israeli agriculture facts and figures

Dr. Arieh SheskinDr. Arie Regev

Second Edition

December 2001

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PREFACEI am pleased to mark the first, Ministry of Agriculture and Rural

Development publication in English on Israel agriculture that provides the

reader information, statistics, developments and trends which have

occurred during the last decade.

The influential role of agriculture in Israel’s national economy, although

small (1.5% of the GNP), is impressive. As a sector operates in the

peripheral areas, protects the natural environment, landscape and land,

it also acts as a lever for other economic branches. The early settlers in

the 19th century were committed to working on the land. Since then, agriculture and

settlements are synonymous for multifaceted activities, which led to the creation and

distribution of hundreds of active rural communities throughout rural areas until today. This

activity involves veterans and newcomers, farmers in moshavim and kibbutzim

(cooperatives), as well as private farmers in the Jewish and Arab sectors.

The unique geographical location of Israel enables the farmers to grow a wide variety of

produce throughout the year, and the different climatic regions, some of which are in arid

areas, are taking an increasing role in agricultural activities. These are unique activities in

which the farmers have to confront advanced forms of production, the use of high-level

technology, and the constant search for new products. The result is that we now produce

more and more with less farmers.

Israel agriculture is dynamic, innovative and based on advanced technology. This is to say,

based on a relatively small number of efficient and innovative farmers, whose achievements

are recognized throughout the world. Israeli farmers are an outstanding example of

agricultural technology in Israel. Drip irrigation systems, automatic and controlled

mechanization, high quality seeds and plants, and other products are exported to a host of

countries in addition to the export of fresh agricultural produce. We are motivated by the

desire to make the desert bloom and find solutions to the natural limitations of land and water.

The Ministry of Agriculture and Rural Development together with the Government of Israel

helps Israel agriculture to cope with the challenges it is facing. These includes a considerable

improvement in the quality of the produce that has to conform to international standards and

international trade agreements, protection of the environment and a variety of activities in the

rural sector. I believe that we will overcome the obstacles facing our agriculture, and Israel

agriculture will continue to develop and contribute to the economy and society in Israel.

May I wish the reader who meets, for the first time, the information presented in this modest

publication, that it will be interesting and useful. The staff of the Ministry of Agriculture and

Rural Development will welcome providing additional information on request.

Shalom Simhon

Minister of Agriculture and Rural Development

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TABLE OF CONTENTS

Page

Introduction...............................................................................................1

Agriculture in the Israeli Economy .............................................3

Factors of Production.........................................................................5

Land Use .............................................................................................5

Water ....................................................................................................6

Employment..........................................................................................7

Capital...................................................................................................8

Agricultural Production.....................................................................10

Foreign Trade ........................................................................................14

Agricultural Economics ....................................................................18

Prices..................................................................................................18

Productivity .........................................................................................21

Income of Employed in Agriculture .................................................22

Interest Rates ....................................................................................24

Economic Account of Agriculture.....................................................24

Intermediate Consumption.................................................................26

Food Consumption .............................................................................28

Summary of 2000................................................................................30

MINISTRY 0F AGRICULTURE AND RURAL DEVELOPMENTP.O.Box 30, Beit Dagan 50250 Israel

www.moag.gov.il

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Introduction

Israel Agriculture: Facts and Figures is being published for the first time in English. Its

contents and objectives are to summarize the activities, economic data and statistics related

to agriculture in Israel.

The current publication follows a number of earlier publications issued periodically during the

1990’s by the Israel Ministry of Agriculture, Department for Foreign Relations and the Israel

Export Institute (in the English, Russian, Chinese and Spanish languages) under the title

“Israel’s Agriculture — Achievement Through Innovation and Technology”.

This publication focuses on macro-economic data of agriculture in Israel. The figures

collected and summarized, include data on annual production of Israeli agriculture, as well as

information regarding the role of agriculture in the national economy. Facts on employment,

investment, export of fresh agricultural products and its share for land use and water are

provided. The foreign trade balance for fresh and processed agriculture produce is presented

as well.

Data on the export of the agricultural inputs industries in Israel is given, their export value is

double that of fresh agricultural produce. Through these figures, it is intended to show a

phenomenon, that although relatively small, Israel agriculture serves as a laboratory for

advanced agricultural technological innovations of the inputs industries which are exported

throughout the world.

Long-run development trends, namely prices and selected input and output indexes

(employment, water, investment etc.) are presented as well as selected rates of productivity

of Israel agriculture during the 1990s. The presentation of these time series aims to

underscore the impact of changes over a period on the economic state of Israel agriculture.

The publication is based on official data of the Central Bureau of Statistics for the year 1999.

However, as initial data for Israel agriculture for the year 2000 was recently received from the

Central Bureau of Statistics, it was decided to include a short chapter for this year.

Israel agriculture, like the agricultural sector in every modern economy plays a small but

important part of the national economy. The agricultural sector in Israel employs, according

to 1999 data, almost 80,000 workers (70% are hired laborers), which represent 3.3% of the

total labor force employed in the economy, and has an annual production of $3,279 billions.

That is an annual production rate of $41,000 per employee. The gross agricultural produce

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represents 1.6% of the gross domestic product which reaches in Israel $16,100 per person

in a population of more than 6 million. Capital stock in the agricultural sector (on farm and off

farm) stands at $68,000 per employee. The production and investment per employee in

agriculture do not reach the levels existing in the Israel High Tech sector. Yet it reflects a

dynamic and highly developed sector both from the aspect of technological know-how as well

as management of the individual farm unit.

