CHAPTER 9
The Livestock Sector and Policies in Syria
Summarized by J. Vercueil^[71] from a study by G. Cummins

9.1 Introduction

The livestock sector will have a significant impact on the future growth of Syria's economy. It provides more than 30 percent of the total value of agricultural production, 15 percent of the value of agricultural exports, and employs 11 percent of Syria’s total labour force, including many low income families in the rural areas. Among the more than 8 million people who are rural dwellers, 2.5 million of which are low income earners, more than 35 percent (households) own livestock and derive from it 15 to 100 percent of total family income. Growth and improved productivity in the livestock sector is therefore also important for poverty reduction in Syria.

Over the past twenty years, Syria has become self sufficient not only in food grains but in most livestock products as well. However, while livestock is a major consumer of crop products as feed, the support to agriculture continues to favour the production of crops over livestock. There is, however, an interactive and complex relationship between agriculture and livestock and between the various livestock production systems, requiring a better balanced approach. The livestock sector, and dairy production in particular, competes directly with crops for land and water, while sheep raising occurs predominantly in areas where other forms of agricultural or livestock production are not viable. Cropping also encroaches on the margins of pastoral lands. As sheep numbers and production in Syria increase, competition intensifies with dairy, beef and poultry for the main feed resource: crop residues and concentrates.

Syria’s programme of reform and economic liberalization also opened significant opportunities for the livestock sector. Between 1994 and 1998, the value of animal production grew by more than 30 percent at 1995 constant prices and, by 1998, was worth SP86 billion, accounting for 28.5 percent of the value of agricultural production. Live sheep export is a major contributor to export revenues. On the other hand, the large livestock populations in Syria have resulted in overgrazing and land degradation, particularly in the drier regions. The continuing growth in sheep numbers coupled with the diminishing areas of traditional grazing, has put intense pressure on the rangelands, and has contributed to the degradation of Syria’s land resources.

Development of the livestock sector must therefore be balanced with measures to conserve the environment: the sector's development strategy must achieve not only growth and poverty reduction, but also agricultural and environmental sustainability. This chapter assesses the structure, constraints, weaknesses and opportunities within the livestock sector. It also explores policy options for improving the main livestock products.

9.2 Livestock production and performance trends

a) Population and output trends

Syria’s livestock population, clearly dominated by sheep, reached a peak in the late 1980’s and then grew again during the 1990’s (Table 9.1 and Figure 9.1^[72]).

Figure 9.1 Livestock population trends

The national sheep flock almost doubled during the 1980’s but increased by only seven percent over the decade from 1989 to 1998. The population slow-down occurred as the opportunity for exploiting rangeland and crop residues through more intensive management diminished, while over exploitation caused an overall decrease in the productivity of the Syrian rangeland.

By the beginning of 2000, the sheep population may have fallen below 1989 levels because of increased sales and lower productivity during the severe drought of 1999-2000. Conversely, cattle have shown more steady growth over both decades, with the national herd growing by 16 percent to more than 900 000 head in the last decade. The growth in dairy cattle was greater than in non-dairy animals, reflecting the increasing demand for dairy products and the liberalization of the milk processing sector. The goat population has remained static over the decade, but there have been some fluctuations between years due to seasonal conditions. Camel numbers have reversed their long-term decline and have more than doubled during the decade, albeit from the low base of 3 000 head. The population of horses declined by 40 percent, continuing a long term trend. The average annual population of poultry has risen by 50 percent during the decade, while the average broiler population has doubled in line with population growth and demand for poultry meat.

Table 9.1 Livestock population, 1960-1998 (thousands)

Source: MAAR - the Annual Agricultural Statistics Abstract.

b) Livestock yields and output trends

As the livestock populations expanded, output of the main livestock categories also grew (Table 9.2). Over the last decade, beef and poultry meats displayed the highest annual growth rates with output increasing by 138 percent and 97 percent respectively. By 1998, cow’s milk accounted for 62 percent of the total milk supply, with sheep milk accounting for another 33 percent and goat milk providing the balance.

In the same year, sheep meat accounted for 55 percent of the total domestic production of meat, down from its contribution of just over 60 percent the year before. During the last ten years, domestic production of poultry meat doubled. Poultry contributed the main increase in meat production with an extra 50 thousand tonnes over the decade.

Table 9.2 Livestock production, 1989-1998 (thousands of tonnes and litres)

Source: MAAR - The Annual Agricultural Statistics Abstract.

Milk yields from cross-bred cattle improved considerably between the 1980’s and the 1990’s due to better nutrition and management (Table 9.3). However, per-animal yield for other livestock products remained static with any increase in production coming from larger livestock populations. Much scope exists to increase the per-head productivity for non-milk items, particularly through intensive feeding systems for beef and mutton, and improved conversion of feed into animal products. The expansion of the dairy cattle cross-breeding programme will continue to lift dairy cow yields, provided the resulting increase in their genetic potential is complemented by corresponding improvements in husbandry, nutrition and health care.

Table 9.3 Average annual animal yields (kilograms per animal)

Source: derived from MAAR data.

In 1998, the sheep industry also produced 15 000 tonnes of clean wool and skins worth SP110 million, some 0.1 percent of animal production.

c) Consumption of livestock products

Despite the continuing increase in supply, Syria’s per capita consumption of livestock products, with the exception of milk, is considerably lower than in industrial countries. Per capita consumption of milk is higher than in Australia and the United States^[73], while consumption of beef and poultry is about 10 percent and 14 percent of US consumption (Table 9.4).

Table 9.4 Consumption of livestock products in Syria and selected countries, 1998 (kilograms per capita per year)

Source: Syria - MAAR Annual Agricultural Statistical Abstract. Other countries- various and as quoted from USDA Livestock and Poultry: World Markets and Trade.

