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What are the implications of banning Agricultural Exports to Saudi Arabia?

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What are the implications of banning Agricultural Exports to Saudi Arabia?

A source of fruits and vegetables notes that "the real effects of the decision will only be realized within a year, because the planting seasons (seeding period, editor's note) will end by then."

banning Agricultural Exports to Saudi Arabia

One source says that some farmers will adapt by resorting to markets and/or other means of transport if Saudi Arabia does not reverse its decision. The photo was taken in early June in northern Lebanon. Master's Photos


This news has caused amazement among Lebanese in general and farmers in particular. On April 23, Riyadh announced its decision to ban all agricultural imports from Lebanon after Saudi authorities confiscated 5.3 million tablets of captagon - an amphetamine drug - hidden in grenade shipments from Lebanon.


After this announcement, the possibility that other GCC countries will imitate Riyadh, or even that the Saudi authorities will go so far as to push for the exit of many Lebanese who work on their territory - on which many families depend. Financially, trapped by the current crisis - it has raised the fears of many Lebanese for some time.


But if Saudi Arabia has not finally gone that far, it appears that it has unofficially extended its ban to all Lebanese products, the association's vice president told L'Orient-Le Jour. . However, the kingdom absorbs $300 million in industrial exports (including agri-food) each year, more than a quarter of the total that industrialists send to the GCC (about 800 million) and 10% of the annual total of exports. (3 billion), he recalls. The Kingdom also banned the transit of all Lebanese goods on its territory, thus penalizing the entry of refrigerated trucks into Kuwait ($23.97 million agricultural exports in 2020, according to Lebanese customs), and Qatar (16, 64 million),


So it is a serious blow to Lebanese companies, especially since exports are a way to somewhat alleviate the liquidity crisis that the country has been facing since the end of the summer. abyss.



A little more than two months after the ban was announced, it is still a little early to be able to assess the results of this measure, which will take several months to fully appear, especially for farmers whose activity regulates the rhythm of seasons and harvests.

What are the implications of banning Agricultural Exports to Saudi Arabia?

In the face of fallible numbers, only the assessments of representatives of the agricultural sector remain, which do not ring in unison. Female farmers plow their fields in the north of the country. master photos.

Data Gaps

Beyond timing, this effect is also difficult to measure due to the lack of accurate data regarding Lebanon's trade with the rest of the world. The fact that part of the Lebanese customs figures do not correspond to those of the partner countries illustrates this shortcoming. For example, Lebanese exports to Saudi Arabia amounted to $229.7 million in 2020, according to Lebanese customs, while the value of this same deal amounted to 883.59 million Saudi riyals, or $235.6 million, according to the General Authority for Statistics of the Kingdom of Saudi Arabia, with a difference. $5.9 million. Agricultural exports amounted to 33.25 million dollars (for a weight of 59.125 tons), according to the Lebanese customs, compared to approximately 163.15 million Saudi riyals,


The CEO of the Lebanese Center for Agricultural Research and Studies (CREAL), Riad Saadia, explains that "invoices issued by Lebanese exporters and certified by the Lebanese Chambers of Commerce cannot be considered an accurate account reference. Exporters prefer to reduce their profits, which must be reported." Without forgetting that the factor of smuggling to Syria also plays its role.


In the face of infallible numbers, only the assessments of representatives of the agricultural sector remained. Which does not resonate in unison...



For his part, the head of the Farmers Union, Antoine Howayek, confirmed to L'Orient-le Jour newspaper that citrus producers (oranges, lemons, grapefruits, etc.) are the most vulnerable to sanctions, as Saudi Arabia and Kuwait are the largest importers of this fruit. And the rice state has already exported in 2020 for 22.43 million Saudi riyals ($5.98 million according to Saudi customs, compared to $5.2 million according to Lebanese customs) and $4.55 million to Kuwait. This situation, along with the ban on the transit of refrigerated trucks, has led to a decrease in citrus prices in Lebanon due to the abundance of supply, which has harmed producers, according to Antoine Howayek.



Head of the Peasants' Gathering and Peasants of the Bekaa, Ibrahim Tarshichi, paints a bleak picture of the situation and contradicts Antoine Howayek in some points. Thus the unionist ensures that "every person (agricultural) is affected", particularly producers of salads and seasonal fruits, such as cherries, for example - while Antoine Hoyck considers that these same products are not really affected. He points out that their prices have not collapsed in the local market.

The risk of dependence on imports


For Ibrahim Al-Tarshihi, the losses will be significant, and if the Lebanese consumer finds his account for a while in the context of triple-digit inflation (+119.83% annual rate at the end of May), farmers will see their potential. The purchase of their inputs (pesticides, fertilizers, seeds, etc.) - which they have to pay in new dollars, when the rate was hovering around 17,200 pounds to the dollar yesterday - was affected. Antoine Howayek believes that if prices fall in the Lebanese market, this will prompt farmers to abandon the cultivation of vegetables and potatoes to focus on fruits that require less maintenance and inputs, thus reducing their costs.



