One hundred years after its creation, Lebanon is invited to rethink its economic model in the context of a profound internal crisis and regional turmoil. The collapse of its financial and banking sectors, paired with the domination of a corrupt and incompetent political elite, has led the country to the verge of becoming a failed state in which people cannot access food and basic services. Within this overall environment, rethinking agriculture is a key element in building a sustainable economic model that reduces geographical inequalities and ensures food security.
LEBANESE AGRICULTURE: FROM THE STATE’S FOUNDATIONS TO THE PRESENT CRISIS
Agricultural development in Lebanon has always been highly influenced by local and regional socioeconomic and political dynamics. After the famine of 1915–1918, the creation of Greater Lebanon in 1920 was motivated by food security imperatives. Akkar, the Beqaa Valley, and South Lebanon—all predominantly agricultural areas—were added to Mount Lebanon to ensure that the new state would not suffer famine again. However, rural and agricultural development soon faced political challenges. The French Mandate (1923–1943) failed to foster a rural economy and reduce geographical inequalities, giving up on the implementation of its rural development plan in order to gain support from rural landlords.
During the rise of what became known as the “merchant republic” between 1943 and 1958, there was an inflow of regional capital and low-wage Palestinian refugee labor to Lebanon, while the oil boom increased trade opportunities with the Arab Gulf states. In that period, little emphasis was placed on taking advantage of economic growth to transform agriculture. Across the country, and more notably around Palestinian refugee camps near the coast and in the Beqaa Valley, traditional local agriculture was replaced by export-oriented fruit production and a handful of large agroindustrial enterprises. Food production was geared primarily toward regional trade, radically altering social dynamics.
For instance, in the Arsal area in northern Beqaa Valley, the move from agropastoral modes of production toward growing cherries and apricots for export radically changed gender and social dynamics there. Women, previously central to agricultural production, saw their roles relegated, while there was a reduction in cooperation over sustainable land resources management, a feature of traditional agropastoral systems.
Within that context, the reforms under president Fouad Chehab in the late 1950s and early 1960s represented a unique attempt to develop agriculture and rural development policies and address inequalities. However, the Chehabist reforms did not alter the system. Export-oriented agriculture and politically affiliated agroindustrial investments failed to induce local economic development at a time when improvements in health and reduced infant mortality had prompted a demographic boom. The lack of rural opportunities led to increased migration toward Beirut and the growth of the city’s poverty belt, fueling social conflict that later contributed to the civil war in 1975.
By the war’s end in 1990, Lebanon found itself divided into several political and territorial spaces. The state did not have any policy vision for agriculture, and the sector relied on the intervention of international donors and the influence of local nonstate actors in shaping regionaldevelopment policies. This was particularly true of rural development in majority Druze areas, Bsharri in the north, and Deir al-Ahmar in the northern Beqaa Valley, as well as regions under the influence of the two leading Shia parties, Hezbollah and Amal.
Since 2011, Lebanon has faced two shocks threatening its capacity to ensure food security for its inhabitants—the Syrian crisis beginning in 2011 and the financial crisis in late 2019. The war in Syria provoked an influx of about 1.5 million Syrians, expanding demand for food. While this demand represented a burden, it also had a positive impact by increasing the real value of agricultural output by 10 percent compared to the precrisis level. To respond to rising food demand, people invested in agriculture, especially in greenhouses, vegetables, and potatoes. Satellite pictures of the coastal Akkar and northern Beqaa Valley regions show the expansion of agricultural land after 2011.1 This local investment created income-generating opportunities for other Lebanese people and absorbed many Syrian refugee agricultural workers. Despite a lack of political support, the Lebanese agricultural sector has been able to adapt quickly in response to food security shocks and generate social stability and resilience in rural areas.
However, the financial crisis and the collapse of the Lebanese pound have put the food security of vulnerable Lebanese and refugees at risk. Between October 2019 and October 2020, the consumer price index increased by 240 percent, while food prices increased by an alarming 367 percent. Data collected from Beirut supermarkets show that volumes of sales of high-end food products—functional foods, imported sweets, culinary preparations, and more—had decreased by 56 percent, while the sale of basic food items such as cereals, pasta, sugar, and rice had increased by 105 percent.2
Despite the price increases, the average consumption level of a basket of fresh produce in 2020, including potatoes, tomatoes, and cucumbers, is remarkably stable compared to 2018 and 2019.3 However, this stability may not withstand a collapse in local production and only reflects the ability of the urban middle class to financially cope with the crisis. Until now, no data have been available on the consumption patterns of vulnerable people. The World Bank has estimated that poverty and extreme poverty rates in Lebanese households during 2020 have reached levels as high as 45 percent and 22 percent, respectively. Precrisis vulnerability assessments by the United Nations High Commissioner for Refugees estimated that around 37 percent of Syrian refugee households are food insecure. In other words, almost one quarter of Lebanese households (those experiencing extreme poverty) and four out of ten Syrian households are likely to skip a meal daily.