Overall, per capita consumption of livestock food products has remained fairly constant over the last 15 years (Table 9.5). The relatively low levels of consumption of sheep meat, beef, poultry and eggs offer considerable opportunity for growth.

Table 9.5 Per capita consumption of livestock products, 1985-1998 (kilograms per capita)

Source: derived from MAAR Annual Agricultural Statistical Abstracts.

Animal products (dairy, meat and eggs) are an important component of consumer budgets (Table 9.6). In 1985-1986 meat, eggs and dairy products accounted for 34 percent of family expenditure on food items. More recent data are not available, but in 1995 total food expenditure continued to count for 52 percent of the consumer's budget.

Table 9.6 Average per capita rural and urban expenditure on food and non-food commodities, 1985-1986 (in Syrian Pounds)

Source: Central Bureau of Statistics.

While consumption of livestock products has remained relatively constant over the last 15 years, prices have increased for all livestock products consumed. Consumer preferences for better quality and differentiated products are also increasing particularly in urban areas. Assuming the economy consistently grows at a modest 3 percent per year while the population growth, price and income elasticities of the past ten years continue unchanged, estimates for 2020 indicate that the demand for meat, milk and poultry will increase by 34, 14 and 49 percent respectively. If output growth rates between 1989 and 1999 are maintained over the same period however, the growth in demand for red meat cannot be met from domestic production alone.

9.3 Livestock production systems

Syria’s livestock production systems are changing. There is an increasing emphasis on intensive feeding in all production systems and a decreasing reliance on natural grazing alone. While there remain a large number of pastoral sheep and cattle production units, both the small and large ruminant systems are moving from methods of low input and low productivity to more intensive feedlotting. Following international trends, the poultry industry has already intensified and levels of productivity are now equivalent to those in industrialized countries. While the dairy industry has also undergone some intensification, average milk production levels are still low compared to the major exporting countries of milk products.

Most sheep and cattle are raised in small herds and flocks (Table 9.7). Cattle production occurs on small farms where livestock production is a complementary activity to agricultural pursuits. The majority of sheep owners own less than 50 sheep and many of these smaller flocks belong to sedentary livestock producers who own land and are involved in either irrigated and/or dryland agricultural production. The major proportion of sheep production occurs on the rangelands, where the average size of flocks is much larger.

Table 9.7 Distribution of cattle and sheep ownership by size of herd and flock, 1998

Source: Data collected from governorates sources.

a) Sheep production systems

Live sheep for export, and meat and milk for domestic consumption are the main products from sheep raising. The country's specialty is the Awassi breed, which commands consumer preference in the neighbouring Gulf States.

Traditionally, sheep production has been concentrated in the more arid areas of Syria, grazing rangeland pastures as the main feed source. The sheep production system was based on seasonal movement between the rangelands in the east and southeast, and the dry and irrigated cropping areas in the west where the sheep are grazed on crop residues. This system is now changing.

A decreasing share of the flock’s nutritional requirements is obtained from grazing the rangelands, and an increasing share from supplementary feeding. As a result, flocks are spending longer periods in the cropping zones; migration patterns are giving way progressively to sedentary production systems based on early weaning, and feedlotting young animals. Such change has been facilitated by improvements in transportation and infrastructure, as well as the securing of national boundaries, and prompted by increasing sheep population and higher prices for young sheep.

An estimated 150 000 families produce sheep in the Syrian rangelands (the Al Badia steppe). Most of these families own less than 300 head (Table 9.8).

Table 9.8 Flock size owned by sheep producing families in the Al Badia

Source: Al Badia Directorate.

The diminishing rangeland resource and lack of feed and fodder continue to constrain the productivity of the sheep industry. The movement into feedlotting young sheep for meat and keeping lactating ewes for producing milk further increases the demand for quality feed inputs, as these activities depend on the availability of quality formulated feeds for profitable rates of feed conversion.

b) Bovine production systems

Syria’s cattle industry is based on local and imported dairy breeds with beef production a by-product of the dairy industry. Of the one million cattle in the national herd, 70 percent are categorized as dairy cows. Government supports improvement of the low milk yields of indigenous breeds through breed improvement programmes based mainly on imported Friesian semen. This cross-breeding programme has substantially increased per-head milk production. The Livestock Production Department implements an artificial insemination programme for the private, public and cooperatives producers.

Economic cattle production depends on efficiently converting feed into milk and meat. Due to the inconsistent availability of good quality feed ingredients for preparing balanced rations, achievement of high feed conversion efficiencies is often not possible. In addition, the productivity of local cattle is constrained by the limited availability of suitable genetic material in the herd improvement programmes, and the overall production of milk and meat per animal remains low.

c) Poultry production

Most poultry are raised in intensive production systems. Both broiler and layer production stock are based on imported grandparent stock whose supply is controlled by a small number of importers. Parent stock is produced in specialized privately or publicly owned production units. About 40 breeders dominate the market for day-old broilers and layer chicks.

The supply and price of all major feed ingredients (maize, fishmeal, soybean meal and other oilseed cakes) varies throughout the year with some ingredients disappearing completely from the market at some times during the year. Further, access by the poultry industry to domestically produced ingredients is in direct competition with the dairy industry and the sheep and cattle feedlots operations. Poor feed quality has also been an issue for the industry, particularly the quality of imported maize and oilseed cake.

d) Issues and prospects for livestock development

The ability of the Syrian livestock sector to meet the domestic demand for livestock products will depend on its ability to intensify production and improve the quality of its animals, rather than from increasing animal numbers as happened in the past.

The opportunity to increase sheep production by better utilizing the rangeland feed resource is limited, and as with cattle, sheep production gains will come from intensification. The trend towards sedentary production of Awassi sheep for the domestic and export markets requires improved husbandry practices and nutrition. These will involve increased levels of supplementary feeding, as well as earlier weaning with weaned animals grown out in feedlots.

