Palestinian fresh fruits and vegetables sector overview

Palestinian Fresh Fruits and Vegetables

Sector Overview

Intajuna Project would like to thank each of the following

organizations and individuals for their contributions in

pro-ducing this research, by reviewing and editing it.

Ministry of Agriculture

Palestinian Central Bureau of Statistics – PCBS

Food and Agriculture Organization of the United Nations –

FAO

Union of Agricultural Work Committees – UWAC

Agricultural Development Association – PARC

Applied Research Center – Jerusalem – ARIJ

Palestine Economic Policy Research Institute – MAS

Al Markaz for Development and Marketing Consultancies

Palestine Trade Center – Paltrade

Mr.Joudeh Al Jamal

Mr.Samer Irshaid

The views and findings expressed in this document are those of

the author and do not necessarily reflect the view of the Swiss

Agency for Development and Cooperation (SDC). SDC accepts

no responsibility for any consequence of their use. Terminology

used may not necessarily be consistent with SDC›s official terms.

This study was made possible with the funding of the Swiss Agency for Cooperation and

TABLE OF CONTENTS

5.

1.Introduction

6.

2.Foreword

7.

3.Executive Summary

8.

4.Fresh Produce Value Chain

10. 4.1 The Core Processes of the Agricultural Value Chain 10. 4.2 The main Actors involved in the processes

11. 4.3 Product Flow and Movement Across the Value Chain

25. 4.4 Supply and Demand Balance and its Impact on the Value Chain 28. 4.5 Labor Across the Value Chain

35. 4.6 Relationships and Linkages Across the Value Chain

37. 4.7 Knowledge and Flow of Information through the Value Chain

39. 4.8 Distribution of Margins and Revenue Sharing through the Value Chain 44. 4.9 Legal Environment and its Impact on the Value Chain

46. 5.Recommendations and drivers for the Change

1. Introduction

‘InTajuna’ (‘Our production’ in Arabic) is a project managed by So-lutions for Development Consulting Co. and Core funded by the Swiss Agency for Development and Cooperation (SDC). Building on the successes achieved by the pilot phase of InTajuna in 2007, which fo-cused primarily on the Fast Moving Consumer Goods sector, SDC and SOLUTIONS have renewed their commitment to expand the project to include the fresh produce sector along with the FMCG sector. InTa-juna provides a catalyst for private sector growth by encouraging Pal-estinians to buy more local produce, improving the managerial and marketing skills and outputs of MSMEs to deliver according to con-sumer preferences, and advocating realistic changes in public policy.

The overall development goal of InTajuna II in the agriculture sector is “To empower local Palestinian producers to increase their market share in the domestic market”

Main Sectors: Fast Moving Consumer Goods (FMCG)

Fresh Fruits and Vegetables (FFV)

InTajuna’s following three main objectives contribute to the achieve-ment of the project goal:

• Increasing the capacity of producers through improving their ac-cess to market knowledge, and upgrade their marketing and man-agement skills

• Improving the visibility and Perception of Palestinian Consumers to-wards local products.

• Empowering producers to advocate for policies that are conducive for increased share in the domestic market

One of InTajuna’s strengths is in its market driven strategy and pro-active approach in influencing perception by tackling issues at the consumer, sub-sector and point of sale levels, thereby creating an op-portunity for deep rooted and comprehensive change unrelated to the political or economical contexts.

In the agriculture sector, and starting 2009, one of InTajuna’s outputs was conducting a sector overview of the Palestinian Fresh Fruits and Vegetables which concludes desk research, household consumer sur-vey, POS field survey and POS consumer survey that are hereby made public for various agriculture stakeholders to be utilized within their ca-pacities, interests, and specialties.

InTajuna’s model for the development of the agricultural sector in Palestine will in its essence evolve around improving the farmer’s

po-2. Foreword

Every morning, the deer wakes up knowing that he has to run faster than the lion or he will be killed.

Every morning, the lion wakes up knowing that he will have to outrun the slowest deer or he will starve.

It is not important whether you are a deer or a lion, but at sunrise, you had better start running.

-

African Proverb

Every morning, the Palestinian farmer wakes up not knowing what is hidden for him, and whether he will encounter frost, draught, blight, siege, price fluctuations, or other calamities. He is the one exposed to surprises that may carry catastrophes or successes, and he is the one potentially or explicitly threatened, and the one subject to natu-ral elements, market factors and the reality of occupation, over and above his social, economic and legal reality. He is the one incapable of obtaining financing and education, both of which are necessary to develop his ways and means, and he is the one without any insurance coverage to compensate him for his loss.

Together, these factors make him fatefully incapable of forecasting the future or planning for it, losing trust in his environment and dealings with others, regurgitating the bitterness of his experiences time and over again. This self (humanistic) dimension is one of the manifesta-tions of the objective reality of the Palestinian farmer, who will be our entry point in this presentation and analysis of this report.

This report aims at shedding light on the agricultural reality of Pales-tinian fresh vegetables and fruits sector, and an attempt to explore the problems from which this sector suffers. It also intends to present some proposals for solutions to these problems. This report comes as part of the Intajuna Project activities aimed at enlarging the knowl-edge-base of the Palestinian market reality as a precursor for increas-ing the Palestinian farmer’s share in the local market, keepincreas-ing in mind that this sector was selected as part of the Intajuna Project due to its importance in the national economy as a whole and the agricultural sector in particular.

Consequently, the Project working group reviewed available studies and data related to this sector, analyzing them and completing part of the missing information, which pertains to the Palestinian consumer behavior at the household level, and marketing channels at the

point-3. Executive Summary

The agricultural sector in advanced and developing countries plays a major role in their economies. Despite the importance of this role and its centrality in the Palestinian reality, this sector continues to stum-ble, as it does not receive the necessary attention at all levels, in spite of a number of attempts and initiatives that were carried out or are underway by various parties. This may be due to many factors, most important of which are:

1. Incomprehensive attempts to address the issue. 2. Dispersed and disintegrated efforts.

3. Subservience of projects to donor agendas. 4. The reality and practices of the Israeli occupation.

An investigative review of the value chain in the agricultural process, starting with the most marginalized sections in this cycle, namely the farmers, enables us to identify the dysfunction in the agricultural sec-tor in Palestine, and to identify the main points of weakness, as follows:

•

Scattered and fragmented agricultural holdings.

•

Limited lending and financing opportunities and lack of agricultural insurance.

•

Lack of farm/ field planning and low productivity.

•

Shortage and difficulty of accessing the necessary market informa-tion.

•

Weak marketing capabilities and limited marketing channels, as well as multiple intermediaries and middlemen.

•

Lack of agricultural standards (in quality, packaging, measurement units, etc.).

•

Volatile control and monitoring and the lack of regulatory laws.

•

Lack of control at the crossing points, and inequitable competition

with Israeli products.

•

High cost of transportation and inputs (Israeli checkpoints, prohibi-tion of some fertilizers, etc.).

•

Immature and ineffective cooperative work.

•

Low return on investment, which alienates investors from this sector.

•

Lack of a research infrastructure in the agricultural sector.