The current publication is aimed at professional readers outside of Israel, Ministries of

Agriculture, international organizations, agricultural counselors and consultants, the

diplomatic corps, importers, exporters, researchers, academics etc. Through this edition, the

Israel Ministry of Agriculture joins a long-standing tradition of publications of this kind in the

English language by many of the European countries.

The sources for the data presented in this publication are first and foremost from the Central

Bureau of Statistics of the State of Israel, as well as statistics of the Planning Authority, Israel

Ministry of Agriculture and Rural Development, from the Central Bank of Israel, the Economic

Department, “Agriculture Center”, (the largest agricultural organization in Israel) and the

Israel Water Commission.

I would like to thank all those who helped in the preparation of this publication, first and

foremost, Mr. Zvi Alon, Senior Deputy Director for Foreign Trade at the Israel Ministry of

Agriculture and Rural Development, who promoted the idea of this publication. I would also

like to thank Professor Yoav Kislev, from the Department of Agricultural Economics, Faculty

of Agriculture, Hebrew University of Jerusalem, together with Mr. Ilan Shapira, Economics

Department, Agriculture Center, who read and reviewed the drafts, commented and corrected

accordingly. Special thanks are due to Rafi Sternlicht, Planning Authority, Ministry of

Agriculture and Rural Development, who, in addition to his important comments, helped in

preparing the statistical data. I would like to thank as well Ms. Devoira Auerbach for the

English language editing and to Mr. Rafi Weis from the Planning Authority, Ministry of

Agriculture and Rural Development for editing the attached geographical map.

Finally, I would like to thank Dr. Arieh Sheskin, my predecessor as Director of the Department

for Foreign Relations at the Ministry for Agriculture and Rural Development who retired in the

year 2000, and undertook the bulk of the work regarding the editing of this publication and

deserves credit for its publication.

Dr. Arie Regev,

Director,

Department for Foreign Relations.

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Agriculture in the Israeli Economy

The share of agriculture in GDP continues to vary slightly around 1.6-2.0% reflecting the

growing constraints of water supply to agriculture and the fast development of high-tech

industries.

Table 1: Agriculture in National Economy

(% of total)

1996 1997 1998 1999

Gross Domestic Product 1.9 1.8 2.0 1.6

Employment 3.3 3.3 3.3 3.3

Investments 1.4 1.3 1.5 1.5

Land Use 19.0 19.0 19.1 18.3

Water Use 64.1 64.5 62.8 59.6

Exports* 4.2 3.8 3.9 3.4

*Fresh

Source: Statistical Abstract of Israel 2000

The share of investments and employment remains stable due to long-term efforts to change

the production structure toward crops using less water per unit of production value such as

flowers.

Table 2: Rural Population and Settlements 1999

Settlements Inhabitants

(000)

Total 981 633.3

Cooperative villages - subtotal 722 318.4

Kibbutzim 268 115.7

Moshavim 411 184.5

Collective Moshavim 43 18.2

Non-cooperative villages - subtotal 259 314.9

Jewish sector 224 236.9

Arab sector 35 78


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The cooperative sector plays a dominant role in the organizational structure of the Israeli rural

areas. It should be mentioned that most of the manpower living in these areas is not

employed in agriculture but is engaged in industrial activities or services. The two main forms

of cooperative settlements are the kibbutz and moshav. The kibbutz is a distinct

socio-economic entity based on cooperative principles. The members of a kibbutz own

collectively the means of production and share social, cultural and economic activities. The

moshav is a village of some 60-100 family farms. Each family maintains its own household

and earns its income from what it produces, while at the same time, belonging to the

moshav’s cooperative framework. At present only a small number of farms are fully engaged

in agriculture. The average size of a moshav farm is between 2.5 to 6 ha. The kibbutz and

moshav today account for 81% of the country’s fresh agricultural produce.

The Jewish non-cooperative sector includes mostly non-agricultural rural settlements, such

as regional centers, rural communities as well as educational institutions. Some of them are

based on the moshava settlement type. Historically, the moshava was a village of private

farmers who acted on the basis of individual initiative, growing mostly orchards. Today only

a small minority of their population is still engaged in agriculture.

The Arab agricultural sector is based mostly on traditional crops, such as olive orchards,

vegetables, some of them for export (strawberries) as well as flowers. This sector is also an

important producer of sheep and goats.

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Factors of Production

Land UseThe Negev Desert, located in the southern part of Israel accounts for some 50% of Israel’s

national area and dominates its land use. (See attached Map)

Table 3: Land Use in Israel

Thousands Ha % of total

Total area of Israel 2,245,000 100.0

Built-Up Area 200,000 8.9

Open Areas and other uses 1,146,000 51.0

Natural Parks and Forest 347,000 15.5

Pasture 141,000 6.3

Arable Land 411,000 18.3

Source: Rural Planning Authority, Min. of Agriculture and Rural Development

Two additional main features of the land use structure characterize its impact on agriculture

development: the very limited area of pastures and the high dependence on water in order to

utilize the arable land.

Table 4: Agricultural Use of Land by Crops, 1999

Thousands Ha %

Total 328.2 100.0

thereof irrigated 192.3 58.6

unirrigated 135.9 41.4

Orchards 84.8 25.8

thereof citrus 25.3 7.7

Vegetables, potatoes and melons 55.1 16.8

Flowers and ornamental plants* 5.2 1.6

Field Crops 183 55.8

thereof cotton 29 8.8

wheat 86 26.2

Source: Statistical Abstract of Israel

*Thereof greenhouses — 1,456 ha

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A comparison of Tables 3 and 4 shows that large areas of arable land were not cultivated in

1999 (411,000 — 328,000= 83,000 ha).

