‘Harsh and hard situation’: Lebanese food distributor sees sales drop 40% amid economic crisis, COVID-19 and Beirut blast
The firm is an importer and distributor of rice, lentils, canned goods including fish, fruit, meat, and vegetables, oil, pasta and tea, mostly to food retailers such as supermarkets and wholesalers, as well as food service.
Lebanon is an import-dependent country, importing 80% of its food needs.
In the recent Beirut port explosion, which holds around 85% of the country’s cereals including wheat and rice, Ibrahim Jabra & Sons SAL lost 250 tonnes of Thai parboiled rice.
The loss was almost half of its entire rice stockpile.
General manager Ibrahim Jabra said his existing stock is likely to last another three to four months.
He told us: “I may have surviving containers of rice somewhere, but we were told that tests need to be done for older food stuff in the Beirut Port, to check if the food was affected by the ammonium nitrate blast.”
Jabra added that he was expecting a shipment of lentils to reach Beirut port on August 7, but it has been transferred to another location.
The explosion also destroyed 15,000 tons of wheat, as well as Lebanon’s main grain silos. For ships bringing in food, they would have to dock at other ports, such as in the Northern city of Tripoli, which will add to the already increasing prices.
The World Food Programme said in a statement that the damage from the explosion will “significantly exacerbate the already grim economic and food security outlook in the country.”
Subsidies but no support
Jabra said the firm’s drop in sales was contributed by the food service sector which had taken a hit with the economic crisis, corrupted government and ongoing pandemic. The firm enter food service just two years ago.
“Everything is deteriorating in Lebanon from people’s savings locked up in inaccessible bank accounts, to COVID-19 and the explosion. Everyone is traumatized, how can someone eat in a restaurant while others are homeless.”
“People have changed their buying behaviours, while they used to buy brands, they now look for lowest price. For food, it’s just buying the bare minimal in order to survive.”
Essential food items such as milk, rice and sugar have tripled in price and become unaffordable for many citizens.
Another factor for the drop in sales was influenced by the government’s subsidies.
Earlier in July, the Lebanon government announced it would be subsidising three hundred food items including rice, meat, oil, vegetables as the prices of commodities reach sky-high and people lost almost six times their purchasing power.
For Egyptian-type rice, citizens will be able to purchase 5kg of rice for 10,000 LBP (US$6) instead of 20,000 LBP (US$13).
While these subsidies help citizens, support is not many for industry players including distributors and agricultural farmers.
Jabra said: “People only can afford cheap rice now, but the government is not supporting all commodities.”
For instance, distributors have been receiving 1,500 LBP (US$1) for 1kg of bread, and are appealing for the government to restore the weight to 900g.
Jabra told us: “We waited two to three months but couldn’t sell anything, now without demand, we made the decision to stop imports (of rice).”
Jabra said subsidies may be removed by the government as humanitarian aid arrives. However he was still doubtful. “I think the humanitarian aid is a bit exaggerated, there are lots of food coming in, because we still have goods at Beirut Port.”
Despite all the negativity, Jabra said he was lucky to be in the food business, continuing selling and surviving despite the harsh and hard situation.
Lebanon’s outgoing Economy Minister Raoul Nehme said in a tweet on August 12 that the country has enough wheat to last four months. It has 32,000 tons of wheat in stocks and 110,000 tons expected to arrive by the end of August.
The Lebanese government has since resigned, but will continue as acting government until a new cabinet is formed.