INTRODUCTION

Of the Mediterranean countries so close to Europe, the Syrian Arab Republic is among the least well known to foreigners. Everyone has heard about the historical towns of Damascus and Aleppo - the most ancient continuously inhabited urban settlements in the world - and about the splendours of Palmyra; but the economy of the country, and particularly its agricultural sector, has drawn little interest from scholars and the business community. The country has fared for decades under a state-controlled central planning system, within which a cautiously managed process of reform, engaged since late ‘80s, has substantially accelerated over recent years. This book presents a set of investigations which depict and analyse the main features of the agricultural sector and economic policies in a country faced with the opportunities and challenges associated with the transition towards a more market-oriented and internationally integrated economy. Headlines from many places around the world witness day after day how critical such a process can be, and the widespread interest of serious information in this respect.

A brief presentation of Syrian agriculture and the reform process under way

The Syrian Arab Republic lies on the eastern coast of the Mediterranean Sea, between Turkey and Lebanon, stretching eastward towards Iraq and Jordan. Of its total area (18.5 million ha) one-third is arable land or forest. The remainder consists mainly of steppe (Al Badia) or rocky areas. The Mediterranean climate, rainy winters and dry, hot summers separated by two short transitional seasons, prevails in the Syrian Arab Republic.

The Syrian Arab Republic compares in land size with Tunisia, Senegal, Uruguay or Cambodia, and in population (16.7 million) with much smaller Netherlands or much larger Chile or Madagascar. Syrian resident population increases by 0.4 million per year, a still high rate of 2.45 percent, despite the long term deceleration. Demographic growth imposes a heavy pressure on the economy and its natural resource base. Population is evenly distributed between urban and rural areas, making almost half of it depend mainly on agricultural and related activities. Indeed, agriculture is the main source of employment for the Syrian labour force. Agricultural land (arable land and permanent crops) account for about one-third of the total land area, a proportion similar to Tunisia, slightly above Greece and slightly below Bulgaria, while the rural density of population (1.15 rural inhabitant per ha of agricultural land) compares with those of Greece or Morocco.

Figure 1 - Population and land size: comparisons with the Syrian Arab Republic

Source: FAOSTAT

With a GNP per caput of 940^[2] US$, the Syrian Arab Republic features among the lower-middle income countries, such as Sri Lanka, Yugoslavia, the Philippines or Morocco, but ensures its population a high level of food availability (3 330^[3] cal/cap/day), which parallels those of rich countries like Switzerland or the Netherlands. Total per capita expenditure in 1996-1997 was Syrian pound (SP) 2 095 per month, 13 percent higher in urban than rural areas, of which 60 percent (both in urban and rural areas) is devoted to food.

The Syrian diet consists predominantly of cereals, particularly bread, with an average consumption per person per month of 12.9 and 15.8 Kg in urban and rural areas respectively. Significant is the consumption of fruit and vegetables, particularly tomato (around 4 Kg per person per month) and citrus (1.3 and 0.8 Kg in urban and in rural areas respectively). Mutton is the main meat item consumed in urban areas (0.6 kg against 0.3 Kg in rural areas), while chicken dominates in rural areas (0.9 kg against 0.7 Kg in urban areas). More broadly, the diet seems more varied in the towns, with lower intakes of bread, chicken, tomato and potatoes, and higher intakes for mutton, eggs, cheese and fruits, while higher consumption of oils and fats characterizes the rural population. With an average inflation rate of 8.3 percent over the period 1990-2000 (much higher in the first part of the decade, increasing from 9 to 17 percent from 1991 to 1994, and decreasing thereafter to -1 percent in 2000), the average growth of food prices was significantly lower, at an average 5.9 percent per year over the same period.

Figure 2 - Income and Nutrition: Comparisons with the Syrian Arab Republic

Agriculture, together with the oil sector, remains the driving force of the national economy. During recent years, its contribution to gross domestic product (GDP) fluctuated around 30 percent, similar to its contribution to employment. This simple evidence highlights important features of the Syrian pattern of economic development, which though sustained - GDP growth over the 1990s has been reasonably high at 4 percent per year on average - has departed strongly from the structural changes prevailing under market forces. On the one side, the comparability of agriculture's contributions to GDP and employment suggests a rural orientation of government policies. Agriculture indeed was supported in such a way as to achieve comparable incomes with other sectors. On the other side, the persistently high contribution to GDP demonstrates that agricultural growth is not yet outperformed by other sectors, a result of both the slow developments of the latter (particularly the services sector) and the good progress in agricultural production, stimulated by domestic support, public investments and protection from international competition.

