Palestine’s Agriculture and Agro-Industries: The Basis for a Resurgent Economy?

A series of recent studies from the UN, the World Bank, the UK, France and the European Union, as well as other international organisations, has highlighted the huge potential of agriculture and fishing in the West Bank and Gaza and the extremely important contribution a revived sector could provide to both Palestine’s GDP and the urgent need to create new jobs, especially for the young and in the rural areas.

Palestine’s Jordan Valley is one of the world’s richest, and most diverse, agricultural areas. Picture: JICA

At present, all the reports emphasize that the escalation of Israeli settlements, particularly in the fertile Jordan Valley; Israeli military control of ‘Area C;’ and the rapidly dwindling amount of water available to Palestinian farmers has led to a sharp decline in both cultivation and output. Fishing and fish processing in Gaza is also stagnating, they add, due to the harsh Israeli restrictions, both onshore and offshore.

“Even though Palestinian agriculture has been incurring heavy losses since 1967, it is one of the most resilient and strategic sectors in the Palestinian economy,” the Geneva-based United Nations Commission on Trade and Development (Unctad) wrote in a report released in July. It is “capable of achieving quicker and more sustainable recovery, compared to other [sectors],” the report noted.

Unctad underscores the fact that the Palestinian economy has lost access to 40 per cent of its land in the West Bank and 82 per cent of its ground water. The ‘separation’ wall, as well as land confiscations and other restrictions on movement, have also prevented shepherds, many of them Bedouin living east of Jerusalem, from reaching their traditional grazing grounds, leading to the loss of two-thirds of Palestine’s grazing areas and the decimation of its sheep, goat, and other livestock herds. Honey production in the Jordan Valley, and elsewhere, has also been badly affected by the loss of hives, acacia trees and other wild and cultivated areas where bees thrive.

A Palestinian farmer near Jenin tends his hives, and honeycombs. Picture: Mohammed Ballas/AP

As a result, according to the World Bank, Palestinian agriculture accounted for just six per cent of GDP in 2010, down from 13.7 per cent in 1994. While the sector employed more than one-fifth of the Palestinian workforce in 1994, that figure has now fallen to 12.7 per cent, according to the Palestinian Authority’s figures.

Unctad estimates that the sector is currently operating at only a quarter of its potential. It maintains that the removal of constraints on agriculture and fishing, full access to land, water and markets, together with sufficient investment in related infrastructure, could lead to a considerable expansion of irrigated land in Area C, especially in the Jordan Valley. This, it suggests, could produce a “rise of agricultural value-added to more than 25 per cent of GDP.”

The World Bank in its latest Palestine Economic Monitoring Report, published in late September, underscores the significance of Area C, which is the only contiguous land in the West Bank and which comprises more than 60 per cent of the West Bank’s total land area. Freeing it from total Israeli military control, as stipulated under the 1994 Oslo Accords, the Bank maintains, and putting its resources to work could provide the foundation for growth in the entire Palestinian economy — in construction, industry and telecommunications and tourism, as well as agriculture.

Hosting foreign visitors to family feasts is also helping to promote tourism. Picture: Siraj Center.

Young visitors helping out with the olive harvest. Picture: Siraj Center.

Such access would also give new industrial zones, like the Jericho Agro-Industrial Park (JAIP), built by the Japanese aid agency, JICA, and operated by the Palestine Real Estate Investment Company (PRICO), the opportunity for Palestinian agri-businesses to export far more to Jordan and the Gulf states, rather than depending on Israeli markets. (See Jericho Agro-Industrial Park: Bringing State-of-the Art Industry to the World’s Oldest City, April 16, 2012, below.) It would also facilitate agricultural exports from Gaza to the West Bank and Europe.

Although farmers in the coastal enclave recently obtained permission to export small quantities of flowers and strawberries to European markets—thanks in large part to intervention by UK and EU officials, they are currently unable to send their produce to other Palestinian population centres such as Ramallah, Hebron, Bethlehem and Nablus, despite the rising demand, due to the Israeli restrictions. Meanwhile, Palestinian exports of agricultural produce, meat and olive oil to Jerusalem, a traditional market where rising demand is unmet, remain stifled by Israeli regulations and checkpoints.

Shoppers in East Jerualem want more fresh fruits and vegetables from the West Bank and Gaza. Picture: Stefano Amantin/Atlantide Phototravel/Corbis.

