integrated impact assessment of the association agreement on the olive oil sector in lebanon
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Ministry of Economy and Trade. Integrated Impact Assessment of the Association Agreement on the Olive Oil Sector in Lebanon. Integrated Assessment and Planning for Sustainable Development Second Review Meeting Geneva, September 21-22, 2005. Scope of the Project. - PowerPoint PPT PresentationTRANSCRIPT
Integrated Impact Integrated Impact Assessment of the Assessment of the
Association Agreement on Association Agreement on the Olive Oil Sector in the Olive Oil Sector in
LebanonLebanon Integrated Assessment and Planning Integrated Assessment and Planning
for Sustainable Developmentfor Sustainable DevelopmentSecond Review Meeting
Geneva, September 21-22, 2005
Ministry of Economy and
Trade
Scope of the Project
The project aims to undertake an integrated assessment of the trade component of the Association Agreement (AA), with particular emphasis on key economic, social and environmental factors
1995
BarcelonaConference
2002
Association Agreementsigned, ratifiedby Lebanese Parliament
2003
Interim Agreement went into effect
2004 2005
EU Enlargement & European Neighbourhood Policy (ENP)
To launch negotiations on Action Plan for ENP
Scope of the Project (2)
The olive oil sector was chosen as a pilot product based upon a set of criteria. The sector must have:
1- Strategic linkage with the EU (Association Agreement/ENP) The EU and Lebanon have a strong business, investment, and
cultural relationship. And, under both the ENP and the AA, negotiations are expected regarding the bilateral agricultural policy
2- Social implications 57% of all farmers are involved in the olive oil sector, very high
tendency to youth migration, olive orchards are located in Lebanese poorest rural areas and across the country
3- Environmental implications In addition to pomace residues and poor agricultural practices, 1
ton of olive processing yields – on average - 1 m3 of wastewater,4- … and a cooperative private sector / NGO community
What has been done so far
• Finalize background paper• Assess the integrated impact of the Association
Agreement (including planning process)• Map and conduct an integrated needs
assessment of the agro-food initially, and the olive oil sector
• Assess the initial impact of the elimination of tariff barriers with the EU
• Identify key challenges and priorities• Conduct several meetings and focus groups• Develop policy scenarios and analyse potential
impact
Project Implementation
• Select a multidisciplinary team • Collect available data and documents• Identify key issues and stakeholders • Establish a steering committee• Conduct workshops, focus groups, consultations• Conduct price, trend and cost analysis• Derive main indicators, inter-linkages • Identify 3 scenarios and impact on selected indicators
Develop action plans and implementation process
Overview of Lebanese Olive Oil Sector
• Cultivation represents 21% of total area and is spread all over the country
Production fluctuates from year to year creating an irregular supply flow to sustain a level of export and domestic consumption
The percentage of extra virgin oil in Lebanon (5%) is low compared to int’l practices (Spain 40% and in certain parts of France over 90%).
Few labs are capable of certifying olive oil in accordance with international standards & proper enforcement regulations are lacking
Overview of Lebanese Olive Oil Sector (2)
Under Association Agreement, Lebanon can export duty-free up to 1,000 tons of olive oil while levying a 70% tariff rate (no change) on EU exports.