Figure 3 - Agriculture Share of National Employment and GDP: Comparisons with the Syrian Arab Republic

Source: World Bank, 2000 and FAOSTAT, 2000

The external trade of Syria depends moderately on agriculture. During 1998-2000, the shares of agriculture in total exports and imports tended to equalize, reaching respectively 20.7 percent and 21 percent. Of the countries shown below, which have a similar weight of agriculture in the economy, the Syrian Arab Republic is among the few that show a lesser weight of agriculture in total exports and imports than in total GDP. This is mainly due to the important weight of mineral oil in Syrian exports. Indeed, agricultural exports count for about 50 percent of non-oil exports.

Figure 4 - Agriculture Share of GDP and Total Trade: Comparisons with the Syrian Arab Republic

Geographically, the Syrian Arab Republic can be divided into four main regions. The Coastal region runs north-south along the Mediterranean coast, between the mountains and the sea, and is characterized by heavy rainfall in the winter and moderate temperature and high relative humidity in the summer. The Mountainous region includes mountains and hills that run north-south along the Mediterranean Sea, with rainy winters (rainfall level may exceed 1 000 mm) and moderate climate in the summer. The Interior region, including the plains of Damascus, Homs, Hama, Aleppo, Al Hassakeh, and Daraa is located to the east of the mountainous region, and is characterized by rainy winters and hot and dry summers, accompanied by large differences between daily maximum and minimum temperatures. Al Badia, which consists of semi-desert plains, is located in the south-eastern part of the country along the Jordanian and Iraqi borders. It is characterized by low levels of rainfall in the winter and hot dry summers.

The Syrian Arab Republic has limited water resources. The average annual availability of water is estimated to be 66.9 billion cubic meters. Rainfall, the main water source, amounts to 45 billion m³ annually, 68 percent of the total, but most of it evaporates or descends into the aquifers (only 9 percent of the rainfall flows as surface water). Other sources are rivers (23 percent), springs (6 percent), and underground water (3 percent). The Euphrates, running through the Syrian Arab Republic for 680 km with an average flow of 1 037 m³/sec, and its tributary the Al Khabour (552 km, average flow of 22.4 m³/sec.) are the two largest rivers. The total amount of water available for irrigation is 22.5 million m³, including surface, springs, and underground water.

Out of the total country area (18.5 million ha), steppe and pastures account for more than 45 percent, forest for only 3 percent while almost 20 percent of the country’s total area is unproductive (towns, roads, industrial areas, and wide desert extensions). The remaining 32 percent, almost 6 million ha, are classified as cultivable. Of this 0.6 million ha were not cultivated, 0.8 left fallow, and the rest actively cultivated as irrigated (1.2 million ha) and rainfed land (3.3 million ha). The very limited forest area covers about 0.5 million ha, with natural forests over 0.23 million ha and the rest man-made.^[4]

The Syrian coast extends over 183 km and the continental shelf covers 1 373 square miles. Fish stock, estimated at 0.9 t/mile², is low compared to other countries. The Syrian Arab Republic is therefore relatively poor in fish production, also due to the limited extension of lakes and internal rivers. Accordingly, the role of fish in the traditional Syrian diet is minor, with per-capita consumption estimated to be less than 1 kg/year.

Over the period 1995-2000, agricultural production increased by 24 percent in constant 1995 prices. The growth was somehow faster for animal (+27.5 percent) than for plant products (+23.1 percent). The irrigated wheat area increased dramatically from less than 0.3 million ha in 1990 to 0.7 in 2000 (+153 percent), as well as that under industrial crops, from 0.2 million ha in 1990 to 0.3 in 2000 (+49 percent). Combining irrigated and rainfed agriculture, cultivated area expanded for wheat (+25 percent), industrial crops (+50 percent), legumes (+10 percent), and fruit (+6.5 percent) and contracted for feed crops (-49 percent) and vegetables (-29 percent). Significant improvements in yield of many irrigated and rainfed crops have been registered over the last decade as the effect of improved seeds, increased and improved water use, and improvement in extension and research services. In animal production, the trend was positive for all types except sheep milk and goat meat. Over the decade, cow milk production increased by 50 percent and meat output by almost 46 percent. Sheep meat production increased even more (62 percent). Very positive results have been achieved also by the poultry sector for both eggs and meat.

