The contribution of agriculture to the Jordanian economy is larger and more important than it may seem at first glance. While the sector made up 4.4% of GDP in 2011, it accounted for 15.3% of national exports. Due to the growth of agribusinesses regionally, many believe Jordanian produce could be exported in greater quantities to neighbouring countries, as well as to Europe.

The sector also plays a key socioeconomic role as well, providing jobs to around 180,000 Jordanians, as of 2009, in both livestock and arable farming. The livestock industry consists mainly of sheep, goats and poultry, although cattle and dairy are also important. In total, livestock accounted for 63% of the total value of agricultural production in 2010. While most of this is for local consumption, the value of livestock exports is also increasing rapidly: JD84m ($118m) worth of live animals were exported in 2011, up from JD33m ($46.4m) in 2010 and JD22m ($30.9m) in 2009.

Fruit, vegetables and other produce contribute most to exports, accounting for 67% of agricultural exports in 2010. Vegetable exports increased by 8.8% from JD310m ($435.6m) in 2010 to JD339m ($476.4m) in 2011, according to the Department of Statistics (DoS).

LOOKING TO EUROPE: Jordan has the potential to increase its exports to the European market. According to Sijal Majali, the general manager at Rum Agricultural Company, which exports produce to several European supermarkets, only a few producers currently have the capability to export to Europe. “But the number is increasing, as technical expertise in the sector grows,” he said, adding that the agribusinesses that have acquired the certification necessary for supplying European buyers have been successful.

The number of certified agribusinesses has been growing rapidly in recent years. “In 2006 we helped the first Jordanian farm acquire the Global GAP [Good Agricultural Practices] certificate,” said Anwar Haddad, executive director at the Jordan Exporters and Producers Association for Fruit and Vegetables (JEPA). “As of 2012, just six years later, we have certified around 100 farms.”

The sector is witnessing a shift towards agribusiness. According to the central bank, the number of registered agricultural companies was 841 in 2010; that number grew to 919 in 2011. Over the same period total invested capital in agriculture jumped from JD100.9m ($141.8m) to JD332m ($466.5m). “Part of the reason for the increase is that more farmers are making use of greenhouses and other technologies which increase production and guarantee high quality,” said Haddad, adding that he expects this trend to continue.

GOING ORGANIC: An incipient organic industry could also prove popular with European buyers. Since the launch of an organic farming initiative by the Jordan River Foundation (JRF), a legal framework has been created for the sector and a small pilot project (27 dunum – a regional reference to a unit of land of approximately 1000 square metres) was established in 2008 at Wadi Araba, which witnessed its first organic produce in April 2011. In August 2011, a further organic initiative was announced at the Mujib Biosphere Reserve. Some agribusinesses also have organic operations, but the industry is very much in its early stages.

The Ministry of Agriculture (MoA) is looking to boost Jordanian produce exports, placing particular focus on olive oil. A higher council responsible for the subsector is in the final stages of formation (see analysis). More generally, the Jordan Valley is considered to have significant export potential: its climate allows the production of high-quality fruit and vegetables all year round. Europe too, it seems, wants to boost bilateral cooperation. In February 2012, a delegation from the EU visited the country with a vision to formulate a three-year strategy for the Jordanian agricultural sector.

EXPORT ISSUES: Yet with the ongoing political unrest in Syria, the usual land crossing to Europe has been increasingly difficult to make. As a result, use of more expensive alternative transportation routes (air and sea) is reducing the competitiveness of Jordanian goods in European markets. “Airline space is limited and alternative transport routes are in increasing demand,” said Haddad. “But higher prices in Europe during the winter mean that producers can still make a competitive offering for high-value produce, including peppers, cucumbers, strawberries, leafy produce, herbs squash and, occasionally, tomatoes.”

REGIONAL MARKETS: The demand in Syria itself for Jordanian produce has declined in 2011 and 2012. “We used to have around 11-120 trucks crossing the border each day, but this number has now gone down to around 55,” Haddad told OBG. The devaluation of the Syrian pound relative to the Jordanian dinar has also affected the export to Syria. At the same time, Iraq has banned imports of Jordanian vegetables, claiming that its local production was sufficient, according to Haddad. The government is attempting to persuade the Iraqis to reconsider the import ban.

