Tayeb at the Armenia Street site less than two months after the catastrophe.

[inlinetweet prefix=”” tweeter=”” suffix=””]Metaphorically, it is a rise from the ruins of a dysfunctional system that has been dealt the final blow by inaction and corrupt indifference.[/inlinetweet] In economic terms, the increase in revenues – which is not an increase in profitability – demonstrates the viability of a new, and copied, direct-to-consumer niche in the Lebanese food market. As well, it shows the great need – and profound opportunity – to work towards and eventually achieve consolidation and sustainability.

Codsi sees a number of factors in play in driving consumer interest in farmers’ markets and shopping local products, rather than being obsessed with branded imports. These factors in her estimate included changing price structures: “Imports started being very expensive,” she says, as well as the growing awareness “of the importance of eating local, clean, and authentic Lebanese foods” among the organization’s target audience, and also the pandemic-induced trend towards cultural introspection, under which people started paying more attention to what is being produced in their locality.

Some specifics of a social market operator

The room for growth, need to realign food value chains, and improve market efficiency, or more importantly blur social efficiencies, is unmistakable when Colsi points out that the Tawlet hospitality operation at the central location has seen stable revenues, alongside a 10 to 15 percent increase in sales volume at three locations outside of Beirut in 2021. A further sales improvement is expected for FY 2022 due to a booming summer season. However, this is juxtaposed with the fact that the menu prices at the central Tawlet, for example, had to be slashed by 20 or more percent in dollar terms versus the pre-crisis offer.

Thus, while the success of the market speaks to the ability of improving food availability, producers’ direct market access and food security, the economic sustainability model has to be vastly improved to make this example of the direct-toconsumer niche become a pillar of local food security. Just as transportation costs are challenging farmers who want to bring produce to any farmers’ market in Beirut, rising costs put a lot of pressure on the bottom line of the Beirut operation of the Souk El Tayeb organization, despite the benefits from consolidating the market, store, and hospitality outlet under one roof.

Energy costs consume half of the revenues of the market, and the $12 per day stand fee has not been set with a profit motive, according to Codsi. “The cost of functioning is greatly increased. We cover costs of Souk El Tayeb jointly with Tawlet and Dekanet operation. The restaurant and shop have been doing good sales, but it is a constant fight to maintain limited profit,” Codsi says.

On the social equity side, the organization’s initiative at the time of its opening in Armenia Street led to setting up of the Matbakh El Kell community kitchen with 2,500 meals per day capacity, in partnership with foreign funders, local charities, and NGOs. It is an example of how Lebanon’s plunge into crises has been triggering community-level support responses which are inadequately accounted for in ubiquitously cited estimates of food insecurity. But at the same time, the charitable activity underscores the persistent lack of food security on a national level, and the need for developing overdue safety nets. “We thought that we would operate it for a year and close it again but then realized that the demand is actually growing,” Codsi explains.

As it is with retail markets in general, the reality of a previously overvalued currency and unsustainable consumption on household and institutional levels loom large in the promising economic niche where farmers access urban markets. This distorted past screams from margin and price deterioration pressures for Lebanese producers and food services providers, when present price levels are compared against the “fresh” dollar, which is de-facto predominant in all segments of the food value chain.

The situation on the side of conventional retail

In the wider retail market segment of medium-to-low end supermarkets, the challenges of contributing to food security are expressed in ways that put the narrative of the substitution of food imports by locally produced foodstuffs into a more realistic perspective, and reveal how the crisis might have engendered market concentration shifts in favor of the biggest players.

As to the progression of food imports substitution, Hussein Bashir, procurement and operations manager at Bashir Business Center, first thought that the Lebanese market would be “flooded with Lebanese products,” but it did not turn out so, he tells Executive. Bashir runs the 1,000 square meter wholesale and retail enterprise and supermarket in Choueifat, south of Beirut. Consumers can find more than 2,000 stock-keeping units (SKU, a codified number that represents specific items available for sale) in the supermarket’s food section.

Instead of a surge in local products, however, markets frequently down-shifted on price points by substituting brand imports from Western Europe and North America with imported processed food from more competitive producer countries which undersell local agro-industrial manufacturers, Bashir confirms. He says some consumer needs, such as detergents and household disinfectants with variable quality, are today supplied locally. But others, such as budget-price sweet biscuits and chocolate wafers which have a domestic manufacturing history going back to the 1950s, are not the cheapest in the market since they are challenged by wafer products made in Turkey.

In examples as diverse as beer, confectionery, and pasta, an alert consumer may indeed have encountered situations where imported products, sold under the house brands of large retail chain, as well as products sourced from agro-food producers in countries with large populations, were equally priced or sometimes significantly underselling local brands.

Retail with a conscience

Another observation of market-influencing change, which is especially notable in the context of reported extreme poverty rates, comprises of revealing consumer preferences. “Sales are still low as a total number but are reverting to the ways things were [before the crisis] in terms of consumer behavior. They show a mentality of ‘if I want it, I will get it’,” Bashir notes. The instant gratification demand, according to him, has caused items which stopped selling during the crisis to sell in a stable way. “The consumers would for example at some point have considered a Mars bar to be a luxury, but now they are putting them again into their shopping carts. Even though it costs a lot [in relation to lira incomes], consumers are willing to spend this much,” he says.