WaterWater scarcity is a main limiting factor in Israeli agriculture. Along the 500 km. from North to

South, the annual rainfall amount varies from 800 mm to 25 mm. The rainy season lasts from

October to April. More than half of the area in the South gets less than 200 mm annual

rainfall.

Three main water resources, besides rainfall, supply most of the water demand for

agriculture, domestic and industrial use. They are the Sea of Galilee, from which an average

annual amount of 400 million cu.m. is pumped to the South, and the coastal and mountain

aquifers. Because of over-pumping and frequent droughts, especially during the last decade,

the water availability has substantially decreased, making it necessary to cut the water

quantity allocated to agriculture.

Agriculture not only had to limit cultivated areas but also had to find alternatives to fresh water

resources as can be seen in Table 5:

Table 5: Use of Water 1989-1999

1989 1999

Million % Million %

cu.m cu.m.

Total - Israel 1,851 100.0 2,076 100.0

thereof agriculture 1,304 70.4 1,264 60.9

Agricultural use by water quality: 100.0 100.0

Fresh water 1,022.0 78.4 842.0 66.6

Marginal (brackish and other

low quality water) 226.0 17.3 224.0 17.7

Recycled 56.0 4.3 198.0 15.7

Source: Rural Planning Authority, Ministry of Agriculture and Rural Development

According to the Water Commission, the Government institution responsible for water policy

and its implementation, the present situation of water supply potential has reached a critical

threshold. Estimates of the Water Commission show that the deficit in water resources in the

year 2001 will amount to 395 million cu.m.

Table 6 presents the demand for fresh water in the next 20 years

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Table 6: Fresh Water Demand in Israel, 2000-2020

Year Domestic Industry Agriculture Palestinian Total

Use Authority

and Jordan*

2000 700 90 702 94 1586

2020 1120 150 530 200 2000

Source: Water Commission

*According to an international Agreement

The additional fresh water supply required in the next two decades amounts to 445 million

cu.m. meaning the construction of a new desalination plant with a 50 million cu.m capacity

every three years. Agriculture will need an increased supply of water from recycled. and other

marginal water resources.

EmploymentThe employment structure of those engaged in agriculture reflects two basic trends: a

decreasing number of self-employed farmers, mostly members of cooperatives (see Table 2)

who have been substituted by hired workers and the increase of hired workers as additional

manpower in the sector.

Table 7: Employment in Agriculture

Thousands

1996 1997 1998 1999

Total* 72.4 74.4 78.4 79.6

Self-employed Farmers 26.0 24.4 22.8 22.8

Hired Workers 46.4 50.0 55.6 56.8

% of Hired Workers of total 64.1 67.2 70.9 71.4

Source: Central Bureau of Statistics

*Not including employed in gardening

About 36,000 hired workers of the total of 56,800 come from outside of Israel, this represents

64% of hired employees and 46% of total agricultural manpower.

Shortage of water, a relatively small local market and high technological level of agricultural

know-how enable the sector to change the crop structure towards high added value produce,

mostly directed to export. These changes dictate not only the use of less expensive labor

forces but also the increasing demand for capital.

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CapitalThis factor of production enables the development of greenhouses for flowers and vegetables

with high yields as well as sophisticated irrigation system and equipment.

Table 8 presents gross and net investments in agricultural production and infrastructure.

Gross investment is defined as the total amount of new capital goods added to the existing

stock of these goods in the sector during a given period whereas net investment is the net

addition to the stock of the capital goods.

Table 8: Investments in Agriculture 1999

(US$ millions, at 1999 prices)

Type of Activity Gross investment Net investment

US$ % US$ %

million million

Total 667.7 100.0 213.0 100.0

1. On-farm assets - total 432.0 64.7 89.4 42.0

Orchards 31.0 4.6 8.6 4.0

Greenhouses 171.0 25.6 60.1 28.2

Livestock 126.1 18.9 10.4 4.9

Irrigation systems 64.6 9.7 8.0 3.8

Agricultural machinery 33.4 5.0 0.0 -

Drainage 4.8 0.7 1.2 0.6

Other 1.1 0.2 1.1 0.5

2. Off-farm infrastructure - total 235.7 35.3 123.6 58.0

Post-harvest services 61.9 9.3 21.5 10.1

Water infrastructure 126.1 18.9 58.8 27.6

Land reclamation and afforestation 47.7 7.1 43.3 20.3


High investment was one of main features of agricultural development in Israel. It was

measured by the growth rate of capital stock in agriculture. However, during the period

1985-1997 the capital stock representing the total of all fixed capital invested in agriculture,

decreased (at real prices). This trend was due to a process of adjustment of investment to

production. In the last two years a slow increase of capital stock in agriculture was recorded.

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Table 9: Gross Capital Stock in Agriculture 1999

(US$ million, at 1999 prices)

US$ %

millions

Total 5,449.7 100.0

Orchards 706.0 13.0

Livestock 788.2 14.5

Agricultural equipment and machinery 1,710.2 31.4

On-farm buildings 1,108.0 20.3

Irrigation systems 324.0 5.9

Greenhouses 119.7 2.2

Fish ponds 165.6 3.0

Land reclamation and drainage 528.2 9.7


The ratio capital/output was, in the last five years, (excluding 1999) around 1.25, namely to

produce US$1, it is necessary to use US$1.25 of capital.

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Agricultural ProductionDuring the last decade the total value of agricultural production decreased by almost 15% at

real prices. However, this development represents different changes: declining prices of

agricultural product prices and increasing quantity of production. The quantity index of

agricultural production during the same period increased by 30%. Some export crops, in

particular citrus and cotton suffered from a drastic reduction of prices and exported volume.

