Egyptian potato and onion ships ignite crisis in Lebanon, Iraq is the solution

Shafaq News/ The Lebanese government's exceptional approval for the entry of two Egyptian vessels, Nooran and Mariam, carrying Egyptian potatoes and onions, has sparked controversy in Lebanon, as they exceeded the time frame stipulated in the bilateral trade agreement between the two nations.

Potato farmers in the Akkar Plain expressed their vehement opposition to the decision by caretaker Prime Minister Najib Mikati, holding him and Minister of Agriculture Abbas Al-Haj Hassan responsible for the stagnation of their harvest season. They decried the latter's reneging on his promise not to allow the import of potatoes from any country after March 31st.

On April 6th, during a sit-in staged in front of the Akkar vegetable market in Qubba Shamra, Omar Al-Hayek, the head of the Cooperative Association of Potato Farmers in Akkar Plain, lambasted the "precipitate actions" of the decision-makers in permitting the entry of Egyptian potatoes. He declared that "all consultations with officials have yielded no results."

Al-Hayek emphasized that "as farmers, we will exhaust every possible legal recourse because we have legitimate rights, and there is an injustice against us; we are part of this nation and refuse to let our rights be trampled."

Prior to granting permission for the two Egyptian ships to enter Lebanon, Al-Hayek expressed his apprehension during a farmers' protest on April 2nd, stating, "The Lebanese potato season commences, and Egyptian potatoes flood the markets. Our concern is the departure of two ships to Lebanon, carrying 6,100 tons of potatoes and 1,000 tons of onions." He referenced a promise from the Minister of Agriculture, made during a phone call between them, not to allow their entry.

However, he added, "We fear a repetition of last year's events. We will not accept these quantities entering. The whole matter is in the hands of the Ministry of Agriculture, and we appeal to the minister and the government to protect the farmers from market manipulation, especially considering that Lebanese potatoes are of superior quality and more affordable than their Egyptian counterparts."

As per List 3 of the Executive Program to Support Trade Exchange between Lebanon and Egypt (Law 48, dated 1998), the period for allowing the entry of Egyptian potatoes into Lebanon is from the beginning of February to the end of March each year. In exchange for a similar exemption for exporting certain Lebanese agricultural goods to Egypt, including apples, grapes, pears, and cherries for periods of up to nine months for some goods and all year for others, the Lebanese customs item 070190 exempts the import of some Egyptian agricultural products, including potatoes, from customs duties, taxes, and fees with similar effects during that period.

Accusations and Justifications

Lebanese potatoes are primarily cultivated in the plains of Akkar and the Bekaa Valley, with a temporal gap of approximately two months between the two regions. Akkari potatoes are harvested in April, while Bekaa potatoes are harvested starting May 20. Each year, the farmers' outcry recurs, as Abdelhamid Sakr, head of the Akkar branch of the Farmers' Union, pointed out. During a sit-in organized by farmers on April 2, Sakr lamented the high costs and losses incurred by farmers, accusing the state of leniency towards greedy large-scale merchants while neglecting the farmers.

Sakr contends that it is high time for the state to "stand by us so that the farmer can continue; we warn that if these potatoes enter Lebanon, there will be escalation." However, the farmers' pleas have fallen on deaf ears as far as the Prime Minister is concerned.

The Ministry of Agriculture, on the other hand, justified allowing the two ships to enter Lebanon after the legally permissible deadline had elapsed. In a statement, the Ministry affirmed its commitment to the content of the executive program supporting trade exchange between the two countries from the outset of importing Egyptian potatoes to Lebanon this season. As the specified legal period came to an end, the head of the Import and Export Control Service, under the directives of the Minister of Agriculture, sent a written correspondence to her Egyptian counterpart requesting a halt to sample withdrawals until March 27, 2023, to ensure that shipments would not be delayed and surpass the March deadline.

The Egyptian side complied with the request of the Lebanese Ministry of Agriculture, responding in writing, as stated in the statement, that sample withdrawals had ceased at the end of the business day on March 27, 2023. Permission was sought for the ships prepared for shipment before this date to enter Lebanon, with the Ministry stressing the need to adhere to the end-of-March deadline.

The Ministry further elucidated that "the Egyptian Embassy in Beirut sent copies of letters from the Alexandria Port Authority and the Abu Qir Maritime Port, stating that the ports were closed on March 29 and 30, 2023, due to adverse weather conditions, and resumed operations on the morning of March 31, which prevented the ships Noran and Mariam, laden with potatoes and onions, from sailing on March 27, 2023. The aforementioned ships headed to the port of Beirut on the morning of March 31 and arrived on April 1, 2023, just one day after the deadline."

In light of these facts, and considering that the Ministry of Agriculture has no authority to decide on the matter of unloading potato cargo, the Ministry, in accordance with applicable laws and regulations, as stated in the statement, sent a letter to the Council of Ministers, requesting an appropriate decision on this matter. On April 4, 2023, an exceptional approval was issued by the caretaker Prime Minister, Najib Mikati, given the urgency and necessity of the matter, to be subsequently submitted to the Council of Ministers.

In this context, the Ministry emphasized "its commitment to the interests of Lebanese farmers first and foremost, and its continuous efforts to ensure the export of Lebanese agricultural products to neighboring Arab countries, with Egypt at the forefront."

The Weakest Link

Lebanon has self-sufficiency in potatoes, as confirmed by Al-Hayek to Al-Hurra website, "Akkar plain produces between 75,000 and 100,000 tons annually, in addition to what is produced in the Bekaa Valley," stressing the Lebanese farmers' keenness to maintain the best relations and trade exchange with all Arab countries, including Egypt. However, this should be "in a way that suits both parties, not at the expense of one of them," noting that farmers are facing significant losses this season, "the cost of a kilo of potatoes is 30,000 LBP, while they sell it for 20,000 LBP."