57% of all farmers are involved in the olive oil sector
Average age of the farmer is in the high 50s and their level of education is very low
Among the main derivatives of the olive oil production process with potential return: soap; compost ; eco-tourism
Overview of Lebanese Olive Oil Sector (3)
• Olive oil processing, as it stands, is a source of pollution: e.g., pomace , wastewater
Olive Oil Production Chain
Olive harvestingBy hand , or Beaten from the tree, or Mechanical tree shacking
CleaningLeave stripping (if required) Olive washing
MillingStone mill (traditional) Metal toothed grinder Hammer mill
Mixing
Olive Oil Production Chain (2)
ExtractionLiquid extraction
Oil storage Refrigeration in containers
Oil distribution
Olive oil separation
International
Local market
Stakeholders Actual Relationship Matrix
Farmers Millers Traders NGOs Govt. SILO
Farmers + X + + +Millers + X + + +Traders X X + X +NGOs + + + + XGovt. + + X + XSILO + + + X X
+: positive, 0 : neutral, ?: uncertain, X : conflict of interest & objectives
SILO: Syndicate of inter-professional Lebanese olive oil producers
Policy Scenarios
Scenario 1: BaselineLebanon can export duty-free up to 1,000 tons of olive oil and still imposes 70% tariff rate on EU exports
Scenario 2: Quality improvement scenario Package of incentives (introduced in 2005) to improve quality and exports of extra virgin olive oil to the EU
Scenario 3: Forward-looking scenarioFurther bilateral and gradual liberalization of sector to be negotiated in 2008 + Scenario 2
Economic Impact
IndicatorsScenario 1 Scenario 2 Scenario 3
Larger domestic market share (by locals)
No impact Positive Negative
Exports of extra virgin olive oil
Minimal positive
Large positive
Positive
Employment Minimal positive
Positive Negative
National welfare Positive Positive Negative to zero
Environmental Impact
IndicatorsScenario 1 Scenario 2 Scenario 3
Waste water Negative Positive Positive
Solid waste Negative Positive Positive
Social Impact
IndicatorsScenario 1 Scenario 2 Scenario 3
Migration (from rural areas)
No impact Minimal negative (no migration)
Negative
Income of the farmer
Positive Positive Negative
(Agricultural) Know how
Positive Positive Negative
Quality of life (health) of the farmer
Positive Positive Negative
Impact of Scenario 1 on Stakeholders
Winners
The few extra Virgin olive oil producers and traders
Seasonal unkilled labour producing low-quality oil
Losers
• Consumers (no choice, high price)
• Communities using the wastewater (irrigation, tap water)
Policy impact is limited since only a small portion of total production is exported to the EU.
Impact of Scenario 2 on Stakeholders
Winners
• Skilled labor• Extra virgin olive oil
producers & traders• Communities
directly affected by the wastewater
Losers
• Unskilled labor• Women workers• Consumers (high
prices)
Policy impact is uncertain in short term but may be positive in medium to long-term with a shift towards premium oil and an increase in competitiveness
Impact of Scenario 3 on Stakeholders
Winners
Consumers Communities
directly affected by the wastewater
Losers
• Domestic producers of olive oil
• Domestic traders• Labor employed
Policy impact is no longer limited given the dynamic nature of the policy shock
Olive Oil Sector Inter-Linkages
EconomicProduction Un-sustainability
EnvironmentEnvironmental degradation
SocialPoor Living Conditions
Poor agricultural PracticesHigh input costsLow pricesYearly fluctuationsLow trade
Migration increaseIncome & employment lossHealth problems
Natural resources exploitationEcological degradationBiodiversity impactLack of planning
Secondary, Long-term Implications
Long term impact assuming no improvement in environmental indicators
Social Implications
Increase in migration, gradual disappearance of olive oil farming community, worsening of health conditions, and loss of income.
Economic Implications
Negative impact on export, employment, and national welfare as quality worsens of, productivity decrease, and competitiveness is lost
Secondary, Long-term Implications (2)
Long term impact assuming better environmental conditions
Economic Implications
• Sustain production
• Increase economic efficiency
• Increase exports
Social Implications
• Provide vocational training
• Improve heath conditions (reduces exposure to unsafe and polluted waters)
• Contain rural migration
Secondary, Long-term Implications (3)
Long term impact assuming better social conditions
Economic Implications
• More efficient production and management techniques
• Increase in income and volume of production
Environmental Implications
•Natural resource conservation
• Better wastewater and solid waste management
Domestic Challenges
• Limited control on the source of olive oil (e.g., black market)
• Few laboratories located in Beirut (testing is expensive)
• No national taste panel• No geographic indication for Lebanese oil• Lack of data, and access to information is
limited and centralized • Absence of awareness raising and
marketing strategies• No leading role for the private sector
Enabling Conditions (pre-requisites)
Olive oil sector considered as a strategic sector
Government commitment to enforce relevant regulations
Stakeholders commit to a public-private partnership
Continuing technical assitance from the EU
Recommendations
• EU contribution:• Remove EU subsidies and simplify regulations•Technical and financial assistance
• Lebanese Government contribution : • Upgrade and certify existing testing laboratories• Disseminate information and build database• Provide training and increase access to testing • Improve intra-ministerial coordination• Create an enabling environment • Facilitate by-product management• Provide access to capital
Recommendations (2)
• Private sector contribution• Organise to achieve economies of scale• Promote fair competition (e.g., inputs, fertilizers)• Disseminate information and proposals• Maintain competitive edge• Coordinate with NGOs and promote public- private partnership
• NGOs contribution:• Raise awareness• Train farmers• Enhance intra-NGO networking• Disseminate information and coordinate with private sector • Facilitate public-private partnership