The level of impact of the above-mentioned issues may vary accord-ing to the agricultural product and the geographical area. Hence, treatment of the problem may need to be structured differently and in a more specialized manner. However, the present agricultural reality compels anyone examining the issue to start from the base of the pyr-amid (namely consumption / the consumer) in order to arrive at realis-tic and sustainable solutions, and to rearrange priorities based on the above, starting with the consumer as a fulcrum for solving the prob-lems in the agricultural sector in a manner that serves all beneficiaries and stakeholders within the agricultural process, especially those who are more marginalized. We believe that efforts should focus on plant production, mainly fresh vegetables and fruits, starting from realizing farming as a business , adapting it to consumer needs, and benefit-ing from available market opportunities by adoptbenefit-ing an integrated approach that provides the necessary means for marketing fresh pro-duce and managing the agricultural process in both directions of the value chain, namely inputs and outputs, in a manner that ensures the sustainability of intergenerational resources and food security .

Small scattered agricultural holdings renders any collective ap-proach a justifiable starting point for this report, due to the numerous benefits involved (such as cost reduction, integrated efforts, compre-hensive coverage and the feasibility of treatment throughout the vari-ous aspects of the agricultural process), especially in light of the low productivity of these holdings and their limited marketing capabilities, and henceforth their abilities in farm and field planning ( taking into consideration the fact that demand is the primary determinant factor throughout seasons and months), the farmer’s ignorance of this infor-mation and the lack of relevant databases and analysis over years and seasons for each crop according to its agricultural style and eco-agricultural zone (valley / coast / semi-valley / semi coastal / moun-tain), the availability and type of water as well as soil type, the collec-tive effect of these factors on productivity and costs, and linking them to price and demand according to days, months and seasons, have all rendered the farmer’s intuition based on experience the driving force behind his agricultural and marketing practice.

Add to the above the lack of the incentive motivating the farmer to develop his product. The selling process is limited to central vegetable markets (article 14 of the Vegetables and Fruits Markets Regulation of the Local Agencies Law for the Year 1997), and is carried out through the “Dutch Auction” method without identifying the product’s stan-dard, grade, packing or presentation. One should not overlook the absence of control over sound agricultural practices, including the control of quantity and quality of fertilizers and pesticides used. This renders any approach towards developing agricultural crops qual-ity useless, especially with the Israeli products being dumped on the Palestinian market, without specifying quantity or monitoring quality.

The political reality, represented in the Israeli occupation, with all that it represents in terms of constraints and distortions of any form of natural development of the relationship between production and market, also contributed to the current state of dispersion and frag-mentation. Communications between the West Bank and Gaza Strip became virtually non-existent, and central markets in every governor-ate or city are managed separgovernor-ately from other markets, without any sort of integration regarding crops produced in various areas to satisfy the needs of the Palestinian markets according to seasons. The num-ber of intermediaries also increased (with each consignment, 10% of the selling price is added to cover central market requirement and intermediaries’ fees, in addition to transport cost). The high cost of transport also represents a major factor for this disparity, together with the large difference in price. (For instance, over 25% of the vegetables consumed in Palestine are imported, although vegetable production is almost equivalent to the local consumption, and over 80% of veg-etables produced in the West Bank come from the seam zone and the northern region. Yet what is sold in the middle and southern regions of the West Bank does not exceed 40% of it at best.

4. The Core Processes of the Agricultural Value Chain

The term “Value Chain” refers to the full range of activities that are required to bring a product or service from conception through the different phases of production to delivery to final consumers and dis-posal after use. All actors involved in the chain operate in a way that maximizes the generation of value along the chain.. The concept may be restricted to relevant activities performed within the firm (con-ceive and design, procurement, production, marketing & distribution, and after sales-service), or may expand to include upstream and downstream activities implemented by various actors. Through this wide meaning of the chain, we shall attempt to present preliminary and secondary studies carried out and analyze them within this con-text, starting from farmers as an entry point to address issues, in an at-tempt to enhance this socially and economically marginalized group, through influencing one or more links within this chain and making this process profitable in a sustainable manner.

4.1 The Core Processes in the Value Chain

There are several channels through which the agricultural process may pass in sequence. These are all subject to basic processes, start-ing with providstart-ing inputs, plantstart-ing, harveststart-ing, post-harveststart-ing activi-ties, selling and distribution and consumption. These channels may vary with the consumer, consumption pattern, variety of crops, and production pattern utilized. In this study, we shall follow the basic chain composed of the abovementioned six operations, keeping in mind that there are sub-activities that may vary according to the party performing them (such as grading, packaging, shipping, storing and distribution).

Value Chain for Fresh Vegetables and Fruits (1) Training and Guidance Financing Procurement Land Preparation Planting Crop Care Harvesting Washing, Grading, Packaging, Storage, Loading and Transporting Storage Selling Transport Purchasing Consumption

4.2 The main actors involved in the processes

These are the parties that affect and are impacted by the agricul-tural process, and have a role in the basic and/ or, sub-activities.

Training and Guidance Financing Procurement Land Preparation Planting Crop Care Harvesting Washing, Grading, Packaging, Storage, Loading and Transporting Storage Selling Transport Purchasing Consumption Creditors Technical, Inputs providers Individual, family farms Coops Companies Commission agents Wholesalers Terminal Traders Retailers Households Institutions Agro-businesses Export Markets

•

Consumers:

Consumers are divided into three main categories, in addition to exportation, which will not be addressed in this report except through the supply / demand balance. Consumption will be re-stricted to the local market. Consumers are:

1. Household Consumption: The number of households in Palestine is estimated at 646,755, with an average house-hold size of 5.8 members. Househouse-holds seek the best quality products at lowest price. For more information about their demographic features, please refer to the FFV Consumer Survey– Intajuna 2009.

Consumer Behavior: The study carried out by the Intajuna Project showed the following purchasing patterns of the Palestinian consum-er:

• Who Does the Actual Purchasing: The head of the house-hold (father) does the actual purchasing of vegetables and fruits from the market in most cases (65%). The percentage of mothers purchasing vegetables and fruits is around 25%.

Source: Intajuna Project 2009. FFV Consumer survey

• Purchasing Locations: Palestinians in Gaza go to the pro-duce market (Hisbeh) in most cases to purchase their re-quirements of vegetables and fruits. Palestinians in the West Bank do the same, but at a lower rate as 22% of households purchase their requirements of vegetables and fruits from specialized stores. The major part of this group is centered in the middle part of the West Bank, and is composed of those whose monthly income exceeds 3500 Shekels (FFV consumer Survey– Intajuna 2009).

Source: FFV Consumer Survey -InTajuna 2009.

About 50% of consumers travel from one store to another in pursuit of variety, better quality and lower prices. About half the consumers prefer to purchase their vegetables and fruits from the same store if all their requirements are available in adequate quality and prices (FFV Consumer Survey– Intajuna 2009). This has been indicated by the results of the field survey carried out on points of sale as well, whereby all those surveyed indicated that return customers does not exceed 40% in total.

Customer Loyalty at Vegetables and Fruits Points of Sale

Points of Sale %

% of Permanent Customers

4.7

0

16.0

1-10

27.0

11-30

20.0

31-50

19.0

51-70

12.7

71-99

0.7

100

Total

100.0

Over 90% of households purchase their requirements of vegetables and fruits one or more times a week on the average. 16% of them pur-chase their requirements on daily basis.

In general, the majority of households surveyed expressed their de-sire to select the vegetables and fruits they require without being re-stricted to specific packaging. Most households surveyed in the Gaza Strip emphasized that they are aware of the source of their vegeta-bles and fruits, while this percentage did not exceed one third in the West Bank, where they rely in most cases on the vendor to specify the origin, and to a lesser extent the packaging or shape of the product. The above was also in line with the results of the survey, which was car-ried out at the point-of-sale level by the Intajuna-2009 team.

