Letter from Lebanon: Farmers Risk Losing Big

(BEIRUT/PARIS: 13 May 2007) As Lebanon heads down the fast track to trade liberalisation, some commentators, including UK-based charity Oxfam, are predicting a devastating impact on small-holder farmers. Unable even to sell produce on the Lebanese market let alone for export, these farmers are painfully unprepared to compete with subsidised imports. Yet little is being done to fortify the agricultural industry as the fruits of major bilateral and multilateral free trade agreements (FTAs) and liberalising reforms loom on the near horizon.

There are 200,000 farmers in Lebanon and they represent 1.4 million people including their families. Around 75% of Lebanese farmers have access to less than one hectare of land and so farm on a very small scale. And 40% of them farm only for auto-consumption, that is, to produce their own food.

These farmers are already amongst Lebanon's poorest citizens and are predominately in the areas of Akkar, Baalbeck, Hermel and the South. A survey from FAO (the Food and Agricultural Organization of the United Nations) shows that farming tends to make up around 30% of their income

In May, Lebanon begins its third round of membership negotiations for accession to the World Trade Organisation (WTO). Interrelated are the liberalizing reforms to which the Lebanese Government committed as a pre-condition to donor funding received at the Paris III conference in January 2007.

The United States Agency for International Development (USAID) Lebanon Mission has been working closely to help Lebanon to gain accession to the WTO, confirms USAID Mission Director Raouf Youssef. He is optimistic that Lebanon will be accepted in either May 2007 or early 2008. A Trade and Investment Framework Agreement which serves as a memorandum of understanding for a future FTA was also signed between the US and Lebanon last November.

Lebanon has existing bilateral FTAs with several other countries in the region, including Syria, Egypt, Kuwait and the United Arab Emirates. It also has trade cooperation agreements with other Arab countries and more FTAs are under negotiation. It is a signatory to the Greater Arab FTA.

Another agreement likely to have a dramatic impact on Lebanon's agriculture is the EU-Lebanon Association Agreement on trade and trade-related matters. An Interim Agreement to progressively clear the way for this bilateral FTA was signed 5 years ago.

Under this agreement, according the website of the Delegation of the EC in Lebanon, "most agricultural products (within the limits of tariff quotas) enjoy free access to the EU market" since 1 March 2003 "while the progressive elimination of tariffs on imports to Lebanon will occur between 2008 and 2015."

A representative of the UK-based charity Oxfam told Scoop he is sceptical that Lebanon's agricultural sector as a whole is prepared for the future free trade area. "Neither the industrialists, the agro-industrialists or the small farmers," said Oxfam's Policy Officer in Lebanon, Aiman Mackie, "have the capacity to take advantage of those opportunities that are being presented in this agreement."

According to FAO data, the EU does not receive many Lebanese exports. Rather, the EU is already Lebanon's second biggest food import partner.

An example given by Oxfam in a recent briefing paper "Signing Away the Future: How trade and investment agreements between rich and poor countries undermine development" shows how even where Lebanon successfully produces goods for export, markets are not necessarily accessible to it.

Despite Lebanon's relatively competitive production of olive oil, the world markets are dominated by Spain, Italy and Greece. "The EU subsidises its olive-oil producers by $2.3bn each year" states the Oxfam document, "and maintains a series of import quotas to protect them from more competitive producers." Even in the EU�Lebanon Association Agreement, very little ground is given to Lebanese imports of untreated olive oil.

The organization is critical of such bilateral FTAs, as opposed to multilateral agreements, because they are often "unequal and exploitative", and dismantle national policies designed to promote development.

The Ministry of Agriculture confirms that Lebanon is yet to receive any real benefit from increased access to European markets through the EU-Lebanon Interim Agreement. Lebanese agricultural exports to Europe are virtually non-existent, says Samir el Chami.

Part of the problem, explains the Director of Plant Management, lies in the fact that Lebanese farmers must conform to European administrative and quality standards to be able to export to the EU. The only benefits to date is technical assistance and financing provided to help the agricultural sector transform itself in order to perform adequately in a free market environment and to update its rules and regulations, says el Chami.

The Ministry of Agriculture official confirms that at present there is a complete lack of strategy in the agricultural sector at a national level. From 1960 until today, there has never been any strategy. Even governmental investment is decided according to individual initiatives and not specific areas as a whole, states el Chami.