Two years ago, the World Bank estimated that if Palestinian farmers could access 50,000 more dunams of land (50 square kilometers) and additional water resources in the Jordan Valley for growing high-value vegetables and flowers, they could earn about $1bn annually, a figure that was also reported by the British charity, Oxfam, earlier this year. With access to twice that, i.e. an additional 100,000 dunams (100 square kilmetres) of land, the Bank estimated that some 150,000-200,000 jobs could be created both directly and indirectly, a figure that is even higher than the number of Palestinians currently employed, or supported by, the increasingly cash-strapped Palestinian Authority.

The importance of trade diversification—for Palestine’s industrial products and services as well as for its agricultural exports, is a priority currently being highlighted by the World Bank and Palestine’s other international donors in a report issued in July (See $55 Million for Palestine’s Private Sector, August 4, 2012, below). Noting that Palestine’s location makes it a prime gateway connecting Europe and the Arab world, as well as Indian and Asian markets, as well as, through Gaza, to other populous urban centres in Egypt and North Africa, the Bank calls on the PA to foster programmes and develop the infrastructure that would lower the costs, and increase the efficiency, of Palestinian exporters.

It is a theme that has been echoed this year by both the UK and the EU, which have pledged substantial sums to help develop small agro-industries and agricultural exports, particularly in the rural areas of the West Bank. (See PalTrade Launches Drive to Diversify Trade & Exports, June 27, 2012, below.)

Palestinian pistachios, almonds and other nuts are prized in the Arab Gulf states. Picture: PalTrade.

An agreement signed by the PA’s Minister of Agriculture, Walid Assaf, and his Jordanian counterpart, Ahmad al-Khattab, in Ramallah in September is a sign of the progress that is already being made. It calls for increasing agricultural exports from the West Bank to, and through, Jordan, as well as assistance on agricultural marketing and research.

So, too, is the agreement signed by Prime Minister Salah Fayyad in Ramallah in July to make better use of the country’s water and wastewater resources, especially in Area C. Signatories include the EU, Japan, the US Agency for International Development (AID), the French Agency for Development (AFD), Germany, Austria, Spain and Finland, as well as the World Bank. Countering attempts by Israeli settlers to attack Palestine’s vital olive crop (as is expected when the harvesting season begins in October), as well as its date palm plantations, is also an area of high priority, according to Assaf and Unctad.

In Gaza, the continuing Israeli limitations on the enclave’s important fishing industry remain a source of international concern. At present its fleet of 700 boats, operated by some 3,500 fishermen, is restricted to fishing within a territorial limit of 3 nautical miles, compared to the 12-mile limit that would be applicable according to international law, human rights experts have pointed out. Meanwhile, Palestinian fishermen continue to lose their lives — the latest at the end of September – because of Israeli military action along the offshore border. Perhaps in retaliation, as well as for Gaza’s own economic survival, the government of Prime Minister Ismail Haniyeh has banned imports of Israeli fruits and vegetables into the enclave, noting that it is itself virtually self-sufficient in these areas.

Fishermen in Gaza, showing their nets to Luxembourg’s Deputy Prime Minister, Jean Asselborn. Picture: Agencies.

At present, farmers in Gaza produce some 70,000 tons of fruit, 25,000 tons of grapes, 20,000 tons of olives, 10,000 tons of guavas and 5,000 tons of dates, in addition to 300,000 tons of vegetables – tomatoes, cucumbers, melons, peppers, beans, onions and other crops – every year, despite the difficult conditions under siege and the deterioration of its underground water aquifers. Restricting Israeli imports would give local farmers greater access to their own domestic market, as well as highlighting the continuing Israeli curbs on Gazan exports to Europe, Egypt and North Africa, officials in Gaza City explained. Such actions, they add, could also help to provide vitally needed jobs for Gazans in agriculture and related industries, which currently employ some 44,000 workers, about 11 per cent of the labour force.

Finance is another issue that is increasingly being addressed by NGOs and international donors concerned about revitalising Palestine’s agricultural potential. “Lack of access to finance is a … salient constraint on Palestinian agriculture,” Unctad noted in its report, “due to the small size of the typical agriculture production unit, lack of acceptable collateral for commercial loans, and high risks to agricultural production emanating from the weather, price fluctuations and recurrent political shocks.” In the eight months from January to the end of August this year, the report noted, the share of agriculture in the total lending by banks in Palestine was a meager 1 per cent. Setting up an agricultural development bank, the UN agency and other international experts have suggested, would be an important step to increasing both output and jobs, as well as exports.