• Consumer Preferences: The first priority of the consumer is the appearance of the product (intact, shape, clean, ripe), and that it is fresh, as well as affordable. When asking about the importance of agricultural products being free of chemicals and toxic materials, 56.2% expressed their inter-est in purchasing products that are free of chemicals, while only 7.3% expressed interest in organic products. In order to identify the concept and standards of quality according to the Palestinian consumer for a number of agricultural prod-ucts, a work team from Intajuna project studied a number of standards related to fresh vegetables and fruits, includ-ing size, color and others, to help identify consumer prefer-ences and to include them into product policies, and to assign standards and measurements for decision makers in the institutions concerned (FFV Consumer Survey – Intajuna 2009).

2. Institutions: Hospitals, security systems, hotels and restau-rants, and other institutions that consume vegetables and fruits and are concerned about quality, good prices, de-pendability, and credibility as far as deadlines, quantities and choices are concerned. Institutions predominantly adopt the tendering system, or contracting suppliers or wholesalers to fulfill all their needs from one source.

3. Agro-based Industries: These are industries that depend for its inputs on agricultural production; namely, vegeta-bles and fruits, such as natural juices plants, tomato paste, drying and packaging, pickling and others. Such industries are keen on obtaining good prices, and seek

dependabil-•

Intermediaries

Intermediaries are divided into wholesalers and brokers, distributors and

retailers. The number of wholesalers, including brokers is estimated at 191

traders. Retailers are estimated at 1,778 in Palestinian areas (PCBS – 2007),

distributed as follows:

Distribution of Vegetables and Fruits Points of Sale in the Palestinian

Ter-ritories

Area

Number of Points of

_Sale

Percentage

Northern West Bank

696

39%

Middle West Bank

229

13%

Southern West Bank

290

16%

Gaza Strip

563

32%

Total

1,778

100%

Palestinian Central Bureau of Statistics – 2007

Individual / family ownership of vegetables and fruits points

of sale is predominant (81.5%). Such points-of-sale are normally

run by their owners (72.8%), and the number of workers at such

points does not exceed one person in half of these ownerships

Source: FFV POS Survey– 2009.

Most points of sale (69%) are rented, and are normally kiosks and stores in vegetable markets, as the following chart shows:

Source: FFV POS Survey– Intajuna 2009

Relative Distribution of Vegetables and Fruits Points-of-Sale in Palestine

by Variety

Type of Ownership

West Bank

Gaza

Specialized Vegetables

and Fruits Store

21%

30%

Grocery Store or

Super-market

9.5%

5%

Kiosk or Space in

Veg-etables Market

62.5%

61%

Roaming Vendor

6%

3%

Other

1%

1%

Results also showed that most points-of-sale provide various variet-ies of vegetables and fruits together, especially in the West Bank. The others provide varieties of either vegetables or fruits, which is the more prevalent pattern in Gaza.

Relative Distribution of Vegetables and Fruits Points-of-Sale in the

Pal-estinian Territories by Specialization

Palestin-ian

Ter-ritories

Gaza

Strip

West Bank

Crops

Sold at

Points-of-Sale

West

Bank

South

Center

North

21.2

32

15.5

29.3

4.9

7.8

Fruits

_Only

27.3

33

24.44

32

17.1

20.8

Veg-

etables

Only

51.5

35

60.1

38.7

78

71.4

Vegeta-

bles and

Fruits

100

100

100

100

100

100

Overall

_Ratio

Source: FFV POS Survey– Intajuna 2009

Points-of-sale rely mainly on the central produce markets (85%) for their supply. Obviously, these ratios vary by product, however, only 27% of points-of-sale deal with farmers directly to provide part of its supply. The ratio of points-of-sale dealing with cooperatives is negli-gible. Points-of-sale tend to obtain their supplies on semi-daily basis (more than 90% do their purchasing one or more times a week). Week-ly purchasing varies according to variety purchased. 13.1% of points-of-sale in the West Bank and 39% in Gaza use refrigerators to store certain varieties of vegetables and fruits. Despite this, the percentage of waste is between 5 and 7% in winter, and may exceed 20% for some items in summer. Packing may form a significant factor in identifying waste levels, in addition to other factors mentioned above, affecting the freshness of the product (purchasing frequency, storing methods, number of intermediaries…etc.). Results show that the main feature of purchasing is plastic boxes for vegetables, and cardboard boxes to a lesser extent. Cardboard boxes are used more for fruits. This may be related to differences in sources, whereby Israelis use cardboard containers while Palestinians tend to use plastic and wooden boxes (FFV POS Survey– Intajuna Project 2009).

Upon enquiring about the sources of the products as far as vendors at points-of-sale know, respondents indicated that vegetables are Pal-estinian when in season, and come from other sources otherwise. The ratio for fruits varied even during season, and according to product. However, the balance tipped towards Israel as the source for fruits.

When asking about the reason for adopting central markets as a first choice to supply points-of-sale requirements of vegetables and fruits, decision makers at points-of-sale indicated that the most important factor is variety of options (one-stop-shop), whereby all varieties and quantities can be provided, regardless of the season, from one source at any time. This normally comes at a better price than any other source, and with payment facilities that cannot be afforded by other sources. In addition, such sources provide fresh products. Furthermore, and as a result of central markets locations and the volume of work carried out there, transport facilities are readily available, hence sav-ing money by acquirsav-ing all supplies in one shipment (previous source). Talking to owners of points-of-sale, who deal directly with farmers to provide part of their requirements, 86% of them indicated that they do not face any problems dealing with farmers, while 14% of them men-tioned problems, mainly in fluctuating prices, and non-commitment on behalf of the farmers to price, quantity or quality, in addition to the fact that a product may not be available in certain times or seasons. Hence, owners of points-of-sale who do not deal directly with farm-ers were asked for the reasons for that. The list of reasons quoted was long, but most significant reasons were farmers’ credibility and com-mitment to prices, quantity or quality, municipal laws, long distances and lack of transportation, lack of trust and preference to work with traders.

Preferential Factors in Points-of-Sale Dealing with Fresh Vegetables and Fruits

Suppliers

Sour

ce

Reason

Multiple Choices _Availability of R

e-quir ed Quan tities Be tt er Price Deliv er y Time Pa ymen t Me thods Ease of T ransport Fr esh Pr oducts

Veg

et

ables

Mark

et T

rader

First

72.2

70.4

63.5

62.3

55.5

53

48.1

Second 16.9

21.1

23.5

21.8

25.6

23.637.9

Third

10.8

8.5

13

15.8

18.9

23.3

14

Total

100

100

100

100

100 100 100

Farmer

First

18.6

17.2

28.5

22.5

26.6

33.3

43.2

Second 51.8

47.6

44.2

47.3

50.7

45.8

40.7

Third

29.6

35.2

27.4

30.2

22.6

20.9

16.1

Total

100 100 100 100 100 100 100

Dis

tribut

or

First

11.9

16

13.6

18.3

21.3

19.4

14.2

Second 34.9

31.9

33.3

33.5

25.9

31.9

22.6

Third

53.3

52.1

53

48.3

52.9

48.7

63.2

Total

100 100 100 100 100 100 100

Source: FFV POS Survey– Intajuna 2009

•

Producers

Agricultural units in Palestine are characteristically small in size and are widely dispersed. Individual agricultural ownership prevails, rep-resenting 76.2% of total holdings, followed directly by family holdings (17.3%). Partnership holdings are limited to 6.3%, while cooperatives and group holdings stand at 0.2%. Holdings are divided into plant duction at 69.5% (68% West Bank and 81.6% Gaza Strip), animal pro-duction at 7.3%, and mixed propro-duction at 23.2%. These holdings are clustered mainly in rural areas (66.1%), and to a lesser extent in urban areas (33.3%), and are restricted to 0.6% in refugee camps.