The financial crisis has not only affected food security by increasing prices but also by threatening Lebanon’s capacity to produce food. Since the mid-1990s, suppliers of agricultural inputs have pushed for a production model that relies heavily on imported seeds and seedlings, fertilizers, pesticides, and irrigation systems. Until recently, this reliance was sustained by the Lebanon’s central bank’s policy to peg the Lebanese pound to the U.S. dollar and the banking sector’s policy to make credit lines available to input suppliers, who, in turn, offer credit to farmers. This system has now collapsed, putting Lebanon’s agricultural production capacity at risk.
For instance, the cost of producing vegetables in 2020 has increased by an estimated 40 percent since 2019, when denominated in Lebanese pounds.4 In turn, the costs of new investments—new irrigation systems or greenhouse equipment—have increased by 80 percent, since farmers had to work, on average, with an exchange rate of 2,000 Lebanese pounds to $1.00 in late 2019 and around 3,500 pounds to $1.00 in spring 2020, compared to 1,500 pounds to $1.00 prior to the crisis. Overall, suppliers of inputs and agriculture services contractors have reported a 40 percent average decrease in sales, reflecting how farmers are adopting cost-reduction strategies. These have involved canceling planned investments, decreasing cultivated areas, or increasing areas dedicated to lower-cost crops such as wheat. It has also meant relying on local seeds or seeds smuggled from Syria, using gravity irrigation—which does not require imported plastic irrigation networks—instead of drip irrigation, as well as reducing the use of fertilizers and plant protection inputs.
Overall, the agricultural sector was able to sustain the initial impact of the financial crisis because the increase in prices partially made up for the sector’s increased production costs. However, there is a significant risk of production collapsing in the 2021 season, as the pound’s devaluation has reached levels as high as 8,000 pounds to $1.00, leading to an estimated increase of 175 percent in operating costs and up to 350 percent in the costs of new investments in the vegetable sector.5 Under this pressure, many farmers may not be able to sustain their production levels, leading to a loss of income-generating opportunities for many Lebanese and for large numbers of Syrian refugees. Furthermore, rising input prices will favor large export-oriented farming while the country mostly needs small sustainable holdings—linked through cooperative organizations—that produce food for local markets.
BARRIERS TO AGRICULTURAL DEVELOPMENT
The Lebanese government’s response to the situation in the agricultural sector has been limited. In fact, much of the reaction has come from nonstate actors, including civil society and Hezbollah, which has called for an “agricultural and industrial jihad.” Both have glamorized farming and a return to the land in a period of coronavirus-related lockdowns. Hezbollah seeks to reconnect with its base by using local municipal resources and capitalizing on the expertise that its Jihad al-Binaa foundation has acquired in rural development and community support. However, the initiatives of both the party and civil society have had a limited impact so far. Meanwhile, the magnitude of the country’s financial and political problems keeps growing.
Besides promoting a form of agricultural autarky, the government has focused on two sets of actions. The first aims to support farmers’ capacity to sustain production and invest in agriculture, including by locally producing inputs. The second seeks to tackle key structural and policy issues that impede the agricultural sector’s capacity to grow and expand in a sustainable way.
Key factors hindering development of the agricultural sector are deeply rooted in an inequitable and clientelistic Lebanese system, where a small number of influential people control access to resources and opportunities. The factors are primarily sociopolitical and only secondarily related to agricultural infrastructure and technical issues. The following are six major impediments.
The informality of the agricultural sector: Around 90 percent of Lebanese people, and almost all Syrians, working in agriculture do so informally. Agricultural labor is unregulated, and, therefore, there is no legal definition of “farmer” as a profession or of “agricultural exploitation” as a business. The fact that definitions of legal and commercial status don’t exist implies the absence of any social protections for agricultural workers, such as health coverage or pensions.
Land regulation and access to land: The top 10 percent of landowners control two-thirds of agricultural land, with large land estates being easily traceable to key political figures. Agricultural holdings are divided between (1) a handful of large estates with easy access to credit and inputs and fully integrated with trade and industrial activities and (2) myriad undercapitalized, fragmented, and in most cases small farms that are managed in ways that prevent them from being sustainable. Furthermore, a significant number of Lebanese agricultural workers and all Syrian agricultural workers are landless. They are either employed by landowners to oversee large- and medium-size orchards or are renting land to plant seasonal crops or set up greenhouses. Inadequate land tenure is linked to low productivity and land degradation, as it encourages unsuitable practices such as the overuse of inputs leading to soil and water pollution. Meanwhile, inheritance laws that facilitate the fragmentation of agricultural land impede efforts to reach economies of scale.
Access to finance: Farmers cannot access credit to finance their investments or operating costs. Input suppliers, who were the primary source of credit prior to Lebanon’s economic crisis, created an unsustainable heavy use of inputs. There is a significant gap between the credit provided by financial institutions and farmers’ needs, coupled with a lack of mutual trust and understanding. A majority of Lebanese financial institutions lack the appetite to lend to small-scale farmers. Only a few are interested in and willing to dedicate resources to the agricultural sector. On the other side, farmers are reluctant to approach banks and prefer receiving informal loans from their social networks and input suppliers.
