Investing into an agricultural stock or an agricultural infrastructure system is intensely unlike dreaming of instant financial gratification, for example by becoming a financial markets jock. Imagine being a day trader on multiple stock exchanges or feeling the hourly thrills of seeing your crypto-wallet bursting at its virtual seams with a million dollars or three, made (and lost) in speculative bets on Bitcoin, Ether, Tether, et al.
Now shudder and think about agricultural stocks, from publicly listed farming cooperatives to fertilizer and equipment multinationals. Investments can be rewarding and seem rather safe – agriculture and its distant cousin of consumer staples are among the prime defensive sectors in the terminology of stock markets – but come with agrarian risks and reward profiles. This path to prosperity is staid and slow by the nature of agriculture as a business.
The only investments guaranteed to keep your heartbeat safer from rapid increases and undue exhilaration than stock portfolios in agriculture, would be investments into agricultural infrastructure and systems. Returns of a direct investment into an agro-system are many growing and harvesting seasons away. In financial terms, neither are investments into publicly traded agricultural corporations as addictive as playing the conventional or virtual financial markets, nor are returns on direct investments into agricultural infrastructures and privately held agricultural enterprises, typically as high as those in tech and healthcare companies. At least during boom times.
Yet, the world is not living in boom times anymore, and it is a sign of these recessionary times that the value of the agro-production system and agro-food economic sector is going through the roof. Add in the importance of being able to differentiate between value and price, and while you are at it, also rethink and recalibrate your profit orientation by pricing in previously ignored, value-annihilating externalities.
Noting that the distinction between value and price has been demonstrated most impressively in Lebanon’s recent but already legendary economic and monetary crisis, you may arrive at the point of reappraising your entire framework and mindset of productive investment into the real economy in the context of agriculture and livelihoods in rural Lebanon.
An overdue development order
Against the background of global and local crises in the 2020s, the need to develop Lebanon’s agriculture-based economic ecosystem – with its incomplete and dilapidated infrastructures – is dire. Not only have public and private investments into this system over decades been too small by orders of magnitude, but new development projects also face limitations in size, economies of scale and short-term return potential, along with barriers to funding, planning and management capacities, and community acceptance. Thus, equipping rural farmers with an incentive-rich agro-food production system that will encourage them to continue producing and tending the land, while also contributing to the establishment of rural business opportunities, is a tall order indeed. Such a quest needs “time, trust, and lots of effort,” socio-economist and agricultural livelihoods expert Elias Ghadban notes.
Ghadban is involved with the design and supervision of one such development program that is currently being undertaken not by a for-profit corporation or public sector entity, but by a charitable organization, the Order of Malta in Lebanon (OML), under what resembles a public-private-community partnership, or civil society, community, and public partnership. Ghadban speaks to Executive as technical advisor and volunteer board member of an agro-humanitarian program that was initiated at the cusp of the Lebanese crisis by OML, a unit in the 900-year-old Sovereign Military Hospitaller Order of Saint John of Jerusalem, of Rhodes and of Malta.
The agro-humanitarian program of OML started with a small project that the organization initiated soon after Lebanon’s commercial banking channels were paralyzed early on in the financial and economic crisis, which brought down a system of rural credit between suppliers and farmers. Under the hitherto functioning system, farmers would obtain seedlings at planting time from commercial providers and pay for them several months later out of revenues generated from their harvests. The conditions during the financial crisis left farmers with the sole option to pay for seedlings with hard cash-on-hand. In this livelihood emergency, the agro-humanitarian project endeavored to provide small-hold and part-time farmers with inputs – seedling – that had become impossible for these farmers to obtain. From this point of origin, transforming rural livelihoods has become the gist of OML’s agricultural approach.
Under its initial agro-humanitarian thrust, OML has been providing a stopgap answer to this problem through the distribution of seedlings that allowed more than 8,600 farmers to plant enough crops to secure subsistence nutrition for their families and additionally achieve some supplemental income from selling part of their crops. Five vulnerability assessments were undertaken to identify the eligible farmers. “We said that we will target the farmers that are linked to the primary healthcare center in the catchment area of each center [and], working next to the center in close collaboration, will support farmers with seedlings depending on summer or winter season, with organic matter, and irrigation systems,” Ghadban explains.
According to him and his colleague Adel Ghandour, who manages the OML agricultural services team, more than 11 million seedlings with an aggregate value of $370,000 were distributed between 2020 and the third quarter in 2022. This represents 43 percent of the target clientele of 20,000 farmers that the charity aims to reach by 2025.
The 2025 target is based on an extensive network for OML services provision which includes mobile units, supported centers, and proprietary centers. Catchment areas of services centers are extensive and provide the base for the organization’s agricultural support nodes called Services Provision Units (SPUs). Five of these units have been developed to date, out of a targeted total of seven that are to be built on 130,000 square meters (sqm) of land, according to a fact sheet provided by OML.
This distribution model, however, is not a long-term solution. “Because the context has changed, we are moving from the humanitarian distribution, to [targeting] a resilience factor where you support the farmers to continue [farming] but also create economic opportunities in rural areas,” Ghadban explains. In practical terms, this means that the agro-humanitarian project is advancing into its second and third phase, which entails further training and community development efforts. But the project is anchored by horticultural nurseries in a communal operation, and by to-be-implemented processing units for the key crops at SPUs co-located with OML operated or supported centers, found from Kobayat and Ras Baalbek in the north, to Yaroun and Rmeich in the south.