For years, the Lebanese Farmers' Association, as its president Antoine Al-Houeik says, has demanded a halt to the import of Egyptian potatoes, but "Lebanese authorities argue that this will be met with a ban on our apple exports to Egypt, the main importer of this product, even though the approach to this issue should be from another angle, which is that Egypt exports products to Lebanon worth 900 million dollars, while it imports from it around 70 million dollars. Why compare the goods of potatoes and apples instead of comparing the balance of exports and imports between the two countries?"

Al-Houeik insists in an interview with Al-Hurra website that "every year, Lebanese farmers object to the import of Egyptian potatoes, and this year the Lebanese government could have stopped their entry by law since it exceeded the allowed period, and on top of that, they allowed the entry of 60,000 tons instead of 50,000 tons."

Similarly, Najib Fares, head of the Wheat Farmers' Union and a member of the Potato Farmers' Union, believes that the trade agreements signed by Lebanon do not take into account the interests of Lebanese farmers, who are "always the weakest link," noting in an interview with Al-Hurra website that "if the Egyptian potatoes delay the Akkari potato season, then it will overlap with the Bekaa potato season, which starts harvesting on May 20."

A window of opportunity has opened for Lebanese farmers, as Ibrahim Tarshishi, head of the Bekaa Farmers and Peasants Association, describes it, "with Iraq opening its markets to Lebanese potatoes, at a time when the Ministry of Public Works and Transport facilitates granting permits to trucks transporting them without taxes," expecting in an interview with Al-Hurra website that large quantities of potatoes will be exported and the crisis will end within two months, noting that the Bekaa Valley produces 250,000 tons of potatoes. On the other hand, Al-Hayek hopes that the Iraqi market will ease the pressure on Lebanese farmers, noting that some farmers have already started preparing export shipments.

Before the crisis sparked by the two ships, the Potato Workers' Union warned in January that Lebanese potato farmers were suffering from a crisis of an accumulation of Lebanese potatoes in refrigerators and warehouses, amounting to around 30,000 tons, and from low prices below half the actual cost.

In a statement, they said, "the total cost of a ton of potatoes is about 400 dollars, and it is not sold in the market for more than 200 dollars. According to the agricultural calendar, the Ministry of Agriculture's decision to import Egyptian potatoes starting February 1st increases the pressure and losses on potato farmers. Therefore, we hope that the Minister of Agriculture will delay the entry of Egyptian potatoes into the Lebanese markets until the Lebanese potatoes are sold."

Crucial Phase

Member of the "Strong Lebanon" bloc, MP Jimmy Jabbour, raised an outcry on behalf of the farmers of Akkar Plain and the people of Akkar, "who live, one way or another, from potato cultivation." During a press conference held at the Parliament on April 6th, he said, "Due to this year's climate conditions, farmers, especially from Akkar, called on the Minister of Agriculture to ask Egyptian authorities to stop exporting potatoes to Lebanon before the deadline expires." However, "the minister informed the farmers that the Egyptian side is committed to the agreement, which is their right."

Jabbour addressed the issue of unloading the two ships, noting that "we are now outside the deadline. The Minister of Agriculture presented this problem and indicated in his letter to the Prime Minister's Office that the Ministry of Agriculture has no authority to decide on unloading the potato cargo. Thus, he did not propose anything to the Prime Minister in his letter but presented the problem. The Prime Minister responded to the Minister of Agriculture, and the letter agreed to an exceptional request from the Ministry of Agriculture, which did not request anything."

According to Jabbour, any import and entry of potatoes to Lebanon beyond the deadline are not subject to customs duties but are prohibited by law. "That's why we, along with Akkar deputies and farmer representatives, visited the Prime Minister and requested the re-export of the shipments," without receiving any response. He reiterated his demand to re-export the shipment and not to allow administrations, especially customs, to violate the law and held the Minister of Agriculture and the Prime Minister fully responsible.

The sale of Akkar potatoes in the market has begun, as Houeik said, "at a price of 28,000 LBP per kilo, meaning that its price in the field is 24,000 LBP or 24 cents. On the other hand, the Egyptian potato (second and third category) is sold in the market for 30,000 LBP." He added, "Even the production costs are not earned by the farmer, which is considered suicide, not only for agriculture but for Lebanon. If we reduce production, its price will double for the consumer, although it is a commodity that should always be available at an acceptable price."

Lebanese farmers are going through a crucial phase imposed on them, as Houeik said, and have been "forced to reduce the area they cultivate due to several reasons, including agricultural companies stopping lending to them to purchase medicines, fertilizers, and seeds, which required them to pay in cash, increased fuel prices, and fluctuations in the dollar exchange rate. They buy their supplies in foreign currency and sell their production in Lebanese Lira, and by the time they receive the price, they incur losses with each additional increase of the dollar." He warned of a decline in production by about a third in the coming summer season.

Another problem highlighted by Houeik is the high taxes imposed on transit trucks leaving Lebanon to Syria, "which prevents us from competing in other markets. If we stop exporting this product, we will face a recession, and its cultivation will decrease. There is no doubt that a farmer who loses will exit production. All of this is a feast for the corrupt officials who, instead of encouraging farmers to produce, contribute to the destruction of their seasons and their slaughter."

Fares also pointed to the same problem, saying, "Transit fees are high. Syria imposes 1,800 dollars on each shipment heading to Jordan and 2,500 dollars if it is destined for Iraq. Therefore, how can we compete in these markets? On top of this, Syrian potatoes and even onions are smuggled into the Lebanese markets.