In livestock products the prices received by producers were far behind the cost of living index.

Table 10: Agricultural Production of Israel by Branch, 1989-1999

(US$ Millions, at 1999 Prices)

1989 1999

US$ % US$ %

Millions Millions

Total Value of Production 3,844 100.0 3279 100.0

Horticulture and Field Crops Total 2,177 56.6 1813 55.3

Vegetables 524 13.6 585 17.8

Flowers and Ornamental Plants 230 6.0 215 6.6

Citrus 387 10.1 220 6.7

Other Fruit 429 11.2 452 13.8

Field Crops 506 13.2 224 6.8

Other Crops 101 2.6 117 3.6

Livestock Total 1,667 43.4 1466 44.7

Poultry 790 20.6 648 19.8

Dairy and Beef 622 16.2 545 16.6

Sheep and Goats 101 2.6 97 2.9

Fish 103 2.7 114 3.5

Other livestock 51 1.3 62 1.9


The share of horticulture and field crops in the total value of agricultural production during the

last 10 years remains stable. This part of production is the main export supplier of Israeli

agriculture. Livestock production, depending heavily on imported grains, cannot compete

efficiently on foreign markets and therefore is directed mainly to supply domestic demand.

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Table 11: Main Horticulture and Field Crops, 1999

Commodity Value* % of Total Quantity**

Production

Vegetables 2107

Potatoes 122.9 3.7 364

Edible Tomatoes 94.4 2.9 242

Peppers 61.1 1.9 102

Cucumbers 33.1 1.0 108

Strawberries 25.8 0.8 16

Flowers and Ornamental Plants*** 1,435

Roses 38.4 1.2 469

Carnations 9.4 0.3 117

Gypsophila 22.7 0.7 155

Fruit 1299

Citrus 723

Oranges 58.7 1.8 204

Grapefruit 92.5 2.8 372

Easy Peelers 43.5 1.3 97

Other Fruit 575

Apples 82.1 2.5 128

Apricots 44.9 1.4 46

Table Grapes 48.6 1.5 49

Bananas 52.4 1.6 118

Avocado 49.0 1.5 56

Field Crops

Cotton Fiber 34.1 1.0 25

Spices and Medicinal Plants 30.2 0.9

Groundnuts 27.3 0.8 23


*US$ Millions, at. 1999 prices

**Thousands tons

***Millions of units export only

Most horticulture crops are based on subtropical and deciduous fruits, and large selection of

vegetables are grown under plastic cover or in greenhouses as well as in open areas but

mainly under irrigation. However, due to water shortage, most basic grains for human and

livestock consumption are imported.

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Table 12: Main Livestock Products, 1999

Commodity Value* % of total Quantity**

production

1.Livestock for Meat 657.0 20.0

Cattle 143.7 4.4 88

Sheep and Goats 79.5 2.4 22

Poultry 406.3 12.4 391

thereof Broilers 258.9 7.9 260

Turkeys 130.9 4.0 125

2.Milk 418.8 12.8

Dairy (millions liters) 401.7 12.3 1,157

Sheep and goats (millions liters) 17.1 0.5 29

3.Eggs (millions units) 112.1 3.4 1,640

4.Aquaculture 114.3 3.5 30

Source: See Central Bureau of Statistics

*US$ Millions, at Dec. 1999 prices

** Thousands tons, unless otherwise stated

Production of livestock products is characterized by very intensive use of technology. As a

result, very high yields are obtained in many products. For example, average milk production

has increased two and half times since the 1950s — from 3,900 litters annually to an average

close to 11,000 liters per dairy cow in 1999. Poultry farming which is the major supplier of

meat for domestic demand has developed under extreme variations of climate. This fact has

necessitated the development of poultry breeds that are highly disease resistant.

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Table 13: Selected Livestock Inventory, 1999

(Thousands, end of 1999)

1999

Cattle 388

Thereof milk cows 122

Poultry

Laying hens 7,190

Broilers 20,150

Turkeys 4,900

Sheep and Goats

Sheep 350

Goats 70

Beehives 72


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Foreign TradeThe foreign trade balance of agricultural fresh and processed produce in 1999 shows a deficit

of US$890 millions. However, the deficit in the trade of fresh produce was only US$176

millions. This gap between export and import is the result of a large import of cereals (see

previous Tables) and timber in the range of unprocessed produce, and of importing

processed products such as sugar, meat and fish which are only partly produced in Israel or

not at all. It should be also mentioned that this category of commodities includes a large

number of tropical products, which are imported for further processing in the Israeli food

industry such as cocoa, coffee, and others.

Table 14: Foreign Trade Balance of Agriculture, 1999

(US$ Millions, at 1999 prices)

Export - f.o.b. Import - c.i.f.

Value % Value %

Grand Total 1,228 2,118

Fresh Agricultural Produce -Total 782 100.0 958 100.0

Field Crops* 89 11.4 509 53.1

Vegetables 159 20.3 36 3.8

Flowers** 221 28.3 6 0.6

Fruit 81 10.4 88 9.2

Citrus 134 17.1 0 0.0

Livestock Products 22 2.8 131 13.7

Seeds 76 9.7 19 2.0

Timber 169 17.6

Processed Produce -Total 446 100.0 1160 100.0

Meat and Fish Products 34 7.6 184 15.9

Fruit and Vegetables Products 175 39.2 144 12.4

Sugar and Sugar Products 26 5.8 158 13.6

Cereals 29 6.5 92 7.9

Others*** 182 40.8 582 50.2

Source: Rural Planning Authority, Ministry of Agriculture and Rural Development

*Imported field crops include grains, raw cotton and tobacco

** Flowers include propagation material

***Others include tropical products, such as coffee, cocoa and tea, alcoholic beverages etc.

As already mentioned Israeli fresh agricultural exports are based on four groups of produce:

vegetables, fruit, including citrus, flowers and field crops. Flowers and ornamental plants

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production has become the most important item in the agricultural fresh exports replacing

traditional citrus as a main export branch of Israeli agriculture. High levels of technology,

together with direct contact with markets, mostly auctions in Netherlands and continuous

adaptation of supplied products, representing new varieties, to the European consumer taste,

have strengthened the position of the Israeli farmer on the international flower market.