Sheep production will also need to become more specialized, with the grazing/supplementary feeding system producing store animals for feedlotters for growing out and fattening for the domestic and export markets. The changing economics of the export sheep market will require Syrian producers of Awassi sheep for export to improve their production efficiencies, through improved reproductive performance of their flocks. The MAAR research and extension services should be targeted at increasing the profitability of production rather than production per se. Greater involvement of the private sector in establishing livestock research priorities will also help MAAR to meet the needs of the producers.

More intensive production in the dairy sub-sector will be based on the use of genetically superior animals, increased stall feeding, improved utilization of crop residues and use of more farm-produced fodder. This will more closely integrate crop and livestock production and it will improve efficiency in using crop and agro-processing by-products. Increased reliance on imported feed ingredients will also make feed ingredients such as barley, maize and cotton seed cake locally available at internationally competitive prices. More intensified dairy enterprises will result in more specialized cattle meat production units, and use of specific beef breeds in cross reeding programmes with dairy cattle.

Poultry production will continue to intensify, with growth in the sector coming mainly from the expansion of intensive production systems in the private sector. The development of a cold storage infrastructure will permit greater access to regional markets for frozen or chilled birds, as well as creating a more stable domestic market.

The most critical factor determining the ability of the Syria livestock producers to meet the increased domestic and international demand for livestock products will be the availability of high quality feed at international prices which will determine the profitability of their livestock enterprises - dairy stall feeding, intensive sheep and cattle feedlotting, and the efficiency and regional competitiveness of the poultry industry. The supply and demand of livestock feed is analysed in the following section.

9.4 Livestock feed and fodder supply

Ensuring an adequate supply of reasonable quality feed and fodder is one of the major challenges facing the Syrian livestock sector. The exact size of the feed deficit varies with seasonal conditions, and uncertain assumptions made on the contribution of the range lands and crop residues to the national feed production affect the assessment.

a) Feed sources and consumption in Syria

The major sources of livestock feed in Syria come from natural pastures and rangeland, cultivated green and conserved fodder, as well as crops and agro-processing by-products and residues.

Grazing provides the most important source of fodder for ruminants. As the livestock population increases and production intensifies, an increasing proportion of the dietary requirements of ruminants is however met through supplementary feeding with cereals and by-products from crops and agro-processing.

About half of Syria’s land mass (8 million hectares) is classified as rangeland (Al Badia) and provides an estimated 15 percent of the national sheep flock’s nutritional requirements in a “normal” rainfall year. Notwithstanding this dependence on grazing lands, most of these are considered to be degraded and the 1999-2000 drought has resulted in further degradation of the range land feed resource.

Barley accounts for more than 85 percent of feed grown for livestock. In years of lower rainfall, other crops, which are not economical to harvest for grain, become an important source of fodder for ruminants. The main agricultural stubbles are wheat, barley and cotton. Cotton seed cake provides the major source of supplementary protein to grazing animals. Wheat bran and straw are the most important crop by-products for feed production.

The supply of feed, fodder and feed ingredients is seasonal both in terms of quality and quantity. The availability and cost of feed and fodders is regarded as a major constraint to increasing the livestock production and the profitability of all livestock enterprises. Procurement of feeds and fodder accounts for a high percent of the cost of production of all categories of livestock (Table 9.9). Although grazing of rangelands and crop stubbles provides a major proportion of the total nutritional requirements for goats and sheep, the cost of purchasing supplementary feed accounts for more than 50 percent of the total cash cost of production.

Table 9.9 Contribution of fodder and feed to cash cost of livestock production, 1999 (SP and %)

Source: Department of Economics MAAR, Farmer estimates.

b) The feed balance

Feed availability is estimated at some 8.9 million tonnes of dry matter per year against a requirement of about 10.7 million tonnes based on 1998 livestock population and production data (Table 9.10). However, slight changes in the assumptions regarding natural grazing yields have a considerable impact on the size of the deficit.

c) Addressing the feed deficit

The livestock feed deficit is expected to grow in the future with a further widening of the gap between domestic production and the livestock sector requirements. Maintaining the sheep population at its theoretical level of 15 million, and maintaining the other sectors at their present rates of growth, by 2010 the livestock feed requirement will increase to 11 million tonnes of dry matter, 24 percent above current domestic level of feed and fodder production. The approach will have to rely on improved utilization efficiency of crops products and by-products, and on sustainable management of the common grazing areas^[74]. With the long-term shift from camel into sheep production, the latter issue boils down to sustainable sheep raising.

Table 9.10 Feed requirements and availability, 1998 (millions of tonnes)

Source: Study Calculations (Cummins, 2001).

Increasing and intensifying crop production will result in greater availability of crop stubbles and crop by-products; further intensification of livestock and crop production will result in better integration of livestock and crop production, both horizontally and vertically. Opportunity exists for greater efficiency of utilization of crop residues for livestock production through the wider application and adoption of local and international livestock feeding technology and applied livestock nutrition research

An estimated 500 000 Syrian families rely on sheep production for a substantial proportion of their income. Most of this production has its roots in the Al Badia region, although most of the sheep flocks migrate out of the Al Badia during the summer months to graze on crop residues in higher rainfall areas. In 1998, the Al Badia had an estimated production of about one million tonnes of dry matter which met over 15 percent of the total digestible nutrient requirements of the Syrian sheep population.

Recent increases in sheep numbers have resulted in a decline in the productivity of the rangelands due to overgrazing of vegetation resulting in lower plant productivity. The size and number of sheep flocks have increased substantially over the last three decades, with a corresponding greater pressure on the range resources from both livestock and (with settlement of the Bedouin marginal lands) human population. The increased availability of water tankers and trucks for transport of animals has allowed more intensive and, in many cases, destructive utilization of the range resources. Tightening of cross border movement of flocks has limited access to range land feed resources in the broader region.

