Farm exports in Jordan showed substantial growth in 2014, aided by foreign sales of vegetables, while deals with new markets and key investments in water irrigation are strengthening growth potential for future years.
Jordan’s fruit and vegetable exports increased 12% year-on-year in 2014, according to official data, with the country exporting 888,000 tons of agricultural produce in 2014, compared to 790,000 tons in 2013. A total of 85% of agricultural exports were vegetables, 50% of which were tomatoes. According to a spokesperson at the agriculture ministry, produce exports are projected to increase further in 2015 to reach 1m tons.
Exports of agricultural goods, food and beverages for the first three quarters of 2014 were up 9.8% to JD793.4m ($1.1bn), ahead of overall export growth of 8.6%, according to the Department of Statistics (DoS). The increase was driven in part by a 35% rise in the value of vegetable exports to JD316.1m ($445.7m) which the Ministry of Agriculture (MoA) attributed to farmers exporting higher-value crops.
Farming is a significant contributor to Jordan’s overall export profile, accounting for around 20% of merchandise exports in 2013 according to World Trade Organization data. However, exporting farmers have faced a number of challenges in recent years, most notably the conflict in Syria, which has seen Jordanian agricultural exports to the country fall by around 25% as well as disrupting overland exports to other markets.
New frontiers
In order to boost foreign sales, the authorities are seeking new markets for Jordanian produce, much of which goes to Arab countries at present with Syria and the Gulf states consuming around 80% of fruit and vegetable exports.
Over the past year, Jordan has targeted Russia as a potential market by seeking an exemption from high import tariffs. Negotiations came to fruition in November, when the two countries inked a deal that will see Russia reduce its import duties on produce from the Kingdom by 25% in the summer and to exempt it entirely from such duties in the winter.
At the end of December, Agriculture Minister Akef Zu’bi noted that exports to Iraq had improved following negotiations with the Iraqi government, which recently agreed to reduce the fees collected from each Jordanian truck entering Iraq from $2,200 to $700.
Agricultural companies can also benefit from a World Bank-funded program implemented by the Central Bank of Jordan (CBJ) at a cost of $900m. Under the program, the central bank will cooperate with commercial banks in providing loans to small and medium sized companies at preferential interest rates and payback periods. Agricultural companies were previously excluded from the program.
Addressing water scarcity
Efforts are also underway to increase the availability of water for farming, a shortage of which is one of the major constraints on exports and the sector’s development. With 106 cu meters of renewable fresh water reserves per capita in 2013, Jordan is one of the 30 or so most water-poor countries in the world.
The initial findings of the UN’s Food and Agriculture Organization report, “Water Along the Food Chain: The Jordan Case”, highlights that winter vegetables and fruits from the Jordan Valley − the main agricultural exports − are highly dependent on irrigation. “Investment is required to further develop the most profitable segment of the domestic poultry meat industry and to expand the growing area of the Jordan Valley to produce fruits and vegetables that target high-end export markets,” said Turi Fileccia, Senior Agronomist in FAO’s Investment Centre and the main author of the report.
The poultry sector is already drawing interest from international investors. Standard Chartered Private Equity announced in November the acquisition of a stake in Al Jazeera Agricultural Company, an integrated poultry and chicken feed producer and distributor, through an equity investment of $35m to aid international expansion.
To further boost the availability of water for irrigation, the government announced plans in August to increase water storage by 25% over the next five years through the construction of new dams and ponds to harvest rainwater.
Construction on the JD11m ($15.5m) Wadi Al Karak dam began in October, which will provide water for local irrigation projects and livestock, benefiting around 5,000 farmers in the Karak area. The US Department of Agriculture provided JD7.5m ($10.5m) as a grant to help construct the 2m cu meters dam, with one of the main aims to boost agricultural exports.
Oxford Business Group
26 January