Table 15: Main Fresh Agricultural Products

For Export, 1999

(US$ Millions, at 1999 prices, f.o.b.)

Product Value Thousands

Tons

Vegetables

Tomatoes 17.1 7.3

Pepper 27.0 15.9

Potatoes 30.6 68.3

Melons 14.3 16.6

Fruit

Oranges 14.3 99

Grapefruit 34.8 146.9

Table Grapes 13.7 6.7

Avocado 40.2 25.5

Dates 16.1 5.0

Flowers*

Roses 37.9 468.8

Gypsophila 21.2 154.7

Ornamental Plants and Seedlings 34.2

Field Crops

Cotton Fiber 41.3 21.8

Groundnuts 12.8 13


*Millions of units

Development of fresh agricultural exports started in Israel, apart from citrus, as a result of

overproduction. However, due to long-term policy, farmers efforts, expansion of marketing

facilities, a trend of specialization has taken place. Table 16 shows that export play a

significant role in many agricultural branches.

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Table 16: Agricultural Exports as %

Of Total Branch Production, 1999

Branch %

Field Crops 37.3

Vegetables 18.5

Citrus 55.7

Other Fruit 16.3

Flowers 73.7

Seeds and Seedlings 27.0

Livestock 2.9


Most fresh agricultural exports are directed towards European markets, in particular to the

European Union with which Israel has a long-term trade agreement.

Table 17: Agricultural Exports according to

Country of Destination, 1999

Region and Country US$ Millions % of total

Total Agricultural Export 782.3 100.0

European Union 596.0 76.2

thereof United Kingdom 120.0 15.4

Netherlands 194.1 24.8

Germany 62.3 8.0

France 71.8 9.2

Benelux 36.1 4.6

Spain 32.7 3.6

Turkey 36.7 4.7

Japan 17.2 2.2

United States 44.4 5.7

Rest of the World 88.0 11.2


Export of agricultural inputs is based mostly on Dead Sea minerals used as fertilizers as well

as on the chemical industry of pesticides and herbicides. Both sectors represent 68% of

agricultural inputs exports. Other items exported are the result of agricultural development in

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Israel, which has been a laboratory and testing ground for irrigation systems, agricultural

equipment and know-how.

Table 18: Export of Agricultural Inputs, 1999

(US$ Millions, at 1999 prices)

Branch Value % of total

Total 1,545 100.0

Fertilizers 719 46.5

Pesticides and Herbicides 332 21.5

Irrigation Equipment 244 15.8

Seeds, Seedlings and Propagation Material 90 5.8

Plastics 35 2.3

Equipment and Machinery 48 3.1

Livestock Feed and Supplements 50 3.2

Other 27 1.7

Source: Israel Export Institute

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Agricultural Economics

Prices

In 1999 the agricultural sector experienced a severe deterioration in terms of trade, which

expressed the relations between the agricultural input price index and the index of agricultural

output prices. If the comparison is further extended to consumer prices changes measuring

the purchasing power of the population, the situation of the agricultural sector in 1999

declined significantly, as can be seen in Table 19:

Table 19: Output, Input and Consumers Prices, 1999

(Annual Change in Percentage)

Output Input Terms

prices Prices of trade

Total Agriculture 1.1 6.2 - 4.7

Horticulture and Field Crops 3.5 7.8 - 4.0

Livestock -1.7 3.2 - 4.7

Consumer Prices* 5.2 5.2


*Annual average

Water represents one of most important inputs in crop production. However, the Government

reduction of the subsidies to water, increased substantially water costs to the farmer. During

the last decade the real water price to the agricultural producer rose by 21% whereas the

output prices dropped by 44% (deflated by inflation index).

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Table 20: Water and Output Real Prices Index

(1988-1999)

Year Water Output *

1988 100 100

1989 92 92

1990 94 85

1991 105 80

1992 120 73

1993 116 70

1994 108 70

1995 110 62

1996 111 58

1997 120 56

1998 120 57

1999 121 56


*Output of Horticulture and Field crops only

Prices received by producers of selected crops and livestock products are presented in

Tables 21 and 22. The prices are calculated as annual averages and include returns from the

domestic as well as foreign markets.

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Table 21: Producer Prices of Selected

Horticulture and Field Crops, 1999

US$/Ton, at 1999

average

annual price

Vegetables

Edible Tomatoes 346

Potatoes 334

Melons 443

Strawberries 1664

Field Crops

Wheat 251

Cotton Fiber 1379

Groundnuts 1214

Fruit

Oranges - Shamouti 312

Grapefruit 248

Apples 646

Table Grapes 1038

Avocado 886

Apricots 982

Dates 2243

Flowers*

Roses 82

Carnations 80

Gypsophila 147


*Thousands of units

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Table 22: Producer Prices of Selected

Livestock Products, 1999

Product US$/Ton, at 1999

average annual

price

Meat

Broilers Meat 997

Turkeys Meat 1,043

Goose Liver 31,053

Beef 1,636

Sheep 3,781

Milk

Dairy Milk* 333

Sheep Milk* 684

Eggs** 68

Source: See Table 23

*Thousands liters

** Thousands units

Productivity

The term overall productivity used in this chapter is the relation between an agricultural output

in a given period and one unit of all inputs (intermediate and factors of production) employed

in producing that output. The productivity in this meaning is therefore the change in output,

which is not explained, by the changes in inputs.