One locally-based NGO, the Arab Centre for Agricultural Development (ACAD), announced in September that it would be setting up a $5 million facility primarily aimed at providing microfinance to smaller agricultural producers in Palestine. Some of the funding may come from Indonesia’s Wafa Group, which specializes in financial assistance for Palestinian refugees and Islamic communities, following talks by Wafa officials and ACAD’s General Director, Samir Barghouthi and Operations Manager, Basel Jarrar, in Amman in September.

Palestine’s agro-industries cater to all tastes, and religions. Picture: Taybeh Brewery.

Meanwhile, the vaunted entrepreneurial spirit, and commitment to — as the World Bank notes — an “open economy,” on the part of Palestine’s private sector has helped to maintain both foreign and local investment in the West Bank’s leading agricultural companies, such as Nakheel, Thimar, the Sinokrot Global Group, Siniora Food Industries and the Anabtawi Group. While the performance of some of them, either as family firms or through their listings on the Palestinian stock exchange (and, in the case of Siniora on the Amman stock exchange), has been adversely affected by the economic setbacks this year — both in the region and in the Eurozone, their steady performance, particularly in providing new investment capital and healthy dividends, is expected to bode well for the future.

Nakheel Palestine Agricultural Investment (Nakheel)’s latest project involves the planting of some 39,000 trees to produce premium-quality Medjool dates on an area of more than 3,000 acres in Area C by 2017, in addition to the setting up a state-of-the-art sorting and packing plant in Jericho. Its shareholders include PADICO Holding and the Siraj Palestine Fund, part of the Ramallah-based Massar International group. (See Palestine’s Growth Attracts New Investment Funds, March 3, 2012 below.)

Production is set to reach 500 tons next year and will be aimed at markets in Europe and Asia, as well as local buyers. Already some 60 permanent jobs have been created, which rises to 120 during the harvest season.

Harvesting Medjool dates, near Jericho. Picture: PARC.

So, too, are the measures, such as those initiated by the UK, the EU and other international players, to encourage Israel to accept the use of Palestinian—not just Israeli—agents for Palestine’s imports and exports, a move which is also helping to alleviate the PA’s fiscal crisis and bring down the rapidly rising prices for food and fuel in the West Bank. The EU Parliament has also taken action to prohibit agricultural exports from Israeli settlements in the West Bank from benefiting from the EU’s preferential trade agreements with Israel. In the UK, the government’s increasingly effective requirements on labeling produce as “Palestinian” for products that originate in the West Bank and Gaza is also promoting a growing awareness of the continued occupation and the expansion of the settlements, particularly in the Jordan Valley.

The social enterprise, Moon Valley, has pioneered the production and marketing of Palestinian-labeled herbs and produce to top British supermarkets, such as Sainsbury’s, Marks & Spencer and The Co-operative. (See Palestinian Agriculture Boosts Trade with the UK, September 1, 2011, below.) Sainsbury’s is also selling Equal Exchange extra virgin olive oil produced by Palestinian farmers near Jenin and Nablus. The success of such imports demonstrates how British consumers, as well as the international community, are becoming increasingly aware of the continued occupation and want to support the Palestinian economy, as well as purchasing premium agricultural products.

Moon Valley, a social enterprise in the Jordan Valley, is marketing premium Palestinian produce to Britain’s top supermarkets. Picture: Moon Valley Enterprises.

Zaytoun, which specializes in Medjool dates, olive oil and honey-roasted almonds and other “Fairtrade” products, sold out much of its stock in Britain prior to Eid Al Fitr in August and is now organising selling tours of British cities during October and November, in addition to sponsoring a campaign to bring Britons to Palestine to help in the olive harvest. “We had doubled our quantities last year and the increased interest of this year means that Zaytoun will aim to double [its supplies to Britain] again next year,” its sponsors report. Zaytoun is one of several voluntary international organisations marketing produce from the Palestine Agricultural Relief Committees (PARC), which works with the Palestinian Farmers Union to promote co-operatives, exports and jobs, including rural women in the West Bank.

© Pamela Ann Smith

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