Syrian food industry is composed of State-controlled enterprises, private sector, and joint-venture companies. In the 1970s, the Syrian Government encouraged domestic agriculture and the food industry to cover the increased demand for food. The main public firms are processing sugar, oil, milk, jams, and beverages. Despite their generally limited size and recent establishment, private food companies are very active in the export market; they have a dominant position in industries like dairy products, olive oil, vegetable oil, processed fruits and vegetables, and sweets.

Syrian economy has been operating under a system of centralized planning for the last four decades. However, this persistent element of the broad policy orientation has been accompanied by gradual but substantial transformations of the policy setting in response to the evolution of the socio-economic environment. An early example of this dynamic is the reform process (infitah) undertaken in the early 1970s with the aim of allowing private sector participation in the state-led growth pursued within the import substitution industrialization initiated during the previous decade. During the 1980s, when this model was put in disarray by repeated surges of external and fiscal unbalances, a set of measures that can be characterized as a “home made” structural adjustment and stabilization program was adopted. Reduction of subsidies on consumption goods and inputs; tightened public company access to foreign currency by linking import to export; reduced expansion of public employment and services; and further economic liberalization through laws promoting joint ventures and private investments. These measures resulted in a de facto strategic re-orientation of the development approach toward a state-led export promotion centered on oil and agricultural sectors, and accompanied by both the recognition of wider space for the private sector initiative and a relaxation of the planning mechanism. Indeed, while the earlier five-year plans were formally issued, later, starting from the sixth one (1986-1990), the plans have gradually shifted toward an indicative status. A new stage of economic reforms has started in recent years in response to the economic slow down of late 1990s, with the aim of enhancing the business environment and the ability to attract foreign investments, modernizing the public administration, and promoting competitiveness on the international market in such a way as to accelerate growth of income and employment. Part of this process are the reforms of the exchange rate regime and currency use regulation, the simplification of the tariff system, the enhancement of investment promotion, the new legislation to promote small-scale investments and employment, the reform of the banking system allowing the creation of private banks, as well as the proactive stand in the negotiation of an association agreement with the European Union (EU) and the application for membership in the World Trade Organization (WTO).

Throughout these decades, agriculture and rural welfare remained a central concern for Syrian economic policy makers, even though the specific objectives and instruments of sectoral policies have substantially evolved. The traditional focus on agrarian reform and large-scale public investments accompanied by rigid production planning, public price fixation and state procurement, has been gradually, but consistently shifting on promoting the role of farmers and other private agents in marketing and processing. The turning point can be identified in the second half of the 1980s, when the large-scale investment launched during the previous decades, especially in irrigation and land reclamation, started entering production. The consequent enlargement of the production base coincided with a turning point in agricultural policies in line with the changing orientation of broader economic policies. From the late 1980s to mid 1990s, gradual phasing out of agricultural input subsidies was accompanied by a substantial increase in prices for main crops, and the gradual relaxation of agricultural planning. Annual agricultural plans have been prepared adopting a more participatory and decentralized approach, while enforcement increasingly relied on economic incentives. In this way, while the State retained a central role in the direct coordination of resource allocation, space was gradually opened for private activities in production and trade. As a result, the traditional objectives of agricultural policies, directed at full utilization of natural and human resources and securing adequate supplies for food security, processing industries and exports, have been gradually evolving over the last decade and, particularly, the last few years, as follows: gradually shifting from strict self-sufficiency to a broader objective of self reliance; recognizing the critical role of marketing and processing for competing at the international level; and increasing concern for the environmental constraints, especially the necessity to preserve and use efficiently the scarce natural resource including land and, above all, water.