In spite of large annual variations, the long-term productivity trend measured by an index of

cumulative changes in the last decade shows an increase of 26% in overall productivity of the

agricultural sector.

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Table 23: Overall Productivity in Agriculture, 1989-1999

Year Annual Index of

change cumulative change

(%)

1989 2.73 100

1990 9.90 110

1991 -0.07 110

1992 6.02 117

1993 -2.05 114

1994 0.48 115

1995 7.34 123

1996 4.76 129

1997 0.05 129

1998 2.13 132

1999 -4.56 126

10 years Average 2.33

Source: Economic Department, Agricultural Center

Income of Employed in Agriculture

As shown in Table 7, during the period 1989-1999 employment in agriculture underwent

structural changes. The number of self-employed farmers decreased and number of hired

workers increased in a very significant way. In the same period the income of self-employed

farmers fluctuated strongly. In 1999, the income of self-employed farmers was only higher by

5% than that of hired workers, but it should be noted that this was an extremely severe year

for agriculture, in particular due to water shortage.

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Table 24: Total Income and Number of Self-employed Farmers

Year Total Income Index Self-employed Index

US$ Millions at 1999 Farmers

prices

1987 1,184 100.0 53,200 100.0

1988 1,014 85.7 48,500 91.2

1989 990 83.7 48,000 90.2

1990 1,039 87.8 43,600 82.0

1991 870 73.5 38,000 71.4

1992 1,014 85.7 38,100 71.6

1993 773 65.3 37,700 70.9

1994 870 73.5 37,300 70.1

1995 749 63.3 28,400 53.4

1996 604 51.0 23,900 44.9

1997 531 44.9 24,400 45.9

1998 628 53.1 22,800 42.9

1999 362 30.6 22,800 42.9


Note: Total income refers to total payments received by self-employed farmers for self-labor

and returns to owner’s capital and loans.

Table 25: Average Monthly Income per Agricultural Employee 1989-1999

(US$ at 1999 prices)

Year Self-employed Hired Worker Relative

Farmer Income

1 2 3=1/2

1989 1,727 1,194 144.7

1990 2,009 1,266 158.7

1991 2,009 1,341 149.8

1992 2,218 1,329 167.0

1993 1,679 1,266 132.6

1994 1,952 1,516 128.8

1995 2,142 1,298 165.0

1996 1,981 1,322 149.8

1997 1,814 1,343 135.1

1998 2,307 1,244 185.4

1999 1,286 1,218 105.6

Source: Summary of Development in Agriculture 1999, Agricultural Center

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Interest Rates

High real interest rates prevailing in the Israel economy are supported by the Central Bank

(Bank of Israel) policy to keep inflation rate as low as possible. This policy is based on a long

experience of the Israel economy, which has suffered from long periods of high inflation.

Many private firms could borrow capital at less expensive rates of interest abroad. However,

the farming sector, which is composed of a large number of small productive units, could not

benefit from these facilities and has to apply to the local financial market for capital. As a

result, the agricultural sector pays considerably high interest payments. In 1998, according to

estimates of the Agricultural Center (the major organization of Israeli farmers) 5.9% of the

value of agricultural production was paid as interest.

Table 26: Interest Rates on Commercial Credit in Israel, 1987-1999

Year Current Inflation Real

Interest Index* Interest

Rate (%) (%) Rate(%)

1987 61.0 16.1 38.7

1988 42.0 16.4 22.0

1989 31.7 20.9 8.9

1990 26.5 17.6 7.6

1991 26.6 18.0 7.2

1992 20.0 9.4 9.7

1993 16.3 11.2 4.6

1994 17.0 14.5 2.2

1995 20.3 8.1 11.3

1996 20.7 10.6 9.1

1997 18.7 7.0 10.9

1998 15.9 8.6 6.7

1999 16.0 1.3 14.4

Source: see Table 25

*Annual cumulative rate (December 99 /December 98)

Economic Account of Agriculture

In 1999, the total value of agricultural production reached almost 3.2 billion dollars of which

about 20% were direct exports. As the majority of exports come from crops, the share related

only to horticulture and field crops was, of course, much higher — about 33%. Livestock

production was mostly directed towards the domestic market and local industry. Both

destinations represented about 38% of total production value.

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Table 27: Agricultural Output by Final Use, 1999

Final Use US$ Millions, % of total

at 1999 prices

Value of output - total 3279 100.0

Local direct consumption 1209 36.9

Thereof Horticulture and Field Crops 872 26.6

Livestock 337 10.3

Indirect local consumption (industry) 1064 32.4


Livestock 941 28.6

Fresh Export 652 19.9


Livestock 41 1.3

Intermediate Produce and Miscellaneous 354 10.8


Table 28 Output, Input and Domestic Product in Agriculture, 1997-1999

(US$ millions, at 1999 prices)

1997 1998 1999

1.Total output 3,347 3440 3279

Horticulture and Field Crops 1,882 1925 1813

Livestock 1,466 1515 1466

2.Total Input 2,126 1993 2026

Purchased Input 1,871 1726 1746

Depreciation 254 267 280

GDP - Gross Domestic Product 1,476 1713 1532

3. NDP - Net Domestic Product (1-2) 1,221 1421 1253

4.Compensation and other receipts 83 82 82

5.Income Originating in Agriculture (3+4) 1,305 1529 1335


As seen in previous Tables, 1999 was one of the worst years for agriculture in the last

decade. Income originating in agriculture, which represents the returns to labor

(self-employed and hired) and capital, declined in one year by 13%, in comparison to 1998.