This is opposed by extreme price-consciousness of consumers on other parts of their shopping lists. Strategizing to cope with competition continues on a marginally or even hypothetically supervised playing field. For several years prior to the crisis, Bashir Business Center was developing two house brands: one for canned fish and one for canned vegetables.[inlinetweet prefix=”” tweeter=”” suffix=””] In the environment of depleted purchasing power, however, the customer base is hunkering heavily after the most cut-rate cans on offer.[/inlinetweet]

“We have a can of tuna that retails for $1.5, one for $1, and one for $0.5. Consumers are seeking out the cheapest one,” he explains, but points out that these price tiers represent quality differences in the fish, with consumers apparently not prioritizing that consideration if the lowest priced-can satisfies their nutritional needs. “In some retail markets today, you see certain products that are dubious or not worth buying, and it is hard to compete in a market where such products are present,” he says.

He adds that he has in a personal capacity recently conducted market research on zaatar (thyme) for a friend who, like himself, hails from South Lebanon, and discovered that not everything sold as a budget mix of the healthy herb was containing much zaatar at all.

“You might buy a cheap brand of zaatar and find that it mostly is made from wheat. [Traditional quality mixes] usually contain sumac, zaatar and sesame.[inlinetweet prefix=”” tweeter=”” suffix=””] What the low-end producers are putting, is citric acid, a lot of salt, and some broken wheat like burghul that is passed on as sesame. [/inlinetweet]There also are mixes with a high share of crushed semolina that is passed on as zaatar. These are locally packaged products of questionable origin in either Lebanon or Syria.”

Markets face challenges in balancing the consumer search for the cheapest offer, with their interest to gain customer loyalty and satisfaction by providing budget products of reasonable quality. What Bashir describes confirms that food security and quality can be an issue for both cheap imports and local cut-rate products. Against the dangers of fake products and unhealthy ingredients, many retailers know that they have an important social and economic interest in directing their customers to the best-available quality products at differing price points, yet they cannot perform this function without the regulatory and supervisory function of public institutions.

A pile of further challenges and then problems of market concentration

On top of factors such as having to cruise the aisles to assess price displays for accuracy, and initiate changes in accordance with rather imprecise information on the Lebanese currency, and the latest supply chain impacting events, retailers suffer further from labor supply and engagement issues. “We have more labor, but we have less quality labor,” Bashir says.

According to him, the most qualified persons are no longer in Lebanon, even at the level of farm labor and retail store labor. “What we used to get done by one worker, we have now to use two to three untrained and unmotivated helpers. These days, not only workers but even managers are unmotivated, even owners are unmotivated. It is getting hard for everyone to find motivation to work. I don’t know how to motivate my workers when it is hard for me to be motivated,” he muses pensively.

The competition with what Bashir calls three “whales” in the Lebanese retail space – chains with very strong market power concentrations in modern retail in comparison to competitors – has possible short-term impacts which are detrimental to impoverished persons’ access to food and also more longer-term implications of potential gloom.

“During the crisis, suppliers have given these whales many benefits, which helped them grow and eat a lot of market share,” Bashir says. He alleges that suppliers were accepting banker’s checks from the mega-chains at times when these were not accepted from other retail companies and also would have priority in seeing their stock orders filled at times when supply was constrained to a minimum. “They would get bigger portions in comparison to competitors, so that consumers would find everything at [their supermarkets]. This was harming business for everyone, and I hope that this will rebalance at some point,” Bashir says.

In evaluating the role of retail markets in the economic context of access to food, it is finally important to note that factors which impact food security on the consumer side have arisen on the fronts of inflation and external threats.[inlinetweet prefix=”” tweeter=”” suffix=””] “I wake up every day and check the news to see if Russia has done this or that. Then I go to the store and, if necessary, raise the price of imported sunflower oil,”[/inlinetweet] Bashir comments, describing a new routine that he says never before existed.

Inflation spikes imperil food security, but hit retailers in their revenues and margins, he testifies, and inflation adjustments – by evidence seen in the local food-retail sector in either direction – are therefore often hesitantly implemented and with time lags at the retail level. All efforts notwithstanding, however, the impact of supply chain risk, currency risk, and sovereign risk on Lebanon will find no other final outlet than these food insecurity risks with the retailer or the consumer, and the despondency devil proverbially takes the hindmost.

In the end, the food security and food safety situation of Lebanon from the markets’ perspective is conflicted. Social ventures appear to be in a better position to contribute to food security through different channels they are attuned to when compared to conventional retail. However, conventional retailers do not operate without consciences and regard for their long term economic sustainability. The markets have not failed, in the sense of their ability to deliver products to people who can afford them. There are new opportunities and open windows to growth for retail markets just as they exist for food entrepreneurs, artisans, and industrialists, but these opportunities are juxtaposed with systemic gaps, inefficiencies and shortfalls. All of the latter combine into a system of failures that is very costly and stands against the potential of the retail sector to ultimately, even if indirectly, enhance the food security of the Lebanese people and restore it to the levels that existed before the economic collapse.