Ownership is the prevailing pattern in agricultural holdings in general (88%), followed by shared ownership (7.1%), and rent (2.7%). This pat-tern applies also to irrigated agricultural holdings, but with different ratios (ownership: 49%, shared ownership: 32%, rental: 23%). It must be pointed out here that the high ratio of shared ownership and rental for irrigated farming increases the cost of this production pattern, since 65% of holders purchase water to irrigate their crops (Irrigated Farming as a Business Enterprise – MASS Institute, 2009).

As mentioned earlier, holdings are small and dispersed. The general average size of agricultural holdings in the West Bank (Gaza: 8.5

du-nums) is 19.8 dunums1_{, with the small ones (1-10 dunums) representing}

the larger share at 58.4%. This translates into weaker productivity and higher costs. At the same time, we find a higher rate of dependency in this sector, whereby the number of family members of agricultural holders is 7.9, noting that 25.6% of holders support families composed of ten members or more (Structural Agricultural Survey, 2005).

Farmers’ Interests: Farmers always strive to obtain the best price and to sell their entire produce without a ceiling on the quantity sold. Ag-ricultural production in many areas is restricted to some varieties and months during their season.

•

Providers

Providers are divided into three groups:

1.Inputs:

Providers of Agricultural Inputs: These are the ones who supply ag-ricultural tools and equipment, seeds and fertilizers, pesticides, pack-aging supplies, and others. The industry of agricultural inputs is gener-ally considered unavailable or immature in Palestine due to the small market size, unavailable investment capital, and the Israeli constraints imposed on the Palestinian side through agreements signed or dis-couraging occupational practices. This represents a major impedi-ment to developing the agricultural sector in the foreseeable future, since many inputs and materials come through an Israeli supplier or intermediary, and other materials are prohibited for the Palestinians.

Agricultural Nurseries: Data indicates that the number of agricultur-al nurseries in the West Bank in 2008 was 98 nurseries, concentrated mainly in the northern part of the West Bank, where 78 nurseries are located. 39 nurseries are specialized in tree seedlings, and 20 nurseries are specialized in vegetable production.

The area of agricultural nurseries in the West Bank is 677.5 dunums, with an average nursery area of 6.9 dunums in the West Bank and 0.9 dunums in Gaza (Agricultural Statistics – Various data, 2009).

Area of Agricultural Nurseries in the West Bank by Type of Nursery and

Geographi-cal Area, 2008

Area A v e r a g e N u r s e r y Area (Du-num)

Total Mixed Wild Trees

D e c o r a ti v e

Plants Seedlings Vegetables # Area # Area # Area # Area # Area W e s t

Bank 6.9 677.5 22 272 2 12 15 102 39 225 20 66.5 North 7.2 563.5 18 246 - - 14 93 32 180 14 44.5

The number of traders involved in providing seeds is estimated to be around 42 traders, and those working with other related areas are to be around 14 traders.

Agricultural Establishments Operating in the Private and National Agriculture Sector in the Palestinian Territories by Economic Activity and Area, 2008

Economic Activity Palestinian _Territories West _Bank Northern _{West Bank} Middle West Bank

Southern

West Bank Gaza Strip

Manufacture of Insecticides and

Other Agricultural Chemicals 4 3 3 - - 1

Water Collection, Purification

and Distribution 432 180 167 8 5 252

Wholesale of Agricultural

Mate-rials and Livestock 314 233 138 23 72 81

Agricultural Tools and

Equip-ment Rental 82 44 19 4 21 38

Source: Palestinian Central Bureau of Statistics (Agricultural Statistics – Various Data, 2009)

2. Financial Services:

Creditors: Compared to other economic sectors, the banking sector benefits agriculture the least. The percentage of lending in this sec-tor fell short of 1% of the total extended by banks in terms of credit facilities to other economic sectors. It did not receive sufficient sup-port from lending agencies to small enterprises or benefit from micro-financing, and the percentage of benefiting from such loans has not exceeded 11% over the past 20 years (MASS – 2008). The number of institutions operating in the field of lending small and micro enterprises is estimated at 10, only one of which operates in the agricultural field (Reef Company). In spite of the fact that all studies emphasize this sector’s need for support and lending, 95% of farmers in irrigated agri-culture emphasized that they never received any loan. The reason for that (about 23% of them do not need loans) is the high cost of lending (12-24% at lending agencies), the inability to provide the necessary collateral, or fear from the inability to repay the loan, in addition to the lack of interest in borrowing on behalf of 20% of them for religious rea-sons (MASS 2008). As for the way farmers finance their requirements, it is most probably through debt (total or partial financing). The most common source is an agricultural materials trader, or against supply-ing the crop to a market trader, in addition to sharsupply-ing as a method of partnership. Cooperative work in the field of lending and financ-ing did not surface except marginally, and we could locate one co-operative only that operated in this field; namely, “The Saving and Lending Cooperative”. Among the institutions operating in the field of agricultural credit:

1.

Palestine Development Fund

2.

Reef Financing Company

3.

Riyada (CHF)

4.

Asalah

5.

YMCA

6.

ANERA

7.

FATEN

8.

Arab Center for Agricultural Development

9.

Islamic Relief – Micro Credit Program

10.

Microfinance and Microenterprise Department (MMD) - UNRWA

Agricultural Insurance: The abstention of insurance companies op-erating in Palestine from providing agricultural insurance has contrib-uted to marginalizing this sector. Service providers, such as banks, and investors avoided playing an effective role in agricultural insurance. This abstention came as a result of the Palestinian political reality of being under occupation, weak government interest in agriculture, as well as other subjective issues such as small holdings and their weak technical and technological abilities, the lack of data and monitor-ing centers, lack of a legal environment and the high level of risk in Palestine.

Numerous forms of risks facing the Palestinian farmer and the vari-ous levels of their severity renders the provision of insurance coverage to compensate for risks surrounding agricultural activities through the product value chain an imperative requirement to protect and devel-op the agricultural sector. Among the risks facing the farmer are pro-ductivity (agricultural blights), marketing (price fluctuations), climatic (frost, draught, floods) human (theft, fire), and political (checkpoints, occupation closures, lack of control of crossing points). The above issues make it imperative that the government interferes in creating laws and institutionalizing and supporting insurance funds, in order to develop the agricultural sector.

3.Technical:

Technical Services and Extension Providers: These are universities, agricultural institutes, and extension departments of the Ministry of Ag-riculture or national and non-governmental institutions. The number of agricultural and extension units in the Palestinian territories reached 58 units, of which 50 units are in the West Bank and 8 in Gaza Strip. The majority of agricultural units; namely, 22 of them, are concentrated in the Northern West Bank.

There are 218 agricultural guidance officers in the Palestinian ter-ritories, of whom 159 are in the West Bank. The majority of extension officers are concentrated in the northern West Bank, with their number amounting to 92 in 2008.