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Intermediate Consumption

However, the reduction in crop production in 1999 was not accompanied in a significant way

by a decrease in outlays for inputs. Water continues to be the main cost element for crop

producers and in spite of cutting water quotas in the same year, water prices still did not

increase considerable. Therefore the total outlay for water remains around 19% of total input

cost.

Services and Government represent the various services required for farm management,

such as financial and insurance services, different payments to the local government for

municipal services, etc.

Table 29: Cost of Inputs of Horticulture and Field Crops, 1999

US$ Millions, at 1999 prices

US$ Millions %

Total 921 100.0

Water 177 19.2

Fertilizers 78 8.5

Pesticides 93 10.1

Transport and Spare Parts 112 12.2

Fuel and Electricity 107 11.6

Packing Materials 119 12.9

Seeds and Seedlings 105 11.4

Services and Government 130 14.1


The main component of inputs required for livestock production is grains for feeding, which

are mainly imported. In 1999 this item represents 62% of total purchased inputs for the

livestock branch.

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Table 30: Cost of Inputs of Livestock, 1999

(US$ Millions, at 1999 Prices)

Value %

Total 908 100.0

Feed Consumption 566 62.3

Chicks 128 14.1

Transport and Spare Parts 50 5.5

Fuel and Electricity 40 4.4

Services and Government 102 11.3

Water and Packing Materials 22 2.5

Source: See Table 29

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Food Consumption

According to systems introduced by F.A.O., a worldwide food balance is calculated in order

to follow the changes in composition of the main nutrients consumed by various populations

as well as to evaluate the total calorie intake. The World Health Organization has

recommended minimum quantities of proteins, fat and calories required for the human body.

Figures collected in Israel during the period 1960-1999 show a continuous increase in the

daily intake of major nutrients per capita placing Israel among the most developed countries.

Table 31: Food Balance - Calories and Nutrients, 1960-1999

(Per capita per day)

Year Calories Index Protein Index Fat Thereof: Index

(grams) (grams) animal Total Animal

origin fat origin

1960 2772 100 85.1 100 86.7 27.9 100 100

1970 2988 108 91.5 108 104.3 38.3 120 137

1980 2979 107 92.2 108 111.5 38.7 129 139

1990 3089 111 97.4 114 117.6 42.6 136 153

1999 3543 128 105.3 124 133.7 44.3 154 159

Source: Statistical Abstract of Israel 2000, Table 11.11

These changes represent also the structure of the Israeli food basket, which is similar in many

aspects to those of other Mediterranean countries. The main features of the food

consumption in this region are a high intake of fresh fruit and vegetables.

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Table 32: Food Consumption by Main Commodities, 1999

(Per capita)

Source: see Table 31

The average food basket cost per capita in 1999 reached US$1,658, 60% of which was spent

on four groups of commodities: meat and meat products, flour and cereals products, milk and

sugar and their products.

Table 33: Annual Outlay for Food 1999

(At 1999 prices, per capita)

Commodity US$ % of total

Total 1658 100.0

Processed Fruit and Vegetables 157 9.4

Tea, Coffee and Cocoa 79 4.7

Sugar and Sugar Products 187 11.3

Fresh Vegetables 122 7.3

Fresh Fruit 147 8.9

Edible Oils 39 2.3

Milk and Milk Products 241 14.5

Eggs 34 2.0

Fish 78 4.7

Meat and Meat Products 288 17.4

Flour and Cereals Products 287 17.3


29

Commodity kg per year

Cereals

Wheat 104.9

Rice, millet 9.6

Potatoes and Potato Flour 43.4

Sugar 43.0

Vegetables 186.8

Fresh Fruit 102.5

Oils and Fats

Butter 0.8

Margarine 5.2

Commodity kg per year

Meat

Beef, fresh and frozen,

carcass weight 16.1

Sheep and Goats, carcass weight 1.2

Poultry, slaughtered 56.7

Eggs 14.6

Fish 13.4

Milk and Dairy Products

Cow’s Milk 61.9

Cheese 15.9

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Summary of 2000

General BackgroundThe developments, which took place in the 2000, reflect the long-term changes occurring in

the position of Israel agriculture in the national economy. There was a further decrease in the

share of agriculture in the main macroeconomic indicators:

Table 34: Agriculture in National Economy (% of total)

1999 2000

Gross Domestic Product 1.8* 1.6

Employment 3.3 3.0

Investments 1.5 1.3

Water Use 60.9* 53.6

Exports** 3.0* 2.2

*Updated

**Fresh

Source: Central Bureau of Statistics; Water Commission

Calculated in real prices of the year 2000, the value of agricultural output was US$ 3,377

million, which was 0.3% higher than in 1999. The number of employed in agriculture

decreased from 79,600 in 1999 to 75,400 in 2000. However, the number of self-employed

farmers increased from 22,800 to 24,500 whereas the number of agricultural workers

declined from 56,800 to 50,900. These developments reflect the growing difficulties to find

employment opportunities outside the farm.

The use of water by the agricultural sector declined from 1,264 million cu.m. to 1,063 million

cu.m (-15.9%), of which fresh water supplied to farmers decreased from 842 million cu.m to

702 million cu.m.

The average monthly income amounts to US$ 1,209 per employed person in agriculture. This

figure is equal to 57% of an average salary in the national economy. Nevertheless, it should

be pointed out that most of employed in agriculture are part-time farmers and an additional

income is earned in non-agricultural activities.