On the other hand, the decision by Saudi Arabia to allow imports of Jordanian vegetables in April 2011 may provide some relief to local exporters. “Meeting Saudi quality standards should not be a big hurdle,” said Haddad, “given that we are already exporting to European supermarket chains.” Saudi Arabia announced in March 2012 that it was receiving around 200-250 tonnes of Jordanian tomatoes a day. “But we need to find an export market for around 800,000 tonnes of vegetables annually,” stressed Haddad. He added that Jordanian producers may not be able to offer Saudi buyers low enough prices for their produce. Indeed, some producers were already complaining in early 2012 that they had been unable to compete with market prices.

All in all, while welcome, this new market is unlikely to fully make up for the loss of the Iraqi outlet and the slowdown at the Syrian border. In the summer months, however, increased local consumption and a greater demand for Jordanian produce in the Gulf region should help to alleviate the problem.

PRICES DECREASING: A tough year for many farmers, 2011 saw agricultural prices fall by an average of 9% year-on-year, according to the DoS. Tomatoes, which constitute almost half of the kingdom’s annual vegetable produce, plummeted by 32% in value due to oversupply in the local market. In January 2012, tomato producers in Jordan Valley protested at what they described as the “severest decrease” in prices in Jordan’s history. This came in the wake of significant tomato crop damage inflicted by the Tuta absoluta pest in late 2010, which caused a temporary spike in prices to JD1.5-JD1.8 ($2.11-$2.53) per kg.

In response, the MoA launched a JD2.3m ($3.2m) initiative in late 2010 to combat the outbreak. No damage had been reported for the 2011/12 season. “The MoA’s initiative has been effective to an extent, although climatic factors are also probably a reason for the lack of damage this season,” said Haddad. He added that studies should be conducted to understand what caused the infestation, which became widespread in the Mediterranean and could re-emerge. The 2010/11 season was better for other produce, with high-value crops such as paprika, squash and cucumber increasing by 9.6%, 7.7% and 1.9%, respectively. Such crops have significant export potential for the European market.

CALLS FOR COORDINATION: It is generally agreed that the Jordanian agricultural sector could be more efficient if farmers were offered greater institutional guidance and assistance. “The government needs to raise awareness amongst farmers with regards to crop cycles,” said Haddad. “The supply-demand dynamic would be much improved if more farmers signed contracts with local or foreign buyers in advance of the planting cycle.” Indeed, some producers are already signing contracts with importers in Europe.

Also, the agricultural sector would benefit from effective systems of monitoring and quality assurance. The MoA announced in March 2011 that it would produce a “Golden List” of farmers and producers entitled to export; this list is to include only those who had proven themselves to be “up to international standards”.

The list is yet to be implemented, although quality testing on produce is now being carried out at two laboratories: one at the MoA and another at the Royal Scientific Society. “All shipments have to go through one of these labs. We are confident in their quality, but they need accreditation,” said Haddad. While progress is encouraging, many in the agricultural industry still doubt the capacity of the ministry, which received less than 1% of total government expenditure in 2009 to take care of necessary expenses, according to the DoS.

WATER FOR FOOD: By trying to support Jordan’s agricultural industry and shore up national water security, the government must perform a difficult balancing act. As the water sector undergoes a radical shake-up, policymakers are increasingly talking about finding alternatives to water-intensive agriculture.

Basem Telfah, the director of Al-Meyyah, a water resource management project at the Ministry of Water and Irrigation (MoWI), is anticipating the imminent publication of an Overextraction Reduction Plan. “We have been working on the plan for around four months and it may go into regulation this year,” he told OBG. Its measures include incentivising farmers to change crop patterns, the closing of illegal wells and even encouraging farmers to change professions. “Some farmers could move into ecotourism,” suggested Ali Subah, the MoWI’s assistant secretary general. It is often observed that while agriculture constitutes more than half of the national water demand, it makes only a negligible contribution to GDP (4.4% in 2011).

