Palestine looks to high-value crops

30 March 2015

Gaza’s farmers are looking to technology and strategic projects to revitalise an agriculture sector suffering from years of occupation

Gaza’s embattled farmers received a rare piece of good news in March when, for the first time in seven years, Israel imported fruit and vegetables grown in the territory, in a partial resumption of trade summarily halted in 2007 after Hamas took control.

The initial supplies are expected to expand to encompass a wide range of vegetables, with the Coordination of Government Activities in the Territories (COGAT), the Israeli authority that deals with Gaza, envisaging future imports totalling 1,000-1,500 tonnes over the period to the end of September.

Key fact

In 2014, agricultural activity decreased by more than 7 per cent and led to a 2.5 per cent decrease in Palestinian GDP

Source: Palestinian Central Bureau of Statistics

With each tonne valued at $750, the trade unleashes some valuable cash earnings for Gazan growers, who have been turned into subsistence farmers in the space of a decade. Israel’s ending of imports from Gaza had proved terminal for many producers, who subsequently sold their land to real estate developers.

Steady decline

In both Gaza and the West Bank, agriculture has been a historically strong contributor to employment, economic growth and exports, but the sector has been in steady decline for the past decade, exacerbated by the difficult political and security situation.

The agriculture industry’s contribution to GDP has declined from 13 per cent in 1995 to about 5 per cent today. The sector’s productivity, measured by output per worker, has been slashed, and the problem has worsened the past couple of years.

In 2014, agricultural activity decreased by more than 7 per cent and led to a 2.5 per cent decrease in GDP, according to the Palestine Central Bureau of Statistics (PCBS). Contributing approximately $500m to GDP, agriculture still employs about 12 per cent of workers.

Despite abundant cultivable land, the Palestinian economy depends on food imports, primarily from Israel, whose climate and soil quality it shares. Food exports, at about $100m, are seven times smaller than the value of imported food products.

In an attempt to revitalise the sector, the Palestinian Authority’s Agriculture Ministry presented its National Sector Strategy for 2014-16 in November last year, aimed at empowering the sector to compete domestically and abroad, and enhancing food security. It identifies almost 40 projects aimed at achieving its strategic milestones, many of them covering reclamation and rehabilitation of land, construction of roads, water management and irrigation. The total implementation costs of the projects are $542.6m, with the private sector expected to shoulder much of the burden.

The Palestinians have a real opportunity to engage in high-value agriculture and high-value markets

Dave Harden, USAid

The most pressing need is to get Palestinian farmers moving up the value chain. According to a World Bank study issued in October 2013, only 20 per cent of West Bank cultivated land is dedicated to high-value production. With just 12 per cent of cultivated land in the West Bank irrigated, farmers need new water technologies, especially desalination, irrigation and wastewater treatment, to help increase this ratio. That, says the World Bank, could also help transition the sector to a higher-value crop portfolio that includes dates, herbs and vegetables. Current crops include olives, wheat, barley, tomatoes, cucumbers and almonds.

High-value crops

The West Bank and Gaza has the potential to refashion itself as an exporter of high-value crops. The World Bank estimates that by 2030, agriculture could account for up to $350m of exports, more than double its output to above $1.4bn, and add as many as 36,000 new jobs.

Indeed, foreign donor groups are already actively working to achieve these aims.

“The Palestinians have a real opportunity to engage in high-value agriculture and high-value markets, in part because they produce good product and in part because there is cachet attached to their product,” says Dave Harden, West Bank and Gaza mission director at the US Agency for International Development (USAid).He adds that the real value in the agriculture sector is at the high end of the market.

If [land Area C] is to remain a security buffer where nothing can happen… then nothing will ever change

Steen Jorgensen, World Bank

Since 2012, USAid has helped Palestinian firms sign 33 contracts with international buyers, infusing $34m into the economy. This has seen Palestinian olive oil marketed through Canaan Fair Trade, a company that works with 1,700 Palestinian farmers to sell products to international buyers including Whole Foods, Willliams Sonoma, Ben and Jerry’s UK and The Body Shop. USAid also works with 23 farmers in the herb sector, who have annual sales in excess of $20m to the US alone.  

Water technology

At the high-end – products such as strawberries and herbs – high technology is being used to reduce water consumption. “This is extraordinarily precise technology, and leaves very little waste; for example, there are microchips that allow [farmers] to disburse fertiliser on an individual plant basis, all remotely controlled,” says Harden.