The Gross Investment in agriculture in the year 2000 reached US$ 694 million of which US$

463 million represent investments in on-farm assets and US$ 231 million investments in

off-farm infrastructure. Calculated in fixed prices and updated figures for 1999 these data

represent a decrease in capital outlay in the sector. The decline in investments directed

towards greenhouses and citrus orchards constituted a major factor in this development.

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Agricultural ProductionThe changes in agricultural production as a result of severe draught caused further

restrictions on water quotas available for the sector. These constraints have affected

horticulture and field crops, such as cotton and vegetables. Flowers production decreased,

too, by 240 million units (-16.8%). The output prices of horticulture and field crops, calculated

in fixed terms, decreased in 2000 by 3.2%. The situation in livestock production was different:

the volume of poultry production for meat increased but milk and eggs production slowed

down. The output prices of livestock dropped slightly — by 0.3%.

Table 35: Agricultural Production of Israel by Branch (at 2000 Prices)

US$ Millions %

Total Value of Production 3,376.8 100.0

Horticulture and Field Crops Total 1,844.2 54.6

Vegetables 604.9 17.9

Flowers and Ornamental Plants 194.1 5.7

Citrus 207.2 6.1

Other Fruit 522.9 15.5

Field Crops 228.2 6.8

Other Crops 86.9 2.6

Livestock Total 1,532.6 45.4

Poultry 659.1 19.5

Dairy and Beef 588.8 17.4

Sheep and Goats 104.5 3.1

Fish 115.4 3.4

Other livestock 64.8 1.9

Source: Central Bureau of Statistics-

ExportAs a result of these developments the volume and share of fresh exports in the total

agricultural production declined. During the three last years the share of exports went down

from 20.6% in 1998 to 19.9% in 1999 and 17.5% in 2000. There were no significant changes

in the share of various crops in the export structure. However, some exported products

mentioned above noted a decrease due to price or quantities decline.

The main export items are presented in Table 36:

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Table 36: Agricultural Exports, 2000

Branch US$ Million f.o.b. %

Total 702 100.0

Vegetables 152 21.6

Flowers 191 27.2

Citrus 92 13.2

Other Fruit 86 12.2

Thereof Avocado 40 5.7

Seeds and seedlings 73 10.4

Fields Crops 89 12.7

Thereof Cotton 56 7.9

Fish 6 0.9

Livestock and Livestock Products 13 1.8


The foreign trade balance of agricultural fresh and processed produce in 2000 showed a

deficit of US$ 979 millions. However, the deficit in the trade of fresh produce was only US$

317 millions. As in previous years, this gap between export and import was the result of

importing cereals (US$ 500 millions), which due to water shortage are not grown in the

country. It should be noted that the share of fresh export represented 61.4% of the total export

of the agricultural sector, including processed products.

The export of agricultural inputs amounted to US$ 1,440 millions. The share of fertilizers,

pesticides and herbicides increased to 70.1% of the total value of exported inputs.

Agricultural PolicyGovernment support to the agricultural sector amounted in 2000 to US$ 169.7 million. This

figure represented 5% of agricultural production value. The long-term trend in Government

policy is towards a sharp decline in the overall subsidies to the sector. The two most important

items, which represent public support to the sector, are: the development budget, which

assists farmers in investing in production assets (US$ 32 million) and the use of water (US$

65.7 million).

Research & DevelopmentThe high technological level of Israeli agriculture is attributed to the achievements of R&D

activities, largely undertaken by the public sector. In 2000 the overall expenditure for R&D

amounted to US$ 69.4 million. The Ministry of Agriculture and Rural Development plays in

this area a dominant role through the responsibility for the Agricultural Research Organization

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(ARO), the most important complex of agricultural research institutes in the country.

Government expenditure for R&D activities coming via the Ministry of Agriculture and Rural

Development represents 64.1% of the total budget for this purpose. The remaining funding

come from various institutions and is based mostly on bi-national agreements, which aim to

develop R&D activities of mutual interest to two countries that established the fund.

Nevertheless, it should be noted that the farmers too, through their professional organizations

and marketing boards participate in financing agricultural research. They contributed in 2000

US$ 16.2 million to the overall expenditure for this activity (24% of total) During the last

fourteen years the share of R&D in the agricultural GDP increased from 3.3% in 1986 to 4.6%

in 2000.

The objectives of the research and development activities for the current period are defined

as follows:

1. Increasing an efficient use of water and the use of effluents

2. Water recycling

3. Restraining the use of chemicals and environmental protection

4. Promoting organic agriculture

5. Developing equipment and machinery in order to limit the need for seasonal workers

6. Development of new crops for local and exports markets

7. Improving the quality of agricultural products

Rural CommunitiesThe rural population represents 8.6% of the total population of Israel. However, employment

in agriculture occupies only 14.5% of the total manpower living in rural areas. The remaining

employed people are engaged in various economic activities, such as industry, construction

and transport (26.7%), tourism and commerce (13.4%) and services.

Difficulties in the agricultural sector forced the need to look for alternative sources of

employment in the non-agricultural sector.

One of the major activities developed to face this challenge was the creation and expansion

of tourism facilities in rural communities. During the last decade these efforts resulted in a

very rapid increase in number of rooms offered to tourists. The tourism industry in the rural

area is composed of B&B accommodation in the villages themselves as well as youth hostels,

hotels and resorts located in rural regions. The total numbers of rooms available for tourists

have reached 13,047 and the number of employed people in the industry is estimated to be

5,000.

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israeli agriculture facts and figures

Documents