The number of agricultural engineers in the West Bank reached 934, with the largest number of them concentrated in the northern West Bank, amounting to 497 engineers. The largest number of engineers is found in the Plant Production area of specialization, amounting to 278 engineers, followed by Animal Production with 201 engineers (Pales-tinian Central Bureau of Statistics – Various Statistics, 2009).

•

Official and Non-Governmental Parties and International

Organizations

These refer to legislative institutions and agencies related to the agri-cultural sector (such as the Legislative Council, Ministry of Agriculture, Standards and Measurements Institution, Municipalities, Ministry of Lo-cal Governance … etc.), and other supporting bodies and institutions, financially or technically, national or international.

Together, these institutions are intertwined in their work, as they are connected to the funding agency’s agenda and policies. They are not connected in the methods of addressing issues (separately). It must be pointed out here that this sector was the least to be sup-ported by funders, receiving a mere US$107 million between 1980 and 2010, out of $130 originally pledged (Ministry of Planning and Inter-national Cooperation Website). Support was restricted to areas such as land reclamation, infrastructure construction and the provision of some inputs. It did not address the marketing side of the agricultural process.

Results published by the Palestinian Central Bureau of Statistics – 2007 show that 34.3% of agricultural holders did not receive any ser-vices from any party. 22% of them indicated that they received sup-port from the Ministry of Agriculture, and the rest from different parties. Central Markets Operation Mechanism: There is normally a coordi-nator for the central vegetables and fruits market; an employee of the municipality, operating with a complete monitoring team which car-ries out registration, collection and auditing functions. In other cases, the market is sub-contracted through a public auction competition by a number of wholesale traders operating in the market, to carry out the functions of the team operating with the coordinator.

There is generally one or two supervisors assigned by the municipal-ity, or employees working for the sub-contractor, to record cars; es-pecially those entering the market. The car number, name of driver,

beneficiary trader, and number of packages by variety are recorded. The origin is also checked, especially for Israeli products with a certifi-cate of origin.

The municipality or the sub-contractor normally charges 3-4% of the trader’s sales. The amount is deducted originally from the farmer’s payment. Sometimes, the fees charged by the municipality or the subcontractor are per package, based on its size and denomination (box, sack, ton). The fees are also charged sometimes per truck enter-ing or leaventer-ing, accordenter-ing to size.

The central market may be generally divided into a number of shops of equal space, ranging from 20 to 60 square meters in all central mar-kets. Annual rents vary among shops according to date of rental. Cost of electricity, water and other services is paid by the trader or tenant. In some markets, there are sometimes kiosks or stands that are rented out on monthly basis. It should be mentioned here that in some mar-kets, a lump sum payment is made monthly, without deducting the 4% charge on sales.

Municipalities do not interfere in the relations among central market traders and farmers, but may sometimes interfere to solve some prob-lems. The municipality does not interfere to set prices for vegetables or fruits. The percentage charged from the farmer by the wholesaler is normally 10%, divided into two parts:

- 6-7% of total sales as the trader’s share.

- 3-4% of total sales as the municipality’s or the sub-contractor’s

share.

• Selling methods include:

- Auctioneering, used in the case where the farmer brings his

pro-duce to the central market and requests the trader to sell it off for

him.

- Selling after purchasing: This is when the trader buys his stock at

the farm gate or from another trader, or buys it from Israel.

Working hours at the central market are normally between 4 and 11 a.m.

In most central markets, traders mostly have first option to vegeta-bles, due to their ability to reach the farmers directly, or receive the produce directly from the farmers at the market.

In some cases, the trader has the second option in case he works with another trader, or if he buys vegetables from the Israeli marketing companies. In the case of fruits, traders normally have the second op-tion because most fruits come from Israel through marketing compa-nies. In very few cases, some traders deal directly with farmers inside Israel.

As for loading produce from the farm to the traders, the farmer loads the produce, in most cases, with help from family members, or hired help. Unloading from the truck to the trader’s shop is normally carried out by labor hired by the trader against a monthly payment of 1500 – 3000 Shekels, or through special labor operating in the central market against a specific amount by package or truck (10 – 15 Agoras per package).

In general, the trader calls the auction for his vegetables, and some-times, other auctioneers work with the trader against a certain per-centage, varying between 10 and 25% of the 7% share the trader re-ceives from the farmer. This percentage is based on the auctioneer’s experience and activity. In some cases, the auctioneer receives a monthly salary of 4000-7000 Shekels.

Municipalities provide a number of services, differing from one mu-nicipality to the other. In general, such services include cleanliness, organizing the premises, supervising traffic inside the market, security and guarding, public toilets, parking facilities, additional power gen-erators, solving problems among traders, supervise services such as electric power, water and lighting, and praying facility (mosque).

4.3 Product Flow and Movement through the

Value Chain

The process starts by importing or producing and supplying agricul-tural inputs by special suppliers. These inputs are transported to the farm where crops are planted and harvested, and then transported after packaging to the market, and eventually to the consumer. In order to distinguish between inputs such as seeds, fertilizers and insec-ticides, and agricultural tools, heavy equipment and water, the flow of requirements within the chain must be explained separately.

Water

: The farmer obtains water from rainfall, underground water

(wells, springs) and surface water (collection ponds), as well as public irrigation networks. With the exception of water from rainfall, and in the case of all irrigated crops (65%), water is purchased. Only 10% of farmers own water resources, while the others share the source (25%).

Number of Wells Used for Agriculture and the Amounts of Water Pumped from

them in the Palestinian Territories by Governorate, 2008

Governorate

Number of Wells

Amount of Water Pumped

(1000 cubic meters)

Palestinian Territories

105,395.60

West Bank **

272

30,145.60

Jenin

59

2,913.70

Tubas

8

2,723.40

Toulkarm

52

9,326.00

Nablus

15

1,059.00

Qalqilyah

67

5,908.40

Salfit

1

-Ramallah and El Bireh

-

-Jericho and the Valley

70

8,215.10

Jerusalem

..

..

Bethlehem

-

-Hebron

..

-Gaza Strip *

..

75,250.00

(Agricultural Statistics – Various Data, 2009)

Heavy Equipment:

These are obtained by the farmer either

through ownership (49%) or rental (49%) from owners or from an agri-cultural cooperative (2%).

By virtue of habit, prevailing pattern and inertia, in addition to the lack of feasible alternatives, farmers are compelled to remain within the currently applicable channels to market their agricultural prod-ucts. Basically, farmers resort to selling their crops, totally or partially, at the farm gate, to a wholesaler who in turn sells it at the produce market (86%), the Israeli market (58%) Arab markets (3%) or foreign markets (3%), or ship it for sale at the central market using a transport vehicle owned by the farmer (32%), or rent a transport vehicle (43%) or sell it to the driver of a transport vehicle who deals at the central mar-ket (57%). What distinguishes this method, as opposed to selling to a trader is that the trader bears all risks involved, while the driver deducts the transport cost and pays the balance to the farmer. The other mar-keting alternatives do not represent a large volume, such as sales to the consumer directly (24%) or a subcontractor (2%) or an agro-based industry (8%) (MASS-2009). Normally, approved markets are the closer ones, then the farther, despite price differentials between them, which indicates that the cost of shipping is an effective factor, but not the major one. We can conclude from this that knowledge and

network-Factors that farmers see as decisive in choosing marketing chan-nels include the high fees charged by the vegetables market (83%) and the high cost of shipping (63%). These are the two more effective factors, followed by Israeli competition (53%) and the large number of intermediaries. Then come other reasons, such as the lack of a law that organizes the operation of central markets, the lack of a clear government for the agricultural sector, Israeli checkpoints, the lack of a packaging or export company in the vicinity, and others (MASS – 2009).

