|Strategies for the development of the agro-industry|
|The Agro-industry was once considered to be a major part of our agricultural and industrial activity, but nowadays it requires substantial rebuilding and amounts to less than 20 percent of the total number of food and beverage enterprises. According to the UNDP, current practices and policies have restricted the strengths of this sector to three; fertile soil, favorable climate and cheap labor. The study highlighted that problems exist at every stage of the food chain, from quality of seeds to distribution.
It also pointed out that the quality of local exports deteriorated following the degradation of infrastructure for cold storage, transportation, grading, and packaging.
Lebanon's top crops and livestock (potatoes, tomatoes, cucumbers, oranges, lemons poultry etc.) are subject to heavy pressures from cheaper products that are being smuggled through the borders and to the loss of markets (mainly the Gulf) in favor of nations like Turkey, Syria, Jordan, Egypt and the Maghreb states.
These countries have diversified and increased their annual supplies (through better exploitation of soils, greenhouses farms and tunnels etc.) and modernized their harvest and production technologies.
Most Lebanese agro-processors have maintained the same range of traditional foods (like canned fruits and vegetables, oils, wheat and so on) that provide low added value (VA). The VA percentage for processing and preserving vegetables and fruits (37 percent) is around four times less than that that of grapes (134 percent) used in the booming wine industry. Another example would be of pistachios whose net income per hectare ($1,402) is over nine times more than the net income obtained from wheat ($158) according to the International Center for Agricultural Research in the Dry Areas (ICARDA). In general, traditional foods have been at the maturity or declining stage of their life cycles for too long. A product's life cycle can be divided into five phases:
- Introduction: when sales are low and marketing expenses are high.
- Increasing growth: new consumers are found, sales and profits rise fast.
- Declining growth: when the market for the product begins to saturate.
- Maturity: the market stagnates, sales are stable and profits reduced.
- Decline: competing products affect the sales negatively.
Therefore it is necessary for an agro-processor to regularly start new life cycles by introducing new products. This way, a producer will have at any one time different products in different phases of their life cycles. The introduction of new crops and livestock is a needed move to achieve long-term goals of profitability and growth. In similar weather conditions, new high value-added products include culinary and medicinal crops (capers, anise, cumin, oregano, mints), fruit trees (almonds, pistachio, walnut, olive trees, figs), livestock (ostrich) and vegetables (green beans, melons). In 2002, ICARDA said the net income per hectare of cumin and anise are respectively over six times and four times the net income of wheat per hectare. On average, the EU market annually imports about 2000 metric tons of anise worth about 4.2 million euros and 6500 metric tons of cumin worth about 11.2 million euros. Syria, Turkey, and Iran are the major regional suppliers of both plants to the EU markets. The value-added of oregano and mints are even higher than those two plants. The net income per hectare of oregano is 32 times the net income of wheat.
A new product requires two key determinants to be successful: the degree of fit between the new product and consumer needs, and secondly, high production standards. Worldwide consumers are increasingly seeking healthy natural foods and herbs and spices. They are also more interested in new foods and tastes especially in Mediterranean cuisine (including that of the Middle East). For instance, global demand and consumption of caper buds is growing because capers are high-end food condiment used in upscale Western restaurants with fish and veal dishes, steak, smoked salmon and salads etc. Capers are also used in the manufacture of medicines and cosmetics. Although they grow well over rugged terrain such as the Bekaa and are extremely resistant to drought, capers can be cultivated usually in areas where olive trees grow. Their full yield will be available in three to four years, and each plant lives between 20 to 30 years and produces 1 to 3 kilograms per season. USDA studies show that in the Balkans, total production costs of a 100-gram jar of caper constitutes less than 7 percent only of its selling price in the US markets (average price being $3). Although capers are dispatched from countries like Morocco and Turkey, most of the value adding takes place in developed markets (like Europe, the US and Japan) where ingredients such as tomatoes, olives etc are added and made into sauces.
The key to the development of agribusiness is to place more emphasis on products that are strong export commodities and ensure high quality and safety, effective production processes and strong marketing efforts. Increasing the competitiveness of locally produced foods and their share on the international markets will bring jobs to Lebanese farmers and growth to businesses.
Fadi Nacouzi is an independent business analyst based in Beirut. He wrote this commentary for the daily star
Beirut,08 16 2004
The Daily Star