11.6 Who will produce the future marketed surpluses of agricultural products in Syria?

Agricultural strategy and policies must be aimed ultimately at producers. This is consistent with the Government of Syria concern about agricultural production growth as well as adequate income for the many rural stakeholders. The policy of area control, coupled with the system of input and credit subsidization via licensing and monopolistic public procurement, have assured in the past that many smaller farmers were eligible for short term production loans, and producer price subsidies could reach the smaller producers. However, the evidence presented in other parts of this volume suggests that over time, with the weakening of the system of area control, there has been a significant decline in the number of loan recipients from the ACB, coupled with an increase in the average size of loans. Accordingly, over time there are fewer loan recipients and the average loan of ACB is becoming larger. These developments must be judged against the facts that both the total number of farms has increased over time, and the average size of farms has decreased. Also the allocation of subsidies, which is tied to the amount of area planted and area irrigated, seems to be highly regressive, with the larger producers receiving the bulk of the subsidies. All this suggests that the current system has benefited a smaller number of larger farmers, and this is contrary to the Government policy of redistributing income and benefits to the rural poor.

It is interesting and important in this context to inquire as to who are the major producers of marketed agricultural surplus in Syria, and who are the producers likely to increase marketed production in the future. It is clear, that while small producers might be able to obtain some income from farming, their production may not be more than enough to satisfy domestic consumption needs. In other words, one would expect that small producers would sell a smaller share of their output, compared to the large ones, in order to satisfy home consumption needs. This is indeed verified by the results of the farm household survey. According to the results indicated in table 11.20, among farms of size less than 1 ha, the share of wheat output that is sold is zero; all the wheat produced by these small farms is consumed by the households. Hence, no matter how high the wheat price is, these farms cannot benefit because they do not sell any product. The share of wheat produced that is sold for farms of the next size class, namely those with area between 1 and 5 ha is 0.58. The shares of the next three size classes, namely 5-20 ha, 20-50 ha, and above 50 ha, are respectively 0.77, 0.85, and 0.98. In other words, the larger farms market the bulk of their product, and produce the largest amount of marketed wheat production. Consequently, they obtain the largest benefits from supported prices. The same type of result obtains for most other food products, as was seen earlier for cotton.

One could expect that larger farmers who produce large amounts of food products would be able to satisfy larger shares of their home consumption requirements from their own production. Table 11.22, however, does not support this hypothesis. The table shows that except for few products such as poultry meat, fruits, and vegetables, the households with smaller farms satisfy a larger share of their home consumption for most other products from products produced on their own farm.

This suggests that the small farms in Syria are not the main suppliers of several strategic products to the market, and that the bulk of marketed production comes from medium and larger farms. However, as seen earlier, the number of small farms has increased over time and they produce mostly for home consumption, at least as far as strategic products like wheat are concerned. This does not apply to fruits and vegetables, for which Syria has a comparative advantage. The bulk of marketed production for products such as fruits and vegetables seems to come from small farmers, while the bulk of wheat and (as was seen earlier) cotton production comes from larger farmers. Accordingly, in order to support the incomes of smaller farm households, policies should concentrate on intensifying and increasing the value of products such as fruits and vegetables in which Syria has comparative advantage, and which are produced and marketed by smaller farms.

Table 11.22 Household consumption of major foods produced on the household farm (%)

Source: Farm household survey 2001.

On the other hand, the medium and larger farmers are those who are likely to produce the bulk of marketed surplus of agricultural products in Syria in the future. These farmers are largely commercial, selling large shares of their output. The strategy towards these farmers should not be one simply of income support. Income support for these farmers has the tendency to increase their overall farm profits, without increasing efficiency, and tends to make them more capital intensive. Evidence for higher capital intensity among larger farmers was exhibited in section four above, and a hypothesis is that this tendency has been the result of the specific products support policies followed in the past. The approach towards these operators should aim at making them efficient in their use of resources, technologically advanced, environmentally sustainable, and internationally competitive. It is only in these terms that these farmers can contribute in the overall growth of Syria, and not drain financial and other resources from other sectors of the economy.