After feed, water is the most important reason for migration of flocks within and out of the Al Badia. With an improved and expanded road network and an increased investment in water tanks and bores, trade in water for both stock and domestic purposes has increased rapidly over the last decade. Expenditure on water has become a significant cash cost for sheep producers.

Considerable extension of cropping into the rangelands and the individualization of the common range resources resulted in an estimated decrease in the area of rangeland available to sheep, from 7.9 hectare per sheep in 1961 to 2.6 hectare in 1993. This has been accompanied by a decrease in the quality of the pasture, and augmented dependence on imported feed supplements.

Land policies have contributed to resource mismanagement and environmental degradation. With State assertion of ownership, customary institutions have lost implicit control over their tribal lands; rangelands were taken out of traditional common property management into open-access and subsequent uncontrolled use and heavy degradation; local communities have lost the ability to effectively control and manage the use of the rangeland resource. While individuals and communities in the Al Badia had developed an array of reciprocal access arrangements allowing members of neighbouring communities to use their pasture and water resources, these arrangements are being monetized and individualized.

Whether the Al Badia can recover its lost productivity is uncertain, but judicious management of the rangeland can increase biodiversity and productivity of the range. Users and boundaries of the range resource must be clearly defined, users groups should receive legal status; and membership in the group should include a binding commitment to user obligations and usage regulations. This requires a community based approach involving all the users of the Al Badia resource. However changing social conditions, with the decay of traditional social systems of authority and increasing economic individualism, do not favour a revival of community based system of management. This calls for a proactive stand by government in recognizing the role and rights of local communities and in providing incentives for communities to be involved.

d) Feed marketing and government interventions

Due to the increasing intensity of animal production in all classes of livestock production, the market in feeds and fodders is well developed in both the public and private sectors. The main feeds of concern to the livestock sector are barley, maize, bran and cotton seed cake. Cattle and poultry are fed mainly on maize (only for poultry) and barley and imported grains and concentrates. Imported soybean and fish and meat meal are utilized by the poultry sector. Barley is the main grain used to supplementary feed sheep. More than one million tonnes of grains, agro processing by-product and feed additives were traded during 1998, not including the free market trade between cereal producers and livestock producers. By the mid-1990's, imports of feed grain generally turned into exports.

While livestock production is essentially a private sector activity, the Government, through a number of agencies, participates in the supply of inputs such as feed, credit, animal health products and services. The public sector procures stores and markets feed and fodders through the General Establishment for Cereals and the General Establishment for Fodder. The cooperative sector through the Peasant Unions Federation is the most important vehicle for distribution of this public sector feed and fodder. The major focus of the public sector activities in the marketing of fodder, until recently, had been provision of feed and fodder on concessional terms to sheep producers and to participants in government sponsored dairy and cattle development programmes. The marketing of poultry feeds is predominantly a private sector concern, and most of the requirements of the poultry industry are imported. Concentrate (grains) feed is supplied by both the private and public sectors, although the private sector’s role is restricted mainly to the manufacture of poultry feed using imported ingredients.

Government interventions on livestock feed prices aim at supplying the livestock sector with its feed requirements at stable prices, and ensuring strategic stocks of feeds on favourable terms to the Government. Feed prices, determined and declared before the start of the harvest season, are established on estimates of costs of production with a margin for profit, and have remained stable for the last three years for the main livestock feed grains and products. However, the cost of livestock feeds on the domestic market has in general been at a premium to international prices (Table 9.11) resulting in increased cost of production of livestock products. As consumer prices are based on cost of production calculations, the increased cost of livestock feed is passed onto the consumers. Hence the crop producer is being supported by the livestock producer and the consumer.

Table 9.11 Nominal protection coefficients for selected feed ingredients, 1990-1999

Source: Study Calculations (Cummins, 2001).

A “Fodder Fund” has been established in the 1970s to provide sheep producers in-kind short-term loans for fodder during the winter months (the so called “critical period”). The loans are repaid during the production season, although repayments can be deferred under certain circumstances such as drought. The allocation of fodder, based on the sheep owned by cooperatives’members, has been as high as 180 kilogram per sheep for the four-month period but the allocation has declined to 35 kilogram in 2000, reflecting the financial capacity of the Fund and the feed reserves held by the General Establishment of Fodder.

e) Drought management

Syria experienced a prolonged period of unusually low rainfall in 1998 and 1999, culminating in the severest drought since the 1950’s. The drought in 1999 cost the sheep producers an estimated SP8.8 billion due to loss of meat, milk and wool production and a further SP37 billion due to increased expenditure on feed and water.

Government programmes to alleviate some of the impact of the drought included: (i) extra rations to sheep producers on a subsidized and deferred payment basis; (ii) extra financial resources to the Fodder Fund and price support; (iii) increased in-kind loans by ACB for feed and fodder; (v) authorizing grazing of conservation areas in the Badia; (vi) allowing private imports of feed; (vii) allowing export of Awazi sheep with exemptions to the “two for one” sheep import/export requirement. Support through the Fodder Fund (about SP700 million) was offered even to producers not able to clear earlier debts.

Several key factors need to be considered in formulating a drought policy which makes the most efficient and equitable use of government support. It should aim at encouraging farmers to manage droughts and difficult seasons (periods of unusually low rainfall) from their own resources. Traditionally, without Government intervention, livestock producers adjusted livestock numbers, sought alternative grazing areas in difficult periods and/or purchased more feed for their animals. A drought policy would ideally encourage greater self-reliance or greater financial self-sufficiency. The current approach is encouraging greater dependency on the government with a number of adverse effects.

f) Issues and prospects for livestock feed in Syria

To be able to meet the future demand for livestock products, Syria’s livestock production will need to improve substantially in terms of per-animal yield and feed conversion. Increasing flock and herd populations, which is the alternative, would lead to lower per-animal yields due to lower levels of nutrition per productive animal.