Access to post-harvest services: Farmers do not have access to post-harvest services—including sorting their produce, grading it, putting it in cold storage, and so on. The reason is that these services are often controlled by integrated farming-trading operators, especially when it comes to key Lebanese exports such as apples, potatoes, and citrus. The monopoly of traders and large farmers over post-harvest services extracts most of the added value farmers can get from their produce by forcing them to sell at low prices during harvest time, when there is an oversupply. Furthermore, existing post-harvest structures, including wholesale markets, are badly managed. Estimates are that inappropriate post-harvest handling, including lack of access to cold storage, represents a loss of at least 15 percent of the total agricultural output.6
Governance of local markets: Although it reduces farmers’ margins and bargaining power, the sale of agricultural outputs through middlemen is one of the most common practices to sell crops. Because farmers and their organizations cannot offer adequate volume for the market, middlemen act as aggregators of agricultural produce. The absence of transparent information about wholesale prices and poor infrastructure and transportation logistics—not to mention risk-averse behavior—all influence the farmers’ decisions to sell through middlemen. Principally, the inadequate governance of wholesale markets stands as a barrier to the upgrading and improvement of local agricultural value chains.
The weak cooperative sector: Agriculture value chain actors in Lebanon need to alter their perceptions and understanding of the role and mission of farmers and cooperative structures. Cooperatives are often viewed as local extensions of the state administration or of developmental nongovernmental organizations instead of private sector economic actors offering a more democratic and socially fair model of management and income distribution. In fact, Lebanese political parties use cooperative organizations to control farmers and rural producers and as a tool to implement de facto rural development policies. In parallel, Lebanon’s public administration inhibits growth of the sector by implementing an outdated interpretation of the law, thus limiting the creation and development of cooperatives.
In its strategy for 2020–2025, published in September 2020, the Ministry of Agriculture for the first time tackled strategic issues with an acceptable level of depth and analysis when compared to previous ministry efforts. The strategy is organized around five pillars, including for the first time food security. Other pillars focus on implementing technical improvements to enhance agricultural and agroindustrial productivity, increasing the competitiveness of agro-food value chains, ameliorating natural resource management, and improving institutional capacity.
However, the Lebanese government tends to develop strategies geared toward donors. The government presents intervention options for donors to choose from and implement as they see fit. Thus, most of the ministry’s strategies have failed to tackle key policy and legal issues because donors and policymakers, for different reasons, are reluctant to push for long-term legal and structural reforms. This has prevented rural development and therefore the improvement and well-being of farmers and farm workers.
POSSIBLE PATHS FOR REFORM
Lebanon’s agricultural sector requires in-depth legislative and institutional reforms. That means it needs a full-fledged transformation of the rules of the game in the sector, similar to what happened following the Chehabist reforms that led to the sector’s current institutional framework.
Among the major reforms that could transform the agricultural sector is the enactment of a law that formalizes farming and animal husbandry–related businesses, as well as agricultural labor. The law should facilitate business creation and assure the rights of small entities in a sector where scale is a key determinant of economic bargaining capacities. The law should also regulate agricultural work and enforce decent work standards for Lebanese and non-Lebanese people alike. The formalization of agriculture must go hand in hand with the establishment of health coverage and retirement schemes.
A second measure to reform land tenure and heritage laws would further transform the agricultural sector. The law should establish and enforce clear and fair land-use regulations. It must disallow the division of agricultural land below a certain size threshold. Also, it must regulate contracts to lease land, allowing for, and enforcing, sustainable land management practices.
A third measure would broaden the law on cooperatives to reinforce solidarity and socially oriented businesses. The reformed law should facilitate the creation of cooperatives; set standards and rules for the financing of, and accounting in, cooperatives; and remove elements of the previous law that impeded the independence of cooperatives and their capacity to grow.
A fourth measure to introduce structural reforms that enforce competitive market laws and regulations would remove cartels in the agricultural sector and improve the governance of wholesale markets and post-harvest services. The establishment of efficient and fair wholesale markets—with clear rules, transparent price information, pricing based on the graded quality of goods, and well-implemented phytosanitary controls—remains difficult and challenging. An audacious ministerial administration will be needed to successfully implement these structural reforms, and, unfortunately, the ministry is not poised to take action in the current situation.
Politicians, and in certain instances civil society organizations and initiatives, have held Lebanese citizens responsible for ensuring their own food security, asking them to plant all available plots of arable land. Not only is this autarky ideal unrealistic—even undesirable—it also frees policymakers from any kind of responsibility or accountability.
Agriculture is far from being a miracle solution to Lebanon’s economic crisis. On the contrary, the sector is among those that may suffer the most. The increased cost of inputs will further deepen the gap between small holdings and large export-oriented enterprises, pushing more and more people into poverty and potentially encouraging a process of land accumulation. The improvement of the agricultural sector is linked to in-depth legislative and structural reforms that would balance value-added distribution between farmers and other value-chain actors. If nothing is done, Lebanon is at risk of losing a sector that has absorbed labor and helped to reinforce civil peace—and this could ultimately trigger unrest and conflict.