4.4 Supply and Demand Balance and its Impact

on the Value Chain

The Palestinian agricultural contribution in the Gross Domestic Prod-uct has sharply declined from 45% during 1970s down to 8.2% in 2007 (Agricultural Statistics – 2008) (5.6 in 2007 at constant prices, base year, 2004) (Agricultural Statistics – 2009), accompanied by a number of political, economic and technical variables. However, the amount of FFV production, specifically in vegetables, remain constant to the consumption level for various varieties.

Production:

Cultivated land represents 30.8% of total Palestinian

land (1967). Fruits represent the largest area of cultivated land (63.2%), with olives assuming the largest share (81.1%), followed by grapes (6.3%), stone fruits (3.8%) and finally citruses (2.5%). Field crops occupy (26.7%) of cultivated land, and vegetables occupy (10.1%) of land (75.2% in the West Bank and 28.4% in Gaza). (77.4%) of vegetables in the West Bank is irrigated. Irrigated cultivation in Palestine represents (14.2%) of the total agricultural land.

The total quantity of vegetables produced in the Palestinian Territo-ries in 2007/2008 is estimated at 696,500 tons, and 254,300 tons of fruits were also produced in the same year. (Agricultural Statistics, 2009).

Production Pattern and Geographical Distribution:

Pales-tine’s variety in climate, landscapes and resources contributed to a variety of crops and seasons year round resulting in over one hundred varieties of fruits and vegetables are cultivated in Palestine. The West Bank produces 78.8% of fruit production and 69.1% of vegetable pro-duction. The Gaza Strip covers the balance. The Hebron Governorate produces 30% of total fruit production in Palestine (excluding olives), and the northern region and the Jordan valley represents (63.2%) of vegetables production in Palestine. (Agricultural Statistics, 2009)

Palestine is divided into more than one eco-agricultural zone:

Valley (seam zone), semi valley, coastal, semi-coastal, and

high-plateau

s. Agricultural patterns also vary (irrigated, rain-fed) and

farming methods (open, covered). The availability of water in

Palestine varies from one area to another, with different types

of water and soils. The same applies to material and technical

resources available to farmers. According to geopolitical

clas-sification, 62.9% of cultivated land in the West Bank is classified

Among the main constraints to productivity is the spread of

rain-fed agriculture, resulting from limited water resources for

natural as well as political causes. Production from irrigated

farming exceeds that from rain-fed agriculture many fold,

per-haps reaching 30 times in some products, upon using modern

agricultural methods. Palestinians utilize 18% only of their water

resources in the West Bank, due to the Israeli occupation

exploi-tation

and controlling the rest.

A Sample of Fruit T rees Pr oduction in the P ales tinian T errit ories b y Cr op and Go vernor at e, 2007/2008 tinian ories W es t Bank Jenin Toubas Toulk arm Nablus Qalqily a Salfit

Ramallah & El-Bieh Jericho and the V

alle y Jerusa -lem Be thle -hem He -br on Gaz a Strip 51,912 2,619 92 46 774 44 688 1,679 778 2,185 6,450 36,557 3,252 3,497 15 34 977 156 2,290 20 0 5 0 0 0 23,418 8,962 72 124 2502 1,905 2,804 100 62 818 0 0 575 6,459 8,667 300 0 700 575 17 79 324 0 782 222 5,668 -6.437 -72 4,638 856 800 3 0 68 0 0 0 258 6,034 300 65 214 2,126 41 373 1,286 0 122 60 1,451 484 4,198 71 180 1,435 486 1,548 30 0 448 0 0 0 2,035 5,120 0 0 0 0 0 0 0 5,120 0 0 0 -379 15 13 42 25 284 0 0 0 0 0 0 4,670 4,496 34 200 1,476 2,415 242 23 0 106 0 0 0 413 2,624 1,500 0 28 160 80 10 430 0 0 4 412 1,889 1,320 0 11 0 18 0 0 0 1,291 0 0 0 2,677 3,336 200 10 679 508 64 222 138 0 22 275 1,218 384 2,513 164 22 103 94 18 0 21 0 10 51 2,030 -30 0 0 0 1 14 0 0 15 0 0 0 1,681 1,373 64 0 70 16 290 14 0 0 18 63 838 204 1,258 121 0 226 79 38 8 18 22 122 624 46 1,061 500 0 24 18 81 29 28 0 8 91 282 208 1,196 1,040 0 3 10 0 0 3 0 0 0 140 -550 0 0 20 75 26 68 48 0 0 4 309 78 606 0 30 105 304 115 0 0 52 0 0 0 -447 0 0 44 0 202 0 0 0 0 0 201 16 160 0 0 0 0 160 0 0 0 0 0 0 273 339 0 -99 -240 0 0 0 0 0 0 5 186 0 0 0 0 0 4 6 0 0 0 176 -183 5 0 12 163 -103 0 0 4 0 99 0 0 0 0 0 0 6 75 0 0 -38 11 0 0 26 0 0 -47 0 9 25 2 0 0 0 11 0 0 0 -200,347 12,732 1,588 31,342 32,772 15,147 9,431 18,469 8,792 4,569 8,118 57,387 53,931 tr al Bur eau of St atis tics (Agricultur al St atis tics – V arious Da ta, 2009)

Sample of Vegetables Production in the Palestinian Territories by Governorate and Crop 2007/2008 Governorate P a l e s ti n i a n

Territories North Jericho and the Valley Center South Gaza Strip Tomato 207,559 86,846 20,540 2,184 8,077 89,912 Cucumber 208,182 151,165 11,471 1,084 7,345 37,117 Eggplant 59,655 18,563 29,564 210 650 10,668 Zucchini 48,506 18,328 15,917 952 2,175 11,134 Cabbage 24,840 9,108 1,768 531 7,224 6,209 White Cabbage 22,875 9,269 1,578 - 3,578 7,951 Watermelon 17,282 468 560 - - 16,254 Hot pepper 16,802 10,505 870 175 49 5,203 Yellow corn 12,481 2,840 5,130 - - 4,511 Mloukhieh 12,434 4,270 2,691 - - 5,473 Broad beans 5,569 2,608 1,555 282 107 1,071 Sweet pepper 10,755 7,592 2,059 - 12 1,092 Carrot 3,421 - 0 - - 3,421 Spinach 4,297 1,864 75 506 464 1,388 Green beans 3,917 2,352 404 392 214 555 Okra 2,411 1,277 286 107 81 660 Green onion 2,805 1,641 0 432 172 560 Lettuce 1,705 416 0 24 324 941 Parsley 1,916 482 0 162 351 921 Radish 2,168 540 0 - 695 933 Peas 2,208 1,357 0 139 - 712 Turnip 2,748 1,452 0 - 658 638 Dill 2,565 2,565 0 - - -String beans 797 449 0 74 37 237 Red Cabbage 380 307 0 - 5 68 Pumpkin 717 72 0 - 169 476 Cabbage Leaf 102 102 0 - - -Green garlic 18 18 0 - - -Total 696,548 342,993 97,113 8,153 33,038 215,251 Production: ton 0 13.9% 0 0 30.9%

Source: Palestinian Central Bureau of Statistics (Agricultural Statistics 2006-2007)