The strategy for improving Syria’s livestock feed deficit requires increased integration of crop and livestock production systems, improving the production and utilization of feed and fodders. Elimination of unnecessary restrictions on the trade of feed and fodders would ensure access to standardized high-quality feed products at world prices, a priority of all livestock enterprises. Government support to the feed and fodder industry must focus on strengthening the regulation and monitoring of feed standards and the quality of feed and feed products formulated by the private sector. Current government support to feed and fodder is allocated according to the number of animals owned; accordingly, the benefits of price support and interest subsidies accrue to the larger, better-off producers. New approaches need to be explored to support the majority of livestock producers who are poor and unable to access the Government’s fodder support programmes.

Improved management of common grazing lands, including introduction of appropriate forms of land tenure for common grazing land users, is a time consuming process. Meanwhile, investment in infrastructure development in the Al Badia should be submitted to an environmental impact assessment to avoid further degradation of the area' resources. With respect to managing the impact of severe drought, the Government’s role should be directed to improving preparedness of the livestock producers: skills in livestock management and planning, information on the utilization of supplementary feeds, weather forecasts. The drought strategy would also comprise assistance in case of “exceptional circumstances” such has just occurred in Syria, a rare and severe event beyond what livestock producers could be normally expected to manage.

9.5 Livestock products marketing and processing

Government mechanisms for balancing supply with consumer demand for livestock products aim at stabilizing prices while increasing livestock production for local demand, creating production surpluses for export, and protecting the local market from external competition where possible. As the Syrian economy is moving from being centrally managed to a more market driven model, policies and Government investment in the livestock sector are under continual review and change in response to the dynamics of the internal economy, as well as the international trade forces.

a) Livestock marketing

More than 90 percent of the national livestock production is marketed through the private sector. The major sheep and cattle domestic markets are in Aleppo and Hama. Aleppo is also the centre for the live sheep export trade and Hama is the focus for imported sheep. Livestock markets are held daily in the major urban centres. With a well developed road and communication infrastructure and the relatively short distances between markets, traders are able to actively compete in markets nationally. In the sheep and cattle markets (for live animals for breeding, store or slaughter), a small number of well resourced commissioners who also trade and fatten animals themselves dominate the market.

The domestic market price for live animals is not regulated by the Government, however the live sheep export trade is subject to Government interventions. Indicative live sheep export prices are used in issuance of export declarations and in calculation of fees and foreign currency earnings, but they can vary considerably from actual prices realized by the exporters.

b) Meat processing

Most slaughterhouses are owned and operated by the governorates. Sheep and cattle must be slaughtered in these facilities to ensure quality control and to facilitate the implementation of public health and hygiene regulations. Most traders, butchers and wholesalers prefer to slaughter their animals in the production governorates, where using their own labour lowers the slaughter fees, and where the enforcement of health and hygiene regulations is less rigorous than in the central, more modern General Establishment for Meat (GEM) slaughterhouse in Damascus. Slaughtering facilities and practices are unsophisticated, but meat quality is considered adequate even though a considerable proportion of marketed meat is slaughtered under unsupervised and unregulated conditions.

At this stage of the meat market’s development, there is a trade-off between the cost of stricter regulations for domestic meat production and the benefits from consumer health protection. While regulations are essential for exports, enforcing similarly strict standards in domestic markets may not be economically feasible. In the longer term, the desirable capital investment in slaughterhouses will be needed to avoid that inadequate processing facilities and poor enforcement of hygienic standards pose health and environment hazards while constraining Syria’s export competitiveness. However, this will require improving the general investment environment in Syria and reducing subsidized competition from Government slaughterhouses.

c) Cow and sheep milk

In 1998, Syrian dairy farmers produced an estimated 1.1 million tonne of cow milk, mainly from small herds in the peri-urban areas. A small number of producers milk more than 150 cows and some of these production units are vertically linked to private milk processing units. The off-take of surplus animals from the dairy herds provides the basis for the beef industry, with young stock grown out under semi-intensive feeding regimes supplemented by fodder produced mainly under irrigation. While the private sector dominates the dairy industry, the government has a substantial investment in both production and processing units.

Most milk is distributed fresh to consumer households for consumption or domestic processing into yoghurt and cheese. More than 60 percent of the milk consumed in the major urban markets is delivered fresh in open containers to the consumer’s door by a network of milk vendors and milk dealers who source their supplies from small dairies close to the urban areas. Processed milk, in bottles or cartons, make up a small proportion of the market, due to its higher cost and consumer preference for raw milk. While claims of adulteration of milk are common but undefined, milk quality is a major constraint to improved milk and milk products industry due to unhygienic handling, transport and storage of milk which is produced in small quantities by a large number of producers. Seasonal supply volumes fluctuate from peaks in summer to lows in winter, resulting in low levels of processing plant capacity utilization in both the public and private sector.

Most strategies for promoting small scale milk production and quality involve the installation of milk chilling facilities at milk collection centres. The private sector, however, does not consider this investment as “profitable” unless supply contracts with small producers and cooperatives can be enforced. In the medium term, the processed milk industry will become more vertically integrated as private processing plants link up with the larger producers who can afford the required investment in milk handling, storage and transport infrastructure.

As for sheep milk^[75], some 500 000 tonnes are produced annually, accounting for about 30 percent of the total milk production in Syria. The per-capita consumption of 35 kg/head is one of the highest levels in the world, as consumers place a high value on sheep milk products, which they regard as more nutritious than cow milk products. About one-third of the sheep milk produced is consumed fresh; production is highly seasonal, with surplus over lamb and family needs (from February to May) being processed into cheese, yoghurt, butter and ghee.

