Despite a number of challenges, particularly regional unrest severely curtailing exports to and through Syria, Jordan is in a strong position to leverage its competitive advantages as an agricultural producer.
Jordan exports considerable amounts of fresh produce to its northern neighbor
One of the most pressing issues is the disruption caused by the increasing violence in Syria. The kingdom exports considerable amounts of fresh produce to its northern neighbor – in 2011 it exported 13,761 tons of fruit and 204,916 tons of vegetables to Syria, second in volume to Iraq – and uses transit routes through the country to deliver agricultural goods to Turkey and Europe, which are important markets for the sector. The war brought Jordanian exports through Syria to a complete halt in July, despite previous assurances that the flow would continue.
The situation is bad news for Jordan's farmers; the agricultural sector has lost $30m as a result of increasing violence at the border, according to international press reports. The closure of several border exits has also led to growing truck traffic, which adds further delays.
The Ministry of Agriculture and sector leaders are now looking at other options for getting farm exports flowing again
The Ministry of Agriculture and sector leaders are now looking at other options for getting farm exports flowing again, such as transporting produce to Turkey through Iraq, using the port of Aqaba on the Red Sea and air freighting through Syrian airspace. None of these solutions is ideal: the first two are more time-consuming than the Syria route, and using air transport is expensive. But higher winter prices in Europe for Jordanian produce, including peppers, cucumbers and strawberries, might allow the kingdom to bear the increased transport costs.
Despite the fact that arable land comprises just 1.1% of the country, according to the UN's Food and Agriculture Organization, agriculture is a vitally important economic sector
Despite the fact that arable land comprises just 1.1% of the country, according to the UN's Food and Agriculture Organization, agriculture is a vitally important economic sector. While the sector contributed 4.4% of GDP in 2011, it accounted for 15.3% of export earnings. The country benefits from a favorable climate, a geographical location at the heart of the Middle East with access to Europe, a skilled agricultural workforce, and good trading relations with a number of countries.
The number of certified agribusinesses in Jordan has been rising rapidly
There is considerable potential for the sector further still: currently only a few producers have the capability to export to Europe, which requires modern equipment and technology, and importantly accreditation. The number of certified agribusinesses in Jordan has been rising rapidly – the first Jordanian farm acquired a Global Good Agricultural Practices certificate in 2006, and now there are around 100, according to Anwar Haddad, the executive director at the Jordan Exporters and Producers Association for Fruit and Vegetables.
Increases in capacity that are expected to support export growth and domestic supply are also ongoing. According to the central bank, there were 919 registered agricultural companies at the end of 2011, up from 841 in 2010. Over the same period, total invested capital in agriculture surged from JD100.9m ($141.99m) to JD332m ($467.19m).
Jordan is also seeking to diversify its export markets
In addition to increasing exports, Jordan is seeking to diversify its export markets. An April 2011 deal with Saudi Arabia ending a 20-year ban on imports of Jordanian vegetables, for example, was a step in the right direction.
The drive to increase exports also involves the targeted development of niche markets, including organic farming and the olive oil segment. There are a number of small pilot projects currently underway in the organic sector, though it is still in its early days in the kingdom.
The priority now is leveraging the existing base of production
Olive oil development, however, is much more advanced: Jordan is the world's eighth-largest producer, though currently only around 7000 tons per year is exported, mostly to the Gulf. The priority now is leveraging the existing base of production, as well as moving up the value chain and increasing overseas sales. This will inevitably require capital investment, better quality control, a more consistent output and a new emphasis on branding.
Progress in recent years in attracting investment and raising output shows that the sector's strengths as a value exporter to Europe and the Middle East and North Africa region are becoming more apparent, particularly in higher-value segments.
Oxford Business Group