Imports:

The major part of fruits, and to a lesser extent,

vegeta-bles are imported. Israel is considered the main exporter to Palestine, keeping in mind that the import / export balance was close in value in the year 2000 (1.3:1). However, it dipped sharply to a ratio of (6:1) in 2006. Quantities imported from Israel, as reported by wholesale trad-ers at the central markets in a survey carried out by the work team of Intajuna, are estimated at 90% of fruits and 25% of vegetables. The Palestinian Central Bureau of Statistics figures for 2007 were as follows:

Palestinian Exports and Imports of Agriculture Products and Net Trade Balance According to the Standard International Classification Categories for International Trade – Third Refinement and Countries of Origin and Destination – 2007 (US$‘000)

Description

Net Trade Balance

Imports

Exports

Vegetables and Fruits Other _Countries Israel Other _Countries Israel Other

Coun-tries Israel

-6,332 -42,532 6,332 54,616 - 12,084

Value in US$1000

Consumption and expenditure:

The ratio of household

expen-diture on food to total income has increased regularly over the past ten years, as a result of the decrease in household income. The in-crease in the volume of spending on any food item comes at the expense of another item. For example, if there is an increase in spend-ing on vegetables, there is a consequent decrease in spendspend-ing items like meat or fruits. Palestinian household spending on vegetables and fruits is estimated at US$500 million annually ($310 million on vegeta-bles and $190 million on fruits). Monthly per capita consumption of fruits is estimated at 4.9 kilograms, and 8.2 kilograms of vegetables. Average monthly household spending on vegetables reached about

4.5 Labor Across the Value Chain

Agricultural Labor:

Results show that average labor in

agricul-tural holdings reached about 2.1 workers. 40.1% of holdings employ one full-time worker. Holdings employing six workers or more did not exceed 2.6%. Results also show the spreading of temporary labor (part-time) at the rate of 71.5% of plant production. Permanent labor is characterized by being family labor (from within the family), and the rate of workers from outside the family does not exceed 5.6% of the permanent workers Structural Agricultural Survey, 2005).

Average wages in the agricultural sector have always been the low-est compared to other economic sectors. The agricultural sector ab-sorbs 15.6% of the formal labor and around 39% of informal labor, while contributes in around 8.1% of Gross Domestic Product.

Ratio of Workers in Agriculture, Forestry and Hunting to Workers in Various Activities in the

Palestinian Territories, Quarterly and by Gender and Area, ₂₀₀₈

Area Jan-Mar Apr-Jun Jul-Sept Oct-Dec

M F M F M F M F Palestinian Ter-ritories 9.8 26.8 11 30.7 9.8 26.1 9.8 26.2 West Bank 10.2 24.3 11.6 31.3 10.2 27.3 11 30.2 Northern West Bank 11.5 31.4 14.6 36.1 12.2 33 16.8 42.6

Middle West Bank 5.1 7.9 5.2 9.4 4 5.9 3.8 5.9 Southern West

Bank 14.8 35.6 16.3 45.4 14.9 40.3 12.1 40.6

Gaza Strip 9 36 9.2 28 8.7 21.8 6.5 10

Source: Palestinian Central Bureau of Statistics (Agricultural Statistics – Various Data, 2009) Average Daily Wages of Workers in the Agricultural Sector and Average Wages for all Activities

in the Palestinian Territories by Year and Area, 2004 – 2008 (US$)

Area 2004 2005 2006 2007 2008 Average W a g e s in the A g r i -cultural Sector Average W a g e s for all A c ti v i -ties Average W a g e s in the A g r i -cultural Sector Average W a g e s for all A c ti v i -ties Average W a g e s in the A g r i -cultural Sector Average W a g e s for all A c ti v i -ties Average W a g e s in the A g r i -cultural Sector Average W a g e s for all A c ti v i -ties Average W a g e s in the A g r i -cultural Sector Average W a g e s for all A c ti v i -ties Palestin-ian Ter-ritories 8.3 15 8.7 15.4 9 16.3 10.1 18.1 11.1 22.1 W e s t Bank 10.1 16.2 11.2 16.4 11.8 16.6 12.7 19.1 14 23.8 North _{9 14 10.6 14.2 11.5 15 11.5 16.4 13.5 19.3} Center 12.1 19.5 11.1 20 12.5 19.1 16.1 23.2 15.5 30.3 South 9 15.5 0 15.9 0 16.4 14.1 18.1 21.3

Labor with Intermediaries:

Points-of-sale owners work them-selves at their points in most cases (72.8%), while the number of work-ers does not exceed one in about half these holdings as mentioned earlier when discussing intermediaries (points-of-sale and wholesale traders). Hence, the number of workers in this field ranges between 3600 and 3700 people.

4.6 Relationships and Linkages Along the Value

Chain Actors

We refer here to the level of coordination, integration and power balances among beneficiaries in the value chain. Theses exist at their lowest levels, where level of coordination and the imbalance in power in favor of traders and intermediaries at the expense of producers are concerned. This is mainly due to the limited roles played by the farmer, which are restricted, in most cases to production, in the absence of any vertical integration (limited or non-existing role in marketing, grad-ing and packaggrad-ing, processgrad-ing and the provision of inputs).

Such relations may exist between farmers and suppliers, or among farmers themselves, or between farmers and intermediaries. They are divided into:

Spot Market Relations, whereby dealings take place between the two parties who agree over its subject for one time. An example is the relationship resulting from the farmers meeting traders, and ending with the conclusion of a deal between them. This is the more preva-lent in the relationship between the farmers and the market. This is in line with the results carried out by MASS regarding marketing cash crops and the farmers’ selection of marketing channels, as well as the field survey carried out by Intajuna Project on purchasing patterns at points of sale, regarding purchasing sources and the ratio of farmers in their direct relations with points of sale.

Persistent Network Relations: These are repetitive relations where the parties interact on the basis of trust, historical experience or contrac-tual relationships. This type of relations is evident in the relationship between suppliers and farmers, or farmers with traders who finance production inputs to farms against the crop.

Horizontal Integration: Here, a group from a certain level of the value chain deals as a group in their relationship with the other levels of the chain, such as the farmers forming a cooperative that approaches the market, or provide the inputs collectively. This form is seen in unions and cooperatives, and in undisclosed agreements (cartel) among wholesalers in a specific market. This form, however, is the most fragile

at the farmers’ level. Farmers have formed many cooperatives (206 cooperatives, according to Central Statistics, 2007), mostly concerned with providing inputs, and do not include marketing or financing. The ratio of farmers, however, is very low in cooperative work, reaching 29% only in irrigated farming. This is due to the lack of confidence on behalf of the farmer in cooperatives and those running them or the services they provide, and to a lesser extent because there is no co-operative in their area, or the lack of knowledge on their behalf of its presence.

Data show that the number of operating agricultural cooperatives in 2008 reached 201 in the West Bank. Their activities are focused on ani-mal and poultry farming. Their number has reached 54. The number of cooperatives in the field of agricultural services reached 53.

