Value chain analysis Lebanon fresh fruit and vegetables
Lebanon has a good climate and long traditions in agriculture and food. It is a net exporter of fresh fruit and vegetables. The value of yearly imports is around € 185 million, while the yearly export is worth around € 225 million, equal to around 500,000 tonnes. The majority of Lebanese exports of fresh fruit and vegetables is consumed by countries in the Middle East, in particular the Gulf states. Exports to this region faces challenges since the Gulf markets gradually opened for global suppliers in recent years and Lebanon lost competitive advantages. Lebanese exporters have strong arguments to diversify their markets and Europe could be an interesting export destination. However, it faces difficulties to meet the strict requirements on the European market.
The Syrian crisis, resulting in a high influx of Syrians in Lebanon, puts a burden on the Lebanese society and its economy. Since the crisis, traditional export routes within the region are poorly available or more expensive. Therefore, the Embassy of the Kingdom of the Netherlands has initiated this Value Chain Analysis to research the opportunities to increase exports of Lebanese agricultural products to the EU market. Export promotion, especially in the agricultural sector, is expected to boost the local economy and thereby create more chances for locals and refugees.
The European fresh fruit and vegetables market
The main characteristics and trends in the European markets for fruit and vegetables are:
- In terms of volumes the market is big and still shows growth, but at the same time the market is highly competitive and tough to enter;
- Large supermarkets dominate sales and distribution and require high food safety and quality levels and strict logistical procedures. Three supermarket segments can be distinguished: premium, mid-range and low price. All of them work with high standards;
- Smaller retail formulas and street markets are facing difficulties due to long lasting price competition and less favourable advantages of scale;
- Relevant consumer trends are ‘health’, ‘pure and natural’, ‘convenience’ and at the same time ‘low price’. Influx of immigrants results in a growing demand for ethnic niche assortments.
- Furthermore European consumers value social and environmental issues; therefore buyers prefer to work with certifications with Corporate Social Responsibility (CSR) impact.
- In trade and logistics there is an ongoing tendency of retail concentration and at the same time importers consolidate and specialize to become preferred suppliers for these retail chains. It means that supply lines are becoming shorter and more efficient and contact between producers, traders and retailers is becoming closer.
Lebanon’s main competitors on the European market are the Mediterranean countries Spain, Italy, Israel, Turkey, Morocco and Egypt, mainly because of rather similar climatic conditions and seasonality. Furthermore South Africa and Latin American countries (southern hemisphere) supply the European market.
The Lebanese value chain of fresh fruit and vegetables
Generally speaking the production and postharvest practices in the Lebanese agriculture have a small scale and lack the capacity to produce volumes and qualities for high-end markets. Quality is not consistent, hardly any production is under Global GAP certification and the cold chain is broken, resulting in high postharvest losses. Market intelligence with respect to trends and buyer requirements in the European market is weak, all over the sector. Furthermore the domestic market structures are immature / not transparent and the private public environment is not supportive.
All these factors do not leave much space for sustainable exports of large volumes to Europe. However, European buyers have an open mind for new suppliers with something special. Lebanon has intrinsic opportunities for certain (small) windows in the fruit and vegetables market. And there is a group of larger producers / exporters with the motivation and capacity to realise these exports.
Opportunities
Lebanon has the best opportunities in specialty (niche) markets, under the precondition that strong and smart marketing communication (story-telling) with attention for the added value of Lebanese produce can be provided. Specific opportunities for the value chains in this study are:
- Table grapes: a potential window is late in the European season: after October and before the peak of South African supply in December. Europe prefers seedless grapes.
- Avocados: European demand is expected to show continuous growth in the coming years. There is a preference for Hass. Competitiveness is the highest in the first months of the year.
- Citrus: there is an interesting window for (Valencia) oranges in the summer (June – September), after Spain leaves the market and in the start of the South Africa supply season.
- Potatoes: the European potato market is too competitive and too difficult for big expectations; only specialties, with high quality and marketed under premium branding, have a chance.
- Other (smaller) products: Lebanese traders who export table grapes, avocados, citrus fruit and/or potatoes, usually also export other products. Cherries, stone fruit, nuts as well as some other small vegetables and fruits may find (narrow) windows in the European market channels.
Needs for improvements in the value chain
There is a strong need to improve the organisation and quality of the supply chains from farmer (cultivation, certification), to handling (postharvest practices, certification), to exporter. Reaching larger scale and better professionalism is crucial, which can be achieved among others through the establishment of more and better cooperatives or alternative models to join forces and consolidate product volumes. Another approach is stimulating and supporting large enterprises who can guide the sector towards high-end markets in the role of service companies that provide technical services, Integrated Pest Management (IPM), certification, knowledge, training etc. to affiliated (small) farmers. Furthermore it is necessary to improve the cold chain infrastructure by initiating investments in packing houses and cold storage facilities.
There is also a strong need to develop a national (export) marketing strategy for fruit and vegetables and a roadmap for the public and private sector with attention for the national product calendar, for determination of the priority crops and unique selling points as well as a branding strategy and a branding plan. Recommended elements of such a national strategy are:
- identify specialty segments in high end markets and focus less on delivering ethnic markets, which usually have a low-quality and low-price character;
- choose table grapes and avocado as the leading crops and the foundation for the export strategy; let other crops follow in their slip-stream;
- use the outstanding taste of Lebanese agricultural produce as an added-value factor;
- stimulate organic production and aim to adding organic as the other added-value factor;
- invest in Europe but at the same time work hard to improve the channels towards GCC markets;
- include the Lebanese diaspora all over the world in marketing and distribution operations.
As a crosscutting approach, knowledge dissemination is indispensable and requires efforts from the public and private sector. Capacity building and training should focus on technical assistance and training all over the supply chain in order to introduce and support modern technologies and methods and should also focus on knowledge on market trends and buyer requirements in Europe.
Private public environment and donor coordination
It is recommended to enhance more and better linkages between the private and public sector and make use of private public partnerships that contribute to both improved infrastructure (investments in production technology and cold chain) and an improved knowledge infrastructure. It is important that the quality and effectiveness of agricultural research, agricultural extension and agricultural (practical) education) will be strengthened.
A structural donor coordination with the actors that have an agenda in the fruit and vegetables sector (in particular EKN, EU Delegation and Expertise France, Food and Agriculture Organisation (FAO), Italian Cooperation and USAID) is highly recommended.
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