In the future Syrian agriculture will face several challenges as result of domestic factors, population growth, greater urbanization, new food habits, and external factors associated with a greater opening to the outside economy. These will require that Syrian farmers improve quantity and quality of their produce, while coping with emerging shortage of water and declining quality of soils and grazing land. Farmers’ revenues are also at risk, due to the limited size of most farms and growing competition from import that will also challenge domestic agro-industry. These call for a higher degree of flexibility in resource allocation at the farmers and sectoral levels, which, in turn, requires enhanced ability to adapt institutions and policy making to the changing scenarios. At this crossroads of Syrian's agriculture history, the analysis of risks, opportunities and policies in meeting these challenges, while preserving the social achievements inherited from the past, is the subject of the papers assembled in the present volume.

Sketch of the contents of the book

The papers in this book have been elaborated by authors who contributed between 1999 and 2001 to an FAO-Italy technical assistance project^[5] supporting the establishment of a National Agricultural Policy Center (NAPC) in the Ministry of Agriculture and Agrarian Reform (MAAR). The papers are presented under three main parts dealing respectively with: i) the agricultural sector in the Syrian economy; ii) the economics of the major sub-sectors in Syrian agriculture; iii) the structural and institutional features of inputs markets and production factors for Syrian agriculture.

The five chapters in Part One of the book illustrate the conditions and contributions of the agriculture sector in the national economy, i.e. the macroeconomic environment of agriculture; the sector's external trade and impact of trade agreements; the situation and prospects for private investment in agriculture; the fiscal flows and financial transfers resulting from applied policies; and selected important environmental issues for agriculture.

The analysis of the macroeconomic context for agriculture is presented by Alexander Sarris^[6]. The Syrian Arab Republic has experienced since the 1960s a fairly high rate of growth (4.6 percent per year between the end points 1963 and 1999), which however did not exceed much the population growth rate (3.3 percent per year) over the same period. Agricultural GDP grew slightly less, remaining by the late 1990s at the same level, per capita, as in the early 1980s. Nevertheless, agriculture remains a major sector of the Syrian economy: nearly 30 percent of the GDP, a share which has kept stable despite the overall growth in the economy. The dominant factor of change in the macroeconomic context has been the steady evolution of the planning system towards greater openness and flexibility, with particularly important consequences through an exchange rate regime becoming simpler and closer to market conditions, and a greater opening to private initiatives and foreign economic relations, thus paving the way for an easier adaptation of the Syrian economy and agriculture to the fast evolving domestic and international context.

The extensive degree of state control on foreign trade has served considerably to ensure protection of the agricultural sector. Syrian agricultural trade is modest compared to the size of the sector, showing a clear preference for self-sufficiency; this is not a pattern that can be abandoned easily, especially since competitiveness had not been a priority in past policies. Yet the Syrian Arab Republic has decided to move outward and to seek WTO accession. Negotiations are under way for an association agreement with the EU. J.M. Alvarez-Coque^[7] explores the opportunities and challenges of such an agreement. Although the country has important relations with neighbouring countries and concluded a set of bilateral or regional (Arab Free Trade Area) trade agreements, the EU is a significant partner for Syrian agricultural trade (13 percent of Syrian exports, 27 percent of imports) and the issues raised by the perspective of a greater opening to economic relations with Europe - generally a major partner for Mediterranean countries - are well illustrative of the type of problems that trade liberalisation presents to countries engaging towards liberalisation and of the potential positive and negative impacts of opening to globalisation.

The issue of investment is tightly linked to that of trade. Hector Maletta^[8], noting that sustained economic growth requires a new impetus for investment - for instance in agriculture irrigation and agribusiness - analyses the policies followed and conditions for private investment development. After a period of nearly total state control, policies in the 1990s have encouraged private investment, notably in agriculture, industry and trade. Two-hundred and fifty (250) projects have been implemented in the agri-food sector, generating growth and balance of payment benefits, and to a lesser extent employment and income gains. But procedures for business and trade remain complicated and uncertain. Joint ventures have been largely confined to the hotel sector. In a still rigid system, on its way to becoming gradually friendlier, private investment has been largely dependent on the short-term incentives given by the Investment Law, rather than on the long-term expectations which a stable set of rules-of-the-game would create. The legislative framework and the business related practices, therefore, need to be more profoundly adapted for investment in the Syrian Arab Republic to become a credible avenue for private capital - domestic or foreign.