Number of Agricultural Cooperatives Operating in the West Bank by Area and Activity, 2008 Area Total Other Marketing

and Supply-ing Produc-tion Supplies, Lending

Olive

Pressing Agricultural Services Bee Keeping Animal and Poultry Farming Plant Pro-duction West Bank 201 21 17 18 53 10 54 28 Northern West Bank 110 19 9 14 20 5 28 15 Middle WB 57 1 5 3 23 4 16 5 Southern WB 34 1 3 1 10 1 10 8

Source: Palestinian Central Bureau of Statistics (Agricultural Statistics – Various Data, 2009)

4.7 Knowledge and Flow of Information Across

the Value Chain

Price:

Farmers are practically price-takers in both directions of the

value chain. They have no power over specifying the prices of inputs, or the crop linked to movement in market supply and demand. There is no mechanism until now with the relevant parties to monitor and build data related to prices or consumption volume, especially in light of multiple central markets and the lack of regulations and legal codes.

Quality:

Farmers respond in most cases to what the market requires

from them in terms of standards related to quality. This is because there are no specific standards or knowledge by the Ministry of Agriculture or the Palestinian Standards Institute regarding product quality, pack-aging, packing, grading or unit of exchange, including measuring or monitoring it. Farmers did work at obtaining the “Global GAP” certifi-cation as part of a project that included eight cooperatives and 110 farmers in 2007 – 2009, to accommodate export market requirements. Henceforth, a unified concept of quality between the two parties of the equation (producer and consumer) is non-existent. As an exam-ple, and in the area of grading, the MASS study of marketing irrigated cash crops of 2009 showed that about half of the farmers believe that they are grading their products based on orders from the Israeli mar-ket or in pursuit of a better price and promoting product quality, and the other half does not grade its products for the lack of an incentive (price differential) or because it was not requested to do so.

As for the preferences and interests of the value chain actors, as shown by field surveys of the Intajuna project, they are as follows:

Consumer Points of sale Farmer Suppliers

• Appearance • Freshness • Price • Availability • One-stop shopping • Reliability and Availability • Price • Payment facilities • Freshness • Reduced Waste • Good Price • Unlimited Quantity • Immediate payment / in advance • Price • Size

Demand:

In most cases, the farmer plants his field based on habit

and previous experience, and to a lesser extent based on the request of traders. Hence, he is not aware of the volume of demand or con-sumption, or they are not clear to him. He works at providing what is requested from him without systematic planning beyond seasonal production.

Knowledge:

Knowledge indicates agricultural experience

and skills, marketing management skills and technical levels,

market information, in addition to knowledge of service

pro-viders and varieties. We find here that most farmers command

good agricultural traditional or modern (5-20 years) knowledge,

by virtue of reality, work or study (45% have secondary school

or higher), as well as training by guidance and support

organi-zations operating in Palestine. Technologies utilized range with

farm size, type and value of commodities produced, resource

endowment, financial status, and geographical location of the

farmer. As for extension, the Central Census Results 2007 showed

that about 34% of farmers did not receive any support from any

party, while 22% admitted that they received support from the

Ministry of Agriculture.

Sub-activities Training and Guidance Financing Procurement Land Preparation Planting Crop Care Harvesting Washing, Grading, Packaging, Storage, Loading and Transporting Storage Selling Transport Purchasing Consumption Main Act or s Creditors Technical, Inputs providers

Individual, family farms Coops Companies Commission agents Wholesalers Terminal Traders Retailers Households Institutions Agro-businesses Export Markets Kno wledg e




4.8 Distribution of Margins and Revenue Sharing

Through the Value Chain

When computing margins, we will rely on the distribution of value added at each level of the product value of the average selling price to the consumer, after calculating the cost of agricultural intermedi-ates at the farm (i.e without calculating labor cost or administrative and financial costs). Hence, the margin here does not mean profit until after deducting the total costs of the stage for each link. It must be noted here that prices change by month, season and market for each variety. The same applies for costs by pattern, agricultural methods, geographical area, climatic conditions and season. Factors therefore have a direct effect on the farmer’s margin more than it does the other links of the marketing chain, which reflects always any effect of change on the selling price and maintains constant ratios and margins.

Farmers:

Margins here are different according to differing costs

and selling prices. We shall start with costs that include the costs of agricultural inputs, cost of financing and management, and cost of labor and land lease if it is leased. Normally, farmers save the cost of labor by using family members, the cost of financing, and the cost of water if he has personal resources. (Cost of Agricultural Inputs, Central Palestinian Bureau of Statistics – 2009).

Value Added for Plant Production in the Palestinian Territories by Governorate 2007 / 2008 (US$‘000)

Governorate Plant Production

Value

Plant Production Intermediates

Value Added % intermediates

Palestinian Territo-ries 831,893 182,610 649,283 22% West Bank 606,637 144,421 462,216 24% Jenin 131,044 31,912 99,132 24% Toubas 52,883 13,805 39,078 26% Toulkarm 102,965 20,173 82,792 20% Nablus 55,190 8,818 46,372 16% Qalqilyah 43,808 8,256 35,552 19% Salfit 12,813 2,576 10,327 20%

Ramallah &

El-Bireh 30,400 5,832 24,568 19%

Jericho & Valley 72487 16,180 56,307 22%

Jerusalem 5,051 1,532 3,519 30%

Bethlehem 12,565 6,086 6,479 48%

Hebron 87,431 29,251 58,180 33%

North Gaza 33,010 8,098 24,912 25%

Gaza 28,186 3,714 24,472 13%

Deir El-Balah 37,705 4,573 33,132 12%

Khan Younis 59,939 11,878 48,061 20%

Rafah 66,416 9,926 56,490 15%

Source: Palestinian Central Bureau of Statistics (Agricultural Statistics, 2009)

It is clear from the above table that input costs among areas, includ-ing the elements in the followinclud-ing table vary widely.

Cost of Plant Production Supplies in the Palestinian Territories by Governorate and Variety 2007 / 2008 Governorate Seeds and

Spores Fertilizers Insecticides Water and Electric Power Plastic Sheet Oils, Lubri-cants and Fuel Maintenance

and Repair Other Total Palestinian Territories 29,199 47,290 35,972 26,763 3,672 13,486 4,255 21,973 182,610 West Bank 21,248 36,077 29,683 18,480 2,067 12,174 3,841 20,851 144,421 Jenin 5,922 8,911 5,068 3,005 - 3,513 1,074 4,419 31,912 Toubas 3,379 3,739 2,309 1,499 275 753 246 1,551 13,805 Toulkarm 3,109 6,334 4,117 3,718 - 612 185 2,098 20,173 Nablus 1,371 1,676 1,221 1,350 86 984 308 1,822 8,818 Qalqilyah 1,018 2,673 1,460 1,645 - 431 131 898 8,256 Salfit 211 712 249 336 - 146 45 877 2,576 Ramallah & El-Bireh 572 1,791 977 241 - 36 12 2,203 5,832 Jericho & Valley 3,477 4,569 2,997 2,809 584 666 239 839 16,180 Jerusalem 45 250 683 50 31 105 33 335 1,532 Bethlehem 263 1,057 2,328 1,061 123 339 103 812 6,086 Hebron 1,881 4,311 8,274 2,766 968 4,589 1,465 4,997 29,251 Gaza Strip 7,951 11,213 6,289 8,283 1,605 1,312 414 1,122 38,189 North Gaza 2,317 2,298 1,132 1,371 323 338 100 219 8,098 Gaza 181 1,310 360 1,454 60 180 64 105 3,714 Deir El Balah 853 1,634 404 1,219 167 136 44 116 4,573 Khan Younis 2,259 3,404 1,935 2,565 740 430 125 420 11,878 Rafah 2,341 2,567 2,458 1,674 315 228 81 262 9,926