Reducing Import Dependency: Challenges and Opportunities

Jun 29 2021


Challenges can fuel and initiate a broad interest in the agri-food sector allowing SMEs to work on products or services that can substitute imported products.

Lebanon has been suffering from a continued currency devaluation since October 2019. The Lebanese Pound (LBP) has already lost 80% of its value. According to the Central Association of Statistics, the price inflation of consumer goods reached 150.3% and the food price inflation index hit 228.6% between April 2020 and April 2021.

Agri-food Production Challenges

The main critical issue is translated in the country’s high dependency on imports, where 80% of its food needs are covered through imports. During the same phase of inflation, the salaries in LBP remained stable to some extent, which led the World Bank to anticipate that Lebanon is likely to witness an increase in poverty, unemployment, and insecurity and that the impact will be felt most severely by the vulnerable segments of the population, particularly small food producers and farmers.

At a production level, producers and farmers selling locally are selling goods in LBP. The currency devaluation shifted the price of raw material and input supplies, therefore, increased the cost of goods drastically.

Here is a quick brief on some of the challenges facing the agri-food sector and its farmers and producers.

The price increase of inputs is leading to a significant reduction in agriculture activities translating into a loss of income for a significant number of Lebanese. This will be reflected in a lower supply of agricultural produces and a higher price in the market.

The input supplies market is primarily based on imports with a total of 107 M$ of imports with this yearly breakdown:

 





Source: Berytech