Under a system of central planning and widespread public interventions, the balance of their impact on agriculture is complex. Peter Wehrheim^[9] explores the resulting picture of economic transfers between agriculture and the rest of the economy in the 1990s, and how it has evolved in the course of the process of reforms under way. The analysis considers exchange rates policies, market price support, inputs, credit and consumers subsidies. Overall, the total net support to agriculture is estimated to have moved from 30 percent of the gross agricultural output at the beginning of the decade, to some 10 percent by the end, showing a significant impact of the reforms. Within a sector that generally has been protected, distortions have led, as is frequently the case in controlled economies, to protection in favour of less competitive products, while those with comparative advantage are taxed and cannot reap their full potential. Particularly detrimental to sustainability, insufficient water saving incentives lead to extensive waste of a precious resource.

Although water is indeed a critical environmental issue in Syria, it is not the only one. Gareth Edwards-Jones^[10] analyses the other main challenge to sustainability of the sector: soil conservation and management, exemplified by the degradation of the Syrian steppe (“al Badia,” comprising 55 percent of the land mass of the country). The worrying situation in the Badia steppe, with less than 200 mm rainfall, is the result of compounding pressures, dominated by the widespread overgrazing (the number of sheep has been multiplied five times since 1950) and amplified by certain support policies: wells and subsidised feed, to combat the consequences of frequent droughts, and restrictions on sheep exports (to preserve the precious Syrian Awassi breed) lead to over-exploitation of the vegetal resource by flocks too large in number and grazing too long. Restoring collective responsibility by users over their resource is a condition for sustainable range management, even more so since the state's withdrawal from certain functions may facilitate the spread of unsustainable behaviours.

Part Two of the book examines the economics of the main sub-sectors in agriculture. The five chapters deal respectively with the Syrian “strategic crops,” which remain subject to government planning (although more flexibility is being introduced), and with other important sub-sectors (Olive and Olive oil, Citrus, and Livestock). The remaining chapter examines the processing and marketing activities, with particular attention to the dairy and horticulture sub-sectors.

The first chapter, by Michael Westlake^[11], analyses the so-called “strategic crops” for which the Government continues to set producer prices and generally runs the related processing and marketing. Wheat and cotton are by far the most important of these crops in terms of farm-gate value, employment and the use of irrigation water. Cotton, tobacco, lentils and chickpeas generate net exports; sugar is a net imported crop; wheat production is normally in balance with domestic consumption, while barley generated mostly a net export surplus in the 1990s, but for the recent drought years. Only lentils and chickpeas are farmed under profitable conditions at international parity prices; all other crops would be unprofitable at normal levels of yield, were it not for the high degree of price support provided. High domestic prices are also handicapping the transformation of the product, such as in the cotton industry. The strategic crops sub-sector generates high costs (the cumulative loss of the public organisations in this sector amount to some 4.5 percent of GDP) but would be severely resized for protected crops (wheat, cotton, sugar beet, tobacco) if government planning would be released. Control of the cropped areas is also used to check irrigation water consumption in the absence of a charge for water use. Reform of this sector therefore represents a major challenge both for public finance, and for employment and income in rural areas, as well as for the pursuit of the food security and environmental objectives of the Syrian Arab Republic.

Ivan Malevolti^[12], in the following chapter, observes that the Syrian Olive Oil sector has been developing over the past decade a steadily growing structural surplus, with the fast growth of production (+76 percent in ten years) far outpacing the growth in domestic demand (+ 28 percent). Handling of this surplus obviously points to an aggressive export policy, and the study carefully analyses the international markets for olive oil, which the Syrian Arab Republic would face for this purpose. Olive and olive oil production and marketing in the Syrian Arab Republic call for a host of improvements in the sector's structure and performance: prevailing domestic prices are above international prices; quality indicators along the field-to-market commodity chain reveal a number of weaknesses, not the least of which are inadequate norms and standards; the sector's operation is distributed among a large number of small-scale actors; and experience in the export business is basically lacking. The prospects for an exports marketing board for olive and olive oil are carefully analysed, as a potentially adequate instrument for managing the transition towards the needed opening to external markets.