Pilot projects have demonstrated that: traditional sheep milk processing methods and equipment can be adapted to produce profitable, wholesome products suitable for the high value urban market; processing facilities as small as 500 kg per day are a profitable investment as minimum risk, and low utilization of processing facilities can be offset in part by utilizing some cow and goat milk.

d) Poultry and other animal products

Broilers are sold either live or fresh dressed (there is currently no market in chilled or frozen dressed poultry in Syria). The market is dominated by small retailers operating in the major urban centres. Broiler farms are spread over all governorates, mostly located close to the big cities. Larger producers market directly to consumers through their retail outlets. Egg marketing is handled by traders or commission agents, or sold directly from the larger production units directly to retail and wholesale outlets.

The General Establishment for Poultry, which supplies mostly public institutions, produces about 10 percent of the domestic consumption.

Wool production in Syria (0.1 percent of the value of all animal products) fluctuates with sheep population. Most of the wool is consumed in cottage industries for the production of blankets, tenting, mattress filling and felted rugs. The General Organization for Wool, with two 600 tonne (clean wool) capacity plants, imports about 1 000 tonne of greasy wool from New Zealand and, using minimal amounts of locally produced wool, produces yarn for carpet manufacture in the Government-owned carpet factories. Locally produced wool is marketed through private traders, with most of the domestic production exported to Turkey. With the lifting of trade restrictions, private traders, who have become entitled to keep 75 percent of the export foreign currency earnings, have entered the trade and now market the total clip.

An estimated 5 million sheep skins and 200 thousand cattle hides are harvested annually. Besides consumption by the handicraft industry, the General Establishment for Tanning is the only domestic market for these skins and hides, operating two companies which have sheep skin and cattle hide processing plants. The sheep skin plants process 3 000 skins per day producing leather for both clothing and footwear manufacturing companies in the private sector. The balance of the skins is exported mainly to Turkey.

e) Price setting mechanisms

Although livestock products marketing are basically a private sector business, the Government endeavours to stabilize prices and to discourage excessive profit taking by intermediaries. However, sources indicate that meat and milk prices fluctuated more than 20 percent over the last three years. Wholesale prices for livestock products are more volatile than retail prices, as retailers are able to maintain higher margins within the official retail price ceilings compared to the wholesalers who operate in a more competitive and less regulated market.

From 1990 onwards, there has been no significant relative wholesale price change between beef, mutton and poultry to encourage significant shifts in consumption and resources (Table 9.12). Consumption meat and milk price reports exhibit some seasonality, perhaps influenced by festivals, changing consumption, and animal feed supply (particularly for milk and mutton). Government price setting strategies have not insulated consumers or producers from these price fluctuations.

Table 9.12 Price ratios of selected livestock products, 1985-1999

Source: Cummins (2001).

The allegedly high margins between farmer and consumer may reflect excessive profit taking, but high transaction costs (more than 50 percent for mutton and 20 percent for beef) are also related to administrative market rules and regulations. A factor contributing to these uncertainties is the limited resources allocated to the collection and analysis of livestock marketing data. A more comprehensive livestock information system, covering livestock production and marketing, would facilitate clear policy and strategies for developing the livestock markets and sector.

Price setting based on cost-plus-profit estimates does not foster efficient production in the public sector, while allowing non-competitive profit taking by a (presumably) more efficient private sector. As a result, consumers pay a higher price for meat and milk than without such interventions.

f) Issues and prospects

For the livestock sector to grow, livestock products markets will need to become more efficient. High transaction costs indicate opportunities for considerable gains in market efficiency. Public sector enforcement of hygiene and sanitary standards will require more resources as consumers demand better quality products and more private sector participants enter the meat processing industry. Improved livestock market information, critical to improved market competition and hence efficiency, would also facilitate policy formulation and more efficient public sector resource allocation.

9.6 Livestock sector trade

The highly restrictive trade regime prevailing until 1986 was relaxed notably through Law No.10 (public/private joint ventures were allocated import and export privileges) and Investment Law No 10 (introduced in 1991) further liberalized the domestic and international trade, allowing the domestic and international private agents to enter the domestic market in “non strategic” agricultural and livestock inputs and products. The bulk of both exports and imports is made of live sheep trade, milk powder being the only other significant item (Table 9.13).

Table 9.13 Main livestock and livestock products imported and exported, 1990-1998 (two-year averages, millions SP)

*Goats exported, cattle imported.

Source: Study calculations, Cummins (2001) Recent Trends.

Between 1991-92 and 1996-98, at current prices, the value of imports of livestock products, excluding live animals, increased by more than 200 percent due to increased imports of powdered milk and butter. During the same time, the value of exports dropped 30 percent from a high of over SP1 billion in the middle of the decade. Poultry meat exports fell by 85 percent to SP7 million, while the export of white cheese tripled at current prices. Most livestock product imports, except live sheep, are sourced from the European Community (EU), while all exports, including live sheep, are to countries in the immediate region. Romania and Bulgaria appear as the major suppliers of live sheep (bela) to Syria.

The increasing imports of milk powder show that domestic milk production does not keep pace with domestic demand, particularly in the low domestic production seasons. Given the size of the Syria non-wool textile industry, considerable opportunity exists to extend Syria’s fibre processing capability to include imported wools for value adding. Another opportunity for value adding in-country rests with offal and slaughter byproducts, observing that Syria imports more than 2000 tonnes of meat meal for the poultry industry alone.

From 1996 to 1998, live sheep accounted for 50 percent and 81 percent of the average annual value of livestock and livestock products imports and exports respectively. This trade, in addition to its importance, offers peculiarities worth examining.

a) The live sheep trade

In 1998, Syria exported more than 685 000 sheep mainly to the Gulf States (Table 9.14) in a trade which has grown from less than 200 000 head in 1985 to become the livestock sector’s major foreign exchange earner. The Awassi sheep breed command a premium in the Gulf live sheep markets over other sheep breeds sourced from Australia, New Zealand and South Africa. In an attempt to protect Syria’s perceived competitive advantage in the supply of Awassi sheep, only males can be exported.

