Lebanese food exports soar, but falling prices cut value

By Eliot Beer

- Last updated on GMT

Related tags: International trade

Lebanon’s food exports grew 33% by volume in 2013, but falling prices meant growth by value was less than half that rate, according to a Blominvest Bank report.

The country exported US$453m worth of food products last year, up from US$392 in 2012, with a growth rate of 15.5%. The average price of food exports fell from US$1,695 to US$1,468 a tonne.

Under-performing industry

Lebanese food products struggle to remain competitive. First, several regional countries heavily subsidise the majority of their exported goods or their production costs (marketing, internal transport, freight and oil costs). This could have a distorting effect when world prices are already low, which will worsen prices​,” said the Blominvest Bank report.

This is explained by the over-production in those countries resulting from the subsidies. Accordingly, not all free trade agreements are beneficial to Lebanon but in contrast could cause severe damages to the sector when the cost of production in Lebanon is higher than that in some other countries​,” it added.

Agriculture and food production makes up around a quarter of Lebanon’s industrial sector, and also employs around a quarter of its industrial workforce, according to the report. But the sector has not kept pace with Lebanon’s overall growth, on average growing only 4.2% a year between 2004 and 2011, compared with average GDP growth of 9.1%.

Iraq’s massive growth

Lebanon exported around 46% of its food production in 2013. Its biggest market was Saudi Arabia, which imported US$69m of Lebanese food products, followed by Syria on US$55m.

Exports to Iraq grew 258% by volume and 147% by value to reach US$51m. The next fastest-growing market was the UAE, which reversed the trend of lower prices with 40.5% growth by value and 27.5% by volume, importing US$26m-worth of food products.

The main exported products were preparations of vegetables, fruits, nuts (25.6% of total agro-industrial products) followed by the beverages, spirits and vinegar category (22.1% of the total). Edible preparations (including soups, syrups, ice cream, and extracts, essences and concentrates of coffee, tea or mate etc...) came third revealing a 15.7% stake​,” said the report.

Blominvest’s analysts suggested the outlook for Lebanon’s food production industry was mostly positive: “When performing well, the Lebanese agro-industrial sector is a promoter of job creation. Several opportunities reside within the sector as the latter is almost immune to the local and regional uprisings. The decision of the Lebanese government to reduce the tax on industrial export profits by 50% will definitely have a positive impact on the external trading activity of the sector​.”

Related topics: Middle East

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