Lebanon Agriculture Sector Note : Aligning Public Expenditures with Comparative Advantage

Agriculture is a small but stable part
of the Lebanese economy. Approximately 20 to 25 percent of
Lebanon's active population is involved in the sector
in one way or another. This note is a synthesis of previous
work written on agriculture development in Lebanon and
related public expenditures in the sector. It starts with an
overview of the agriculture sector in Lebanon and its role
and contribution to the economy. Approximately eight percent
of Lebanese households live below the poverty line. Among
major economic sectors, agriculture has the highest rate of
poverty. Over 20 percent of heads of households engaged in
this sector are very poor. The North governorate is among
the hardest hit areas with one in four agriculture workers
likely to be poor. Agriculture sector development could play
an important role in pro-poor growth. This note aims to
focus on an agriculture sub-sector with significant growth
potential. The Strengths, Weaknesses, Opportunities, and
Threats (SWOT) analysis explains that Lebanon is relatively
more competitive in fruits and vegetables than in cereals
and livestock. First, Lebanon is a relatively water scarce
country and livestock put a greater strain on water
resources than fruits and vegetables. Second, cereals are a
lower-value crop than fruits and vegetables, and have more
volatile returns. Third, competitiveness in cereal markets
requires producing in high volume. Lebanon is a small
country that is very dependent on cereal imports, comprising
roughly 83 percent of consumption. Thus, profitability is
limited by a constraint on economies of scale. Moreover,
making significant investments to reduce cereal import
dependency may actually reduce food security by putting
further strain on Government of Lebanon's (GoL's)
fiscal balance, thereby limiting its ability to respond to
food-price shocks. Livestock growth is also unattractive
from a food security perspective because it would
significantly increase domestic demand for cereals,
increasing the country's exposure to market volatility.