Table 9.14 Destination of live sheep exports, 1998

*The exchange rate applied on these prices is 11.25 SP/US$ whereas the actual rate is 46.
Source: Ministry of Foreign Trade.

In 1986, several Decree No. 10 joint ventures were established to export sheep to the Gulf. This lucrative trade led to sharp export increases by 1989 and to a hike in the local market price of mutton. To prevent further escalation of the domestic price, the “two for one” policy required exporters to import live sheep equivalent to twice the volume of the proposed export shipment, before they were permitted to export Awassi sheep. Imported non-Awassi sheep, whose cif price was much lower than the Awassi fob price, were to be slaughtered within three weeks of arrival into Syria to supply the domestic sheep meat market. The expected benefit was the lowering of the domestic retail price for sheep meat.

While GEM, prior to 1992, imported annually from 500 000 to 1 800 000 sheep mainly through barter trade, the disintegration of the Soviet Union led GEM to stop imports due to its inability to access foreign exchange credit, and the import trade is now entirely in the private sector. The link established by the Government between the numbers of sheep imported and exported led to the development of specialized traders, with importers selling their import documentation to the specialist exporters of Awassi sheep to the Gulf.

The live sheep export trade caters to two major markets, Saudi Arabia and Emirates, with Saudia Arabia the major market. The live sheep export trade has declined sharply in recent years, both in value and volume. One reason is the surge of exports from Iraq, the largest Awassi flock in the region, which considerably depress prices for fat-tailed sheep in the Gulf markets.

The most significant recent reform has been the decision, in 1999, to grant exemptions to the GEM and the Peasant Unions Federation from the “two for one” obligation. Such exemptions were granted to relieve the over-supply of sheep onto the local market due to the very severe drought of 1999. Subsequently, the price of live sheep import documents, which previously traded at about SP100/head, fell to SP50/head, which would be expected to allow Syrian exporters to supply the Gulf market at more competitive prices.

Since the disintegration of the Soviet Union, there has been a growing concern by Syrian authorities on the declining standards of livestock quarantine, disease control and regulation in some of the sheep supplying countries. Consequently, current Syrian quarantine regulations requires that sheep be landed in Syria within fifteen days of issuance of pre-shipment certificate of health in the country of origin (Article 41A). This, however, effectively excludes from the market potential supplier countries such as Australia and New Zealand, who have efficient and effective disease control and quarantine systems, and could supply good quality, disease-free sheep at competitive prices.

The future domestic market for chilled and frozen meat will also pressure the local sheep meat prices. With 80 percent of the local sheep meat market still provided by the national Awassi flock, provision of the remaining 20 percent could be more efficiently procured as chilled meat, thereby also removing a major disease risk to the Syrian livestock industry.

b) International competitiveness issues

Liberalizing trade, particularly lifting import restrictions on livestock products, would have a positive impact on livestock producers. As an example, they pay a considerable premium over global prices for their livestock feed concentrates. Liberalization of the trade in animal feed and lower feed prices would also encourage greater intensification of livestock production, decreasing the grazing pressure on the Al Badia.

Trade, health, hygiene and quarantine requirements elsewhere will prevent Syria from accessing high value markets for the immediate future. Syria’s current international markets for livestock and livestock products are therefore limited to those in the Middle East and western Mediterranean. Syria has a comparatively disease-free livestock industry and produces volumes of mutton, beef, poultry and milk which are large compared to its immediate neighbours (excepting Iraq). The country appears competitive in the export of Awassi sheep to the Gulf countries, but this market is changing as the consumption of chilled and frozen meat increases, and the demand for live sheep decreases. Iraq, the major competitor in the Awassi market, is now able to supply sheep to the Gulf at cheaper prices due to the devalued Iraqi dinar. Australia’s exports in chilled mutton to the Middle East have increased by 30 percent since 1996.

Available data on the live sheep trade is, however, incomplete and inconclusive. Given the importance of this trade to the livestock producers in the Al Badia, the issue warrants further assessment of the impact of the “two for one” rule and the “fifteen days” rule.

Syrian poultry producers claim a competitive advantage in the supply of hatching eggs for both layers and broilers. Consolidating Syria’s poultry meat exports is highly dependent on lowering the transaction costs of imported feeds. Syrian poultry producers also claim a higher productivity in poultry meat over European levels in addition to having lower labour, electricity and transportation overhead costs.

9.7 Livestock support services

The Ministry of Agriculture and Agrarian Reform (MAAR) is responsible for all livestock issues, including production and health, animal development programmes, slaughterhouses, dairy development, as well as statistics, education, research, technology development and extension on livestock related activities. These functions are delivered through a number of institutions and national research centres. Livestock sector education, research and extension are also supported through the Universities of Damascus and Aleppo. The International Centre for Agricultural Research in Dry Areas (ICARDA) at Aleppo, as part of its international responsibilities, conducts livestock sector research in Syria.

a) Public spending in the livestock sector

From 1989 to 1998, the MAAR total annual expenditure increased from just over SP1 billion to 4.4 billion. The share of operational spending going to the livestock sector programmes and activities, excluding allocations to extension and the General Establishments, ranged from 11 to 20 percent over the same period. In 1998, the core livestock sector programmes received SP272 million, or six percent of the operational budget.

MAAR expenditure on the General Establishments of Poultry, Meat, Cattle and Feed rose to over SP164 million during the middle of the decade before declining to SP110 million in 1998 as the Establishment organizations increased their level of cost recovery from their operations. However, MAAR expenditure on the General Establishments with livestock responsibilities accounted for more than 25 percent of the total operational expenditure on livestock related activities (9.15).^[76]

Support to the Livestock General Establishments, whose activities are mostly of a commercial nature such as poultry production, feed production and processing, cattle breeding and dairy production, account more than 50 percent of the budget for livestock development activities (excluding the Al Badia development programmes). Al Badia development is supported through three core programmes which receive more than 50 percent of the total livestock programme budget, although the Al Badia accounts for about 15 percent of the livestock production. Livestock research receives 30 percent of the total MAAR research.