This could then lead to lower agricultural production, as agricultural GDP has already seen a 25.68% year-on-year decline, from $1.9 billion in 2019 to $1.4 billion in 2020, according to figures provided by CREAL. However, if the decline in production continues, this situation will also be disastrous for the consumer who will have no other means but to resort to imported products.


In 2020, Lebanon exported - officially, according to Lebanese customs (the figures will be adjusted upwards) - only 421,924 tons of vegetable products, worth 242.47 million dollars, while it imported 1.88 million tons, worth 796.87 million dollars. Looking at these numbers, Lebanon imports more than three times the volume of its exports. However, the decline in its production also means the need to import more to compensate. But the shortage or difficulty in finding coins will complicate the task.



Lifting the ban or not?


“The real effects of the decision will only be realized within a year, because the planting seasons (the sowing period, editor’s note) will be over by then,” Nuance on his part is a source of fruits and vegetables on condition of anonymity. “By the end of April, most farmers had already finished planting for the new season. So they cannot decide on adjusting the cultivars and their quantities before this season is over.


The source also specifies that many farmers hope that Saudi Arabia will eventually reverse its decision within a few months, and therefore do not wish to lower their prices because they will "sell at a loss in the local market (especially due to the devaluation of the pound"). and hyperinflation), which drove them out of the market.” Finally, he considers, “Farmers who produce only one type of fruit or vegetable will suffer more violent repercussions than their colleagues. Others will adapt by switching to other markets and/or modes of transportation if Riyadh does not reverse its decision.”


A disaster scenario agreed upon by all actors in the sector. Antoine Howayek and Ibrahim Tarshichi believe that Lebanon will not be able to switch to other markets in such a short period of time, and the latter states that trade relations with Saudi Arabia were established more than 50 years ago. If Ibrahim Tarshishi calls for the existence of "connections with Jordan and Iraq, the sister Arab countries", Antoine Howayek, for his part, states that the majority of Lebanese agricultural products do not comply with European standards, which deprives them of the right to export to this region of the country. Globalism. An obstacle that many farmers have been trying to overcome with the help of many NGOs or associations that have been investing in these sites for years.


Another alternative: developing shipping routes to the Gulf - via Egypt - "which if the experience is critical in terms of profitability, will be used next year," according to the source interviewed who specifies that the sector is considering the question. more and more. Admittedly, the trips are longer between Lebanon and the Gulf — “two to three weeks” versus two weeks (round trip) by land, according to the head of the refrigerated trucks union Ziad Abdel Fattah — but their cost is more or less equivalent. To the problem of road transport (a phenomenon associated with many modern circumstantial factors) but much less than air transport, problems that are added to those that the agricultural sector has been facing for many years.


Indeed, as Riad Saad reminds us, the industry was shaken and even “totally destroyed” by the civil war from 1975 to 1990, and the post-war period was not lenient either. He denounced in a January 2020 presentation that "the Lebanese state, which is responsible for reconstruction, has simply ignored the agricultural sector." The economic and financial crisis that started at the end of the first half of 2019 has led to a difficult time for farmers. . In its 69th annual report, CREAL notes that the financing chain for farmers to obtain inputs has been broken, "preventing the vast majority of farmers from meeting their needs for this raw material resulting in low yields and low income. Low production quality"


The post-war period was not lenient either. He denounced in a January 2020 presentation that "the Lebanese state, which is responsible for reconstruction, has simply ignored the agricultural sector." The economic and financial crisis that started at the end of the first half of 2019 has led to a difficult time for farmers. . In its 69th annual report, CREAL notes that the financing chain for farmers to obtain inputs has been broken, "preventing the vast majority of farmers from meeting their needs for this raw material resulting in low yields and low income. Low production quality"



The post-war period was not lenient either. He denounced in a January 2020 presentation that "the Lebanese state, which is responsible for reconstruction, has simply ignored the agricultural sector." The economic and financial crisis that started at the end of the first half of 2019 has led to a difficult time for farmers. . In its 69th annual report, CREAL notes that the financing chain for farmers to obtain inputs has been broken, "preventing the vast majority of farmers from meeting their needs for this raw material resulting in lower yields and lower quality of production."


He denounced in a January 2020 presentation. The economic and financial crisis that began at the end of the first half of 2019 gave farmers a hard time. In its 69th annual report, CREAL notes that the financing chain for farmers to obtain inputs has been broken, "preventing the vast majority of farmers from meeting their needs for this raw material resulting in lower yields and lower quality of production". He denounced in a January 2020 presentation.



The economic and financial crisis that started at the end of the first half of 2019 gave farmers a tough time. In its 69th annual report, CREAL notes that the financing chain for farmers to obtain inputs has been broken, "preventing the vast majority of farmers from meeting their needs for this raw material resulting in lower yields and lower incomes."


Although Hassan Diab’s government set up a program to support inputs in May 2020, many farmers were unable to reach the “food basket” in which some seeds, fertilizers, pesticides and livestock feed were included, he regrets Ibrahim Tarshichi, blaming the state which are "absent". For its part, CREAL refers to the newcomers in the sector who misused the subsidy and, even worse, sent part of it illegally to Syria, while in return, pesticides coming from Turkey through Syria flooded the Lebanese market with suspected or even non-existent fraudulent products. effectiveness.















































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