EFFICIENCY MEASURES: Particular emphasis is therefore likely to be placed on reducing irrigation-intensive practices, and this could have a negative impact on some producers. Telfah told OBG that “irrigation-fed olive trees are not water-efficient or economical, although we are of course supportive of rain-fed operations.” The latter currently make up around 65% of Jordan’s olive groves. “While it is crucial that we achieve water efficiency, we cannot simply stop agriculture,” Subah said.

Telfah also noted that the country’s national water strategy, “Water for Life”, may have overstated agricultural water usage. “Irrigated agriculture uses a lot of water – around 58% of annual consumption – but this figure is amongst the lowest in the Middle East.”

Already one of the four most water-scarce countries in the world, Jordan will have even fewer renewable supplies by the end of the century, according to some models on the projected effects of climate change. Some believe these effects are already being felt: although rainfall at the beginning of the 2011/12 season has increased considerably, the country has had a run of very dry years. In 2010/11, for example, the authorities were forced to reduce the irrigation allowance to farmers in the Jordan Valley. “The agricultural sector has received only 50-60% of its water needs in recent years,” Subah told OBG.

SELF SUFFICIENCY: As the government grapples with the pressing issue of water security, it is also attempting to ensure that Jordan remains food-secure. At the heart of this debate lies the country’s production and consumption of wheat: according to figures from the central bank, local production of wheat reached 22,100 tonnes in 2010, a figure dwarfed by the year’s consumption of some 700,000 tonnes.

Such dependency on imports adds a heavy burden to government finances at a time of sky-high global cereal prices: in 2011, the Cereal Price Index of the United Nations Food and Agricultural Organisation reached an unprecedented high. The US donated 50,000 tonnes of wheat, valued at $13.3m, to the kingdom in February 2012, but this served not so much as to ameliorate the situation as to underline its gravity.

A definitive solution has yet to be found. Some argue that Jordan can become more self-sufficient through boosting production of wheat in its rain-fed areas. The president of the Jordan Agriculture Engineers Association (JAEA), Abdul Hadi Falahat, has proposed a plan under which the use of agricultural land in the Jordan Valley and Disi would be regulated and the cultivation of wheat would be incentivised, but action is yet to be taken on this front. Instead, the government is leaning towards a rather different solution. Since late 2011, it has been talking of investing in land in Eastern Europe, Central Europe and Russia, on which the Jordanian private sector would cultivate wheat, exporting the produce back home. Russia has approved joint investment ventures between Jordanian and Russian firms.

Yet some in the industry are doubtful that this solution will yield the desired effects. The president of the JAEA said he thinks that the project will be driven by profit-making and, as such, cannot provide a viable solution to national food security. Majali said he also believes that investing in wheat production outside the country is ill-advised. “Export costs are likely to be high, and the Jordanian agricultural sector does not yet have sufficient capacity, skills or experience to cultivate land in Eastern Europe for its own benefit,” he said. There would be little difference between the cost of this project and that of importing wheat, Majali added.

WATER DEMAND GROWING: Agriculture is not the only sector feeling the pinch in water supplies. “Proposals for new industrial projects have sometimes come up against the problem of water shortage,” said Subah. Domestic water supplies are usually delivered only once a week, and extra fees apply to those who require a top up. Yet water usage is set to increase throughout the economy, spurred on not only by an annual population growth rate of 2.2% but also by areas of economic growth such as tourism and industry.

The industrial sector alone is expected to need an extra 100m cu metres of water by 2017, not least because of the heavy water requirements in several large projects likely to be implemented over the coming years. These upcoming projects include a nuclear reactor and oil shale mining operations as well as shale power plants and new industrial cities.

INTEGRATED SOLUTIONS: First drafted in 2008 and soon to be updated, Jordan’s “Water for Life” strategy addresses all aspects of the water cycle up to 2022. The solutions being implemented in accordance with the strategy aim to be efficient and well-targeted: they not only alleviate the water burden, but also bring improvement to the country’s wastewater and energy sectors, as well as to the broader economy.

Maximising the reuse of treated wastewater is key to the strategy, as is creating significant investment windows for the private sector, especially in the greater Amman area (see analysis). One effort under way is the expansion of several wastewater plants