This could change with an agricultural development strategy prepared in 2006, a five-year work program which has been sent to the government. It is still going through the approval processes necessary for its implementation. Which means this initial development program will barely have begun when the free trade area with the EU begins.

The first such strategy to be drafted in Lebanon's history, it is based on administration development, participation relations and their role in agricultural development, water use extension, production and quality improvement, adoption of efficient techniques, land use and forest management organization and rural agricultural extension.

While these policies are targeted at the agricultural industry as a whole and not specifically according to the needs of small farmers, el Chami argues that, "since most of the farms in Lebanon are small size farms" they will be the most significant beneficiaries of the strategy, when and if it is implemented.

Its two main goals are to lessen the comparatively high cost Lebanese farmers bear, greater than those faced by other farmers in the region. Its second aim is to increase the quality of the product and add value to it in preparation for export.

For some, however, this is nowhere near enough to prepare small farmers for liberalization and does not even target them specifically.

Mackie believes that the high fragmentation and lack of any solid national strategy is a massive handicap for the Lebanese agricultural sector. "Lebanon has a very strong sense of individualism," he underlines, "and this is very much represented in the way agriculture is organized."

Because of this, he argues, the potential of Lebanon's agricultural sector as a whole is severely stunted. "How do we balance this concept of food nationalism and food security versus what is it that we want to import from outside?" the activist demands.

Lebanese farmers need only look to the consequences of the North American Free Trade Agreement (NAFTA) on their Mexican counterparts. Although the agreement resulted in a sharp rise in foreign investment in the Mexican agricultural sector, within 10 years of NAFTA, 1.3 million agricultural jobs were lost.

USAID's director dismisses claims that Lebanon's industries overall are still too fragile to be exposed to free trade. "My experience with the Lebanese [is that] they don't need any time," he argues, insisting that the Lebanese are entrepreneurs. "If they see an opportunity they jump for it."

At first Youssef denies that the spread of capital-intensive, large-scale farming that is capable of producing the export-orientated agricultural products favoured by FTAs will result in smallholder farmers being forced off the land as has occurred elsewhere, notably in many Latin American countries.

"I don't see this happening in Lebanon, you have a shortage of labour," he argues. Youssef adds that Lebanon is a small hilly country and so there is no "mass of land which is really going to be mechanised overnight."

When pushed, he conceded that smallholder farmers must eventually give way to larger farms because "that's a free market concept� It's a free economy, demand and supply. These guys can be skilled, they can go some place else and work. Or maybe they can retune their skills and adopt a new technology to be useful in some other areas."

Mackie maintains that ultimately, small farmers cannot compete against either bigger farmers or agricultural imports. Lebanese farmers are disadvantaged compared to European and many other Arab products because of the impact of the war, the lack of governmental support and poor organization of the agricultural sector, said the Oxfam Policy Officer.

The Ministry of Agriculture recognizes that as a social group, small farmers suffer many hardships already. He agrees that small farmers will need more assistance if they are to survive Lebanon's agricultural markets being opened.

The Ministry of Agriculture cannot develop farming in the most obvious way, by direct subsidies, because this is banned by the WTO and would be out of kilter with the government's anti-intervention policy.

Instead, says el Chami, studies will need to be conducted. Projects in the proposed strategy awaiting the green light from the government will help to an extent, the official asserts. Through irrigation projects, for instance, the cost to the farmer is reduced.

Overall, the various FTAs pose a potential threat to smallholder farmers in Lebanon, warns el Chami, if something is not done to prepare them.

El Chami is undecided over the net impact liberalisation will have on the agricultural sector and says that remains to be seen. He feels the mood in the Ministry of Agriculture is that it is better to sign FTAs and undertake liberal reforms in general because resisting the international tide could have negative consequences for Lebanon.

Many farmers remain unconvinced of the potential benefits they will receive from free trade, he confirms. "Until now, the farmers always are afraid and they say why you have [the EU-Lebanon Interim] Agreement? Why?"

Yasmine Ryan is a graduate of the University of Auckland, in Political Studies and French language. She is currently interning with a Lebanese newspaper in Beirut, as part of her Masters degree in International Journalism at the Institut d'Etudes Politiques, Aix-en-Provence.

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