This delivers high yields, and has enabled some farmers to target new fruit and vegetable varieties, such as avocados, sweet potatoes, mangoes and guava. The aim, says Harden, is to target the lucrative Gulf market.

“Mangoes and avocados are among the products we’re looking to sell to Saudi Arabia and across the Gulf, because you can truck them pretty easily via Jordan,” he says.

But the wider potential for the Palestinian agriculture sector is still stunted by the Israeli occupation. In particular, it is the heavy restrictions placed on Area C – which holds the vast bulk of Palestinian agriculture land – that means the sector will continue to struggle to meet its potential.

Area C comprises the territories beyond Palestinian urban areas, and accounts for 60 per cent of the total land area in the West Bank. Palestinian access to much of this land is either prohibited or severely restricted.

The Land Research Centre has estimated that almost half a million dunums (one dunum, a unit used the Occupied Territories, covers 1,000 square metres) of land in Area C suitable for cultivation is not farmed by Palestinians. While most of the West Bank’s aquifer and spring water is located there, Palestinians have not been able to draw their agreed allocation of 138.5 million cubic metres a year (cm/y) needed to irrigate the land.

About $700m could be added to Palestinian GDP if Area C restrictions were lifted, says Steen Jorgensen, World Bank country director for Gaza and the West Bank. “If you add in water, you’re talking an additional $1.2bn, which would equate to more than 10 per cent of Palestinian GDP,” he adds.

On top of that, some of the most efficient fertilisers are kept on a restricted “dual use” list by the Israeli authorities, so may not be employed in the West Bank or Gaza.

The result is a double-whammy effect that is frustrating the agriculture sector’s potential to lift many Palestinians out of the poverty trap.

“If you have access to land, you can’t do anything to improve it; there’s no water, no fertiliser, so it’s not surprising that agricultural production has dropped in the West Bank, at least,” says Jorgensen. “In Gaza it’s been roughly constant, but it has turned from an export-driven to a subsistence type of agriculture. The high-value products such as strawberries have gone. “

Some producers have managed to get projects going in Area C. The Nakheel Palestine medjoul date farm, backed by the local Padico Holding, is an example. The company’s mission is to develop the Palestinian date production industry and produce high-quality dates for export to foreign markets. The project covers a total area of 3,000 dunums.

“We’re planting in Area C, although we were always hesitant… for years as it’s slightly salty land,” says Samir Hulileh, CEO of Padico. “But the former Palestinian prime minister, Salam Fayyad, encouraged us and initiated a scheme to take water from Area A to the plantation.”

Land zoning rules

The date plantation is covered against political risk under the World Bank’s Multilateral Investment Guarantee Agency insurance scheme. “As expected, the Israelis have declared a few orders against the law, but we have gone to court and won. We are now in the fifth year of operation, so we’re feeling good about it,” says Hulileh.

Nakheel is now exporting to 12 countries and expects more to come, as demand is high. However, success stories such as Nakheel and the herb and exotic fruit growers remain few and far between. For the sector to really punch above its weight it will require a reconfiguration of the land zoning rules.

“The best inoculation against conflict is for people to be well off,” says Jorgensen. “On the Israeli military side, there is now more willingness to look at issues such as Area C land. We’ve heard a change in tone, but it also calls for a fundamentally different way of looking at Area C. If it is to remain a security buffer where nothing can happen except by settlements, then nothing will ever change.”

US-aid supported key accomplishments

  • In 2014, the Palestinian agriculture sector increased the value of exports by $24m compared with the previous year.
  • Since 2012, Palestinian firms signed 33 contracts with international buyers, infusing $34m into the Palestinian economy [20 forward contracts infused $11m and trade show participation infused $23m].
  • Since 2012, 1,131 new people were employed in the agriculture sector.
  • Between 2012 and 2014, new technologies were introduced to 1,877 hectares (18,770 dunams), improving quantity and quality of production.
  • Between 2012 and 2014, 1,700 farmers were trained on a variety of agriculture-related topics.
  • Between 2012 and 2014, USAid invested in 505 farms to promote agriculture production.
  • USAID’s overall investment in the agriculture sector since 2012 is $8.2m. 

Source: USAid

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