Reference Date: 31-October-2022

Planting of 2023 winter cereal crops to start shortly

Planting of the 2023 winter cereal crops, the largest share of which is wheat in Beqaa Valley, will take place between late October and early December after seasonal rainfall replenishes soil moisture.

Harvesting of the 2022 winter cereal crops was completed in July. Although the season was marked by an uneven temporal distribution of rainfall, weather conditions were generally favourable for crop development. However, low application of inputs due to their high prices constrained yields.

Domestic cereal production is confined by landscape and climatic conditions. Total 2022 cereal production is estimated at about 134 000 tonnes, about 10 percent below the five‑year average and similar to the 2020 and 2021 harvests that were already affected by the economic crisis.

Crisis continues to impede economy, including agricultural sector

Farmers, like the rest of the economy, continue to cope with the impacts of protracted financial and economic crisis. Seeds, fuel, fertilizers, plant protection materials, feed and other agricultural inputs are available on markets in relatively adequate quantities similar to the previous three seasons that were already hampered by the ongoing crisis. However, access to agricultural inputs, most of which are imported, continue to be constrained by their high prices. Small and medium sized farmers relying only on farming income, without any supplementary off‑farm income, have been particularly affected by the high prices of inputs, particularly more expensive imported ones resulting in reduced input application, or substituting with locally produced inputs of lower quality, leading to lower marketable production and incomes.

Most farmers lack liquidity. Seasonal credit provided to farmers by input importers and sellers, has not been available since October 2019. Up to 2021, an arrangement between the government and the Banque du Liban (BdL) allowed traders of raw materials, including feed and agricultural inputs, to finance imports using a subsidized exchange rate of LBP 3 900/USD, although the allocation often experienced delays. Since October 2019, input traders require payments in cash on hard currency, or converted into Lebanese pounds using a parallel exchange rate, at which they purchase United States dollars to cover the cost of fresh imports. Since the second half of 2021, sharp increases of international prices of fertilizers denominated in United States dollars have been magnified by currency devaluation.

Although fuel is available, it often remains out of reach, particularly following the withdrawal of subsidized foreign exchange. Agricultural operations do not appear to have suffered significantly as mechanization is often substituted by labour due to lack of employment opportunities elsewhere. However, marketing of agricultural production, particularly of perishable fruits and vegetables, appears to have moved closer to farms, yielding lower prices than more lucrative, but more distant, urban markets. While most of the imported agricultural inputs are paid in United States dollars, sales of agricultural products remain denominated in Lebanese pounds, with ongoing currency depreciation erasing any gains. Limited purchasing power of the population has capped the increases of retail prices.

The FAO/Data in Emergency Monitoring (DIEM) survey of agricultural households carried out in July and August 2022, indicated that over 80 percent of the crop producers faced some production difficulties, with the most frequent being access to fertilizers (72 percent), pesticides (59 percent) and labour (43 percent). High food and fuel prices were the most common shocks cited (90 percent and 87 percent, respectively) by surveyed households, a significantly higher share than reported in previous rounds conducted in late 2021 and April 2022.

Slightly below‑average cereal import requirement forecast

Domestic cereal production covers, on average, less than 20 percent of the consumption needs and the country relies heavily on imports. In the 2022/23 marketing year (July/June), the cereal import requirements, mainly common wheat for human consumption and maize to feed livestock and poultry, are forecast at 1.9 million tonnes, about 10 percent below average.

Wheat has traditionally been sourced mostly from the Black Sea Region to take advantage of geographical proximity. During the past four years, average wheat imports from Ukraine and the Russian Federation were about 55 and 30 percent, respectively, of the total imports. Combined with macroeconomic challenges and lack of sufficient storage capacity following the explosion in August 2020 in Beirut that destroyed the main silo, disruptions to global export flows related to the war in Ukraine and related global price increases led to a rapid decline of the already meagre in‑country stocks. At the end of March 2022, the in‑country stocks of wheat were sufficient to cover not more than one month of consumption needs. Lack of storage capacity requires smaller shipments, which are comparatively more expensive to ship.

At the end of July 2022, the Parliament approved a loan agreement with the World Bank worth USD 150 million to finance immediate wheat imports to avoid the disruption in supply over the short‑term and to provide affordable bread for poor and vulnerable households, including displaced population and refugees in the country.

Food insecurity not improving as economic challenges persist

In August 2022, the year‑on‑year general inflation rate exceeded 160 percent, a decline from the peak of 240 percent recorded in January 2022, the highest level ever recorded in the country. Similarly, the food price inflation recorded an annual increase of almost 200 percent, below the 483 percent from January 2022, but still unsustainably high and eroding purchasing power across all segments of population, with particularly detrimental impacts on the most vulnerable. During the summer months (June‑August), shortages of bread and other basic goods fuelled additional discontent.

The Central Bank aims to gradually close the gap between the official exchange rate of LBP 1 507/USD (in place since 1997) and the parallel exchange rate of about LPB 40 000/USD, a new record reached as of mid‑October 2022. The unification of the exchange rates is one of the preconditions to unlock the USD 3 billion worth of financial assistance from the International Monetary Fund (IMF), preliminarily agreed in April 2022. Beginning 1 November 2022, the official exchange rate will shift to LBP 15 000, with initial exceptions of commercial banks’ balance sheets and mortgage loan repayments. The new rate will initially be applied to custom duties on imports and on Value added tax (VAT) on goods priced in United States dollars.

Although financing of the essential imports, wheat, fuel and medicines, at the official exchange rate of LBP 1 507/USD has not been active since 2021, up to early September 2022 importers were able to purchase hard currency at a rate below the market prices at the Central Bank’s Sayfara exchange platform used by commercial banks and foreign exchange dealers.

Removal of the below market exchange rate for fuel imports resulted in dramatic price increases: the price of 20 litres of gasoline (95‑octane) raised from LBP 61 000 in June 2021 to LBP 302 700 in October 2021 and LBP 717 000 in October 2022. The liberalized fuel prices increased transportation costs as well as other costs considering the reliance on generators in the absence of a reliable electricity supply, which is leading to high levels of spoilage in the agrifood chain.

The food security situation did not improve during the first half of 2022, and multiple crises are increasing the numbers of Lebanese in need of support. Based on the World Food Programme’s (WFPs) Consolidated Approach for Reporting Indicators of Food Security (CARI) methodology, over 1.7 million people were estimated to face acute food insecurity at the end of 2021. Between June and December 2021, food insecurity averaged 46 percent, a 14‑percentage point increase compared to January and June. Social safety net programme support, the National Poverty Targeting Programme (NPTP), provides cash modalities assistance, reaching almost 910 000 beneficiaries by June 2022.

Of the 1.5 million Syrian refugees in Lebanon, 57 percent of Syrian households were found to have poor or borderline food consumption in 2022, up from 46 percent in 2021. In addition, 67 percent of Syrian households were marginally and severely food insecure, compared to 49 percent in 2021. In addition, 88 percent of the Syrian refugees in the country were dependent on humanitarian assistance as they were not able to afford the absolute minimum amount required to cover life‑saving needs.

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