A network of veterinary clinics provides services to the poultry, cattle and sedentary sheep production industries, but no specific services are provided to the transient sheep industry. The supply of animal health services is dominated by the public sector although the private sector has a major input supply role in the poultry industry, and to a much lesser extent in the dairy industry.

Table 9.15 MAAR livestock related expenditure, 1987-1998 (3 year averages in millions SP)

Source: MAAR.

Public extension services comprise 800 Agricultural Extension Units, each covering about 8 000 ha of rainfed or 2 000 ha of irrigated agricultural land. Most of them include livestock oriented engineers. Their main contribution to livestock is through a network of 300 veterinarians and 1 200 veterinarian supervisors, whose major activity is the delivery and supervision of vaccination programmes. Much less emphasis occurs on animal production and management issues.

b) Livestock credit programmes

With negative real interest rates, credit is the single most important conduit for government subsidies to rainfed livestock production. The livestock sector credit has varied between 4 and 7 percent of all medium- and long-term loans in the agricultural sector during the last decade (Table 9.16). Credit is provided for the establishment of livestock enterprises, including the purchase of genetically improved species. Poultry received more than half the value of the total loans to the livestock sector. Loans to individuals for livestock production are provided against collateral of either land or personal belongings such as machinery. Loans to sheep producers, who mostly do not own land, is provided through the cooperative sector, which acts as guarantor for the individual producers.

Table 9.16 ACB loans* to the livestock sector, 1991-1998 (millions SP)^[77]

*All mid term loans except those for stores and barns which are long term.

Source: Agricultural Cooperative Bank.

Other important loans to the livestock sector are short-term for the purchase of feed from the GEF. During the 1998/2000 drought, the major government support to livestock producers was the provision of in-kind loans for feed provided by the ACB. To February 2000, loans totalling SP700 million had been provided to livestock producers for the procurement of livestock feed. Due to the severity of the drought, the government provided a moratorium on loan repayments to ease the financial burden of the impact of the drought on family incomes.

The requirement for collateral, compliance requirements of licensing and administrative procedures limits the ability of many livestock producers to access credit. Despite the detailed loan compliance requirements, a considerable proportion of loans are considered to have been used for alternative purposes.

A substantial informal credit system operates in parallel to the official ACB credit system, ranging from seasonal advances to sheep producers from the sheep cheese makers (Jabbans) to provision of capital funds inter and intra families for agro-processing investments. The cost of ACB credit is well below the “market” rate. For those unable to access it, in most cases the resource-poor, credit is expensive.

c) A new perspective for government livestock services

The role of government in the Syrian livestock services sector must be adapted to market realities. The private sector can efficiently and effectively provide those services classified as private goods or toll goods. In the case of private goods, the user can exclusively appropriate the benefits, and is thus willing to pay the private fees. Examples include clinical services, artificial insemination, and the production and distribution of veterinarian pharmaceuticals. Toll goods are products or services whose supply does not diminish as a result of one person’s use, but access to them can be restricted so that only those who pay for the product or service can enjoy their benefits. An example of a toll good would be a herd milk recording scheme.

Future policies should strengthen the capacity of the Government to manage tasks that remain in the public sector, such as research and most agricultural extension activities. In addition, public responsibility does not necessarily imply public implementation. Some services, such as vaccinations, food inspection and research, can be subcontracted to the private sector for delivery under the Government’s monitoring and regulation.

Experience of other countries has shown that farmers are willing to pay for services that are reliable and effective. For full cost recovery to succeed, the delivery of quality and consistent services must be guaranteed.

9.8 The way ahead

In Syria, livestock production is predominantly a private process, although the Government is involved in the production of poultry meat, eggs and milk through the General Establishments of Poultry and Cattle and in the production of improved breeding stock for the sheep, cattle and poultry industries. Syria has a strong functioning private market system. While the regulation of trade in goods and services is, and will remain, a function of Government, production and trade themselves do not need to, and the market itself should rule prices. Thus the trade in livestock inputs such as feed, fodder and medicine should become an entirely private sector process.

Production and investment in the livestock sector respond to market prices and incentives. In this respect, many factors critical to the development of the sector fall outside the sector itself. Broader issues, such as exchange rate arrangements, banking (licensing laws, unofficial sector), property rights (land and water, tenure, foreign investment), general protection policy issues (imports banned or subject to license) and administrative issues (official and real duty on imports and unofficial cross border trade) impact on the livestock sector.

However, the efficient functioning of the private livestock production and trading system will depend upon both the development of a legal/regulatory framework that facilitates market operations and the level and quality of technical services or inputs which impact upon livestock productivity. In the long term, for example, animal health and management will be a far more critical determinant of the evolution of the size and composition of the national herd and flock than any price and support programmes and, possibly, any subsidized credit schemes. A significant improvement in the utilization of feed and feed products, whether domestically produced or imported, offers the possibility of accelerated sectoral development without major infusions of capital from outside the sector.

Government technical services should, to the extent possible, respond to effective demand, and users should support their cost, in considerations that private benefits should be privately financed; that the public cost-bearing capacity is ultimately limited; and that market procurement of services maximizes relevance to user needs. As a consequence, a three-pronged “partnership” approach to service supply would involve the livestock producing community, private input suppliers and traders, and the public sector supply of public good services. Government assistance should be focused not on animals, but on people. Within the category of livestock producers, the focus of Government support and assistance is most needed for those livestock producing families with the least resources in terms of livestock numbers, land and other capital assets, while the current practice provides support according to numbers of sheep and land owned by an individual. The primary interfaces of smaller livestock producers with Government services are the extension services, animal health services and the cooperatives. Effective supply of assistance in livestock production will very much depend upon exploitation of these primary interfaces and, in the case of the existing cooperatives, developing new mechanisms.