The horticultural nurseries, include a batch of operating nurseries which have to date produced over 2 million seedlings. By the first quarter of 2023, the number of nurseries will be eight, each with projected capacity of around 7 million seedlings per year. “This satisfies around 15 percent of demand, which is significant for us, because this is a pilot project,” Ghadban says. According to him, the first batch of nurseries already provides seedlings at comparable or better quality than those offered in the commercial market, at a price to farmers that is lower by 40 percent when compared with the for-profit market.
They are complemented by crop processing units with equipment for roasting freekeh, or young wheat, and presses for oils and essences. Of the processing units, a pilot freekeh facility has become operational in Yaroun. The investment budget for creation of processing units has been put at $250,000 to $300,000 per SPU and a consultative evaluation of further processing unit establishments between OML and farming stakeholders has been initiated. However, such collaborative decision making is a time-consuming undertaking, Ghadban explains. Both components in the food value chain, the nurseries on the upstream side and the processing units in the post-harvest realm, will operate on basis of a resilience principle by offering their services to farmers at break-even prices, he adds.
The fact sheet on the OML agro-humanitarian program says that it was launched in 2020, “establishing the beginning of the Association’s involvement in agriculture, after 60 years of presence in the country through its network of community health centers.” According to Ghadban, the program was initially devised as a small initiative under the accessibility pillar in the food security matrix and was called agro-humanitarian because it was created in response to a humanitarian crisis in access to food in Lebanon.
From the program’s emergence early in the crisis, it is not entirely clear if OML’s venturing into agricultural system building came into existence in the form of a sound instinctual reaction to the crisis or had a strategic aim from the start, but the key to the entire project is a deep-rooted and long-planning relationship. In developing its SPUs, OML built on both its track record as an operator of primary health care centers in the services to the needy and elderly in rural communities and its partnerships with religious orders, universities and public sector entities.
OML could leverage these bonds of trust and its commitment to building rural resilience into leases for the land plots upon which the SPUs are situated. “The centers will be there for 20 years and all centers were built in partnership with monasteries or public organizations such as [the] Litani Water Authority. The [lands] were taken for free for 20-year leases based on the intention to provide services to farmers at break-even cost,” Ghadban says.
He estimates the values of the plots that were made available for free at seven to ten times the constructed SPU infrastructure, and says the depreciation of SPU assets is calculated on a ten-year horizon. However, he elaborates further that the organization’s efforts under its long-term approach and community presence would not stop if the projects in the current timeline were completed before implementation of a governmental strategy for agricultural development were to commence.
Clear strategy for the sector
Latest at this point it becomes evident that besides the above cited factors of time, trust, and effort – which in the context of tight farming communities and a cautious rural mentality can be described as core social requirements for winning acceptance – projects aspiring to long-term improvements of agricultural and rural communities will equally depend on a healthy budget, a smart plan, a functional financial and governance infrastructure, and a good organizational infrastructure. “Agriculture needs investment, I mean. If you don’t have [funds] to invest, agricultural growth will remain very restricted and be limited to the people who have cash and can invest,” Ghadban acknowledges.
Asked for his estimate on the growth rates and timeframe of an agricultural renewal, he responds: “I would say that giving a time for phasing out of the crisis would be just throwing a number unless there is a clear financial system. But as someone who has worked in conflict areas, I cannot see a vibrant agricultural sector in Lebanon unless there is clear orientation from the government.” By his reckoning, this will not come to pass before ten years.
Source: Lebanese association of the Knights of Malta
The program’s time line illuminates a notable difference in capacity and approach between OML, as a long-term charitable organization, and the comparatively young civil society organizations in Lebanon. All functioning humans are partial to something; ergo, the agendas of success are driven by determined minorities with partisan interests. In the wake of the Syrian crisis and Arab Spring enthusiasm of the early 2010s, many international NGOs and their local units and derivative local CSOs have emerged onto the Lebanese scene, altering the composition and expanding the focuses of the historic sector of charitable, religious, and social welfare organizations that existed before the dawn of the millennium and its United Nations-determined Sustainable Development Goals.
But while often less media savvy and less outspoken on fashionable causes than their international NGO peers, who are concentrating on rights that were drawn up since the Universal Declaration of Human Rights was adopted by UN member states, the religious charities and legacy organizations of goodwill have continued to play constructive roles in care for the proverbial widows and orphans, the sick, the poor, and almost all who have been economically and socially disadvantaged and overlooked by those in power. OML stands in this deep tradition in the Lebanese space and thus is both predisposed and well positioned for the pursuit of a project that is as challenging and slow-paced as agricultural transformation and recovery of real rural economy as a conduit of stewardship and resilience.
“Strategically, agriculture as a sector will be the main sector creating jobs for economic recovery as well as for business recovery in rural areas,” Ghadban opines confidently, pointing out that by adoption a resilience point of view means that free distribution of services and seedlings has to be replaced with services that are provided on basis of break-even prices.
He says, “Looking at agriculture from a resilience point of view, means the need of addressing the challenges that have existed pre-2019 while taking into consideration the needs of post-2019, through long term approach to change rural communities and make the agricultural system more resilient and feasible.”