M. Westlake^[13] next analyses the citrus sector, which is contributing 20 percent to the export proceeds of fruits and vegetables in the Syrian Arab Republic. On irrigated schemes especially, natural conditions give great potential for expansion of citrus production, which is currently concentrated in the coastal region of the Syrian Arab Republic. But the downward trend in citrus domestic prices, principally determined by the confrontation of domestic supply and demand, gives rise to concern about a production surplus. A profitable development of the sector depends upon efficiency improvements all along the commodity chain - export efficiency to improve proceeds from this business; processing and marketing efficiency to transmit better prices to the producers; and citrus farming efficiency. A critical role for Government rests in fostering better grading, preparation and packaging norms and practices as a condition for successful entry into the most promising markets.

The following chapter^[14], a résumé by Jacques Vercueil from a study by Gary Cummins, discusses the important growth potential of the livestock sector, which already accounts for 15 percent of the value of agricultural exports, and 11 percent of the total labour force in the Syrian Arab Republic. While livestock is a major consumer of crop products for feed, agricultural policies have consistently favoured the crop sector. The paper discusses the new support approach, which is required to account for the complex relationship between the livestock and crops sub-sectors, in the context of environmental sustainability, which is particularly threatened in the dry areas. Cattle and dairy production compete directly with crops for land and water. Sheep production, in contrast, occurs predominantly in areas where crops and cattle are not viable. However, cropping also encroaches upon pastoral lands, and as sheep numbers augment, competition with other animal products takes place for crop residues and concentrates. The relevant upstream and downstream activities for feed and fodder supply, animal products marketing and processing, trade and support services are also examined.

Daniele Rama^[15] comprehensively studies the marketing and processing system for Syrian agriculture, with special attention to the non-”strategic” sub-sectors. The low degree of outward orientation of the country is manifested in: the narrow geographical diversification of export markets, mostly directed to neighbouring countries; in the prevalence of one-way commodity trade flows; and in the use of production expansion as the main instrument for export development. In analysing the pre-marketing conditions for the development of an efficient supply chain, the demographic and consumption patterns, and technological developments in agriculture, the paper discusses foreign trade and international agreements, alongside the Government's agricultural planning and price regulation system and its investment policy. The many agro-food operators - farmers, cooperatives, agricultural chambers, credit and input suppliers, state and private agricultural and food companies in processing, distribution and trade - are reviewed in relation with their preparedness for a competitive environment; the vertical coordination mechanism is examined in particular detail for the fruit and vegetable (fresh and processed) and dairy sub-sectors. Policy implications are derived with respect to horizontal and vertical organization, provision of services, removal of constraints, prospects for privatisation and improvement of the business environment.

Part Three of the book examines the structural and institutional factors that command the patterns of availability and use or misuse of the production factors and inputs for agriculture production in the Syrian Arab Republic. The five chapters respectively discuss the diversity of agriculture producers in the sector, the land tenure and labour relations in rural Syria, the irrigation water policies, and the inputs and credit supply and distribution systems.

Alexander Sarris and Alessandro Corsi^[16] depict, on the basis of census data complemented with farm-household surveys, the size distribution and labour and capital endowments of agricultural holdings, and analyse their relation with farm income, production, and access to inputs and services. Conclusions are derived with respect to the perspectives of evolution of Syrian farm structures and agriculture production in the context of domestic policy reforms and overall economic change. Despite an intended legalistic policy, existing symptoms of uneven access to factors make the contribution of the rural development policy to reduction of poverty a topic worthy of consideration.

In the next Chapter, Nadia Forni^[17] investigates the multifaceted relationship between people and land in the Syrian Arab Republic, where customary and formal legal systems are co-existing. The state, the ultimate owner of a large part of the country, also has a critical role to play as arbiter in privately owned lands. The population pressure that has been mounting in recent decades calls for better definition of rights and duties; informal conflict resolution at the grassroots level would help resolve issues between legal and de facto, actual and would-be users of land. Another consequence of population growth is the increasing number of landless agricultural households, including numbers without fixed employment. Most agricultural wage labourers are females, men resorting more easily to foreign labour markets commanding better wages.While traditional labour organisations are efficient, enrolment is partial only, and unregistered workers are more vulnerable to economic change. Development of rural off-farm employment will be a necessary complement of agricultural policy reform to ensure the lasting viability of the rural economy.

Water, even more than land, tends to become the critical production factor in many regions of the world, and has reached this stage in the Syrian Arab Republic already. Consuelo Varela-Ortega and Juan Antonio Sagardoy^[18] show that water scarcity in the Syrian Arab Republic is an increasingly serious concern for public authorities, as future demand for water will surpass available resources. The need to increase water use efficiency in agriculture is at the centre of the nation's water policy discussions. Irrigation expansion has mounted over the past decades to comply with the food security objectives and food production needs. At present, water policies combine the expansion of irrigation with the attainment of a sustainable use of water by increasing technical efficiency: modern irrigation technologies at farm level benefit from considerable government support. In this context, the study analyses irrigation and water policies in Syrian agriculture at the national and basin's level and at the farm level. Simulations of several scenarios permit short- and long-term analyses of different policy alternatives for conserving water resources. Results show that sustainability will be reached in the medium term only if irrigation modernisation is coupled with a limited and selective expansion of irrigated areas. Demand management and the introduction of incentives, such as water-crop quotas or tariffs, will be necessary to attain water conservation objectives.

Agricultural inputs and credit are marked by very extensive government interventions, analysed in the two successive papers by N.S. Parthasarathy, based on investigations which involved all types of stakeholders at different levels in the sector.

In the context of agricultural inputs^[19], the reform process comprised as particularly relevant factors of change the unification of exchange rates, private sector entry into certain areas of agricultural procurement, reduced rigidities in crop planning, removal of explicit subsidies, and relating price fixation to costs of production. Fertilizers are produced (60 percent) or imported by public companies, with private agents active only at the retail level, under a system of crop licensing that commands access to, and credit for, fertilizers. Seeds also are mainly produced by government agencies for the strategic crops (centralised production seems to lead to under-utilisation of the production capacity), while private dealers import and distribute reproductive material for the rest of the sector; a seed law would become necessary as private agents gain a greater stake in the business. In contrast, the authorized entry of private agents in the market of agricultural chemicals has led to a steady growth of this sector, although quality enforcement at field level is considered weak by private operators. The extension system, entirely public, has played an important role in the modernisation of Syrian agriculture, but the private sector's contribution to technological information for farmers will need to be addressed as part of the reform process, as shown by the example of chemicals. Overall, implicit subsidies to the input sector can be analysed as beneficial for three-quarters to the producers, and one-fourth to the supplying sector.

To an even greater extent, the financial sector^[20] is entirely run by public entities. The system is marked by strict segmentation, each of the five specialized banks (for agriculture, industry, commerce etc., all under the aegis of the Central Bank of the Syrian Arab Republic) having lending domains and administratively eligible clients. The result is a fairly rigid system, with a strong dependency on subsidization compensating for one-fourth for lowered interests and for three-quarters for high transaction costs. It is noticeable that credit users aspire to better service and access rather than lower credit costs. On the other hand, savings mobilisation is under-exploited, banks wanting the freedom to develop their own savings mobilisation strategy. In the up- and downstream sectors, the low rate of funding on approved investments, and the importance of high cost private funding, illustrate the poor impact of such policy on the modernization and competitiveness of the Syrian productive sector. In agriculture, a small part only of credit is used for medium- and long-term, preventing a sufficient rate of progress in technology and modernisation. As a result, priority areas for investment in the agriculture strategy are not particularly sustained. The paper exposes the benefits to be expected from further reform in this sector, and discusses the way in which a smooth transition with minimum social costs can be implemented so as to make agriculture and its up- and down-stream sectors benefit from the indispensable finance dynamics needed for its successful progress.

Overall, the papers show that the margin of progress embodied in the removal of the residual constraints inherited from the past pattern of policies is considerable, and holds great promises for a successful adaptation of Syrian agriculture to a more open and competitive environment. The reform process undertaken more than a decade ago has been conducted cautiously with a clear concern to avoid the economic and social disruptions that have, in many other countries, caused great losses and suffering. Yet a delicate balance needs to be found in the pursuit of the reform, between the preservation of some remarkable achievements of the past, and the necessity to provide producers and investors in the agriculture and related sectors with the degree of freedom needed to achieve the dynamic transformations of the production, transformation and marketing of agricultural produce called for by the fast evolving domestic and international environment. “... the appropriate role of the state in agricultural development is an empirical question which requires sophisticated policy analysis to determine in each particular setting. Every country is different ...” and “... market failures and government failures are empirical issues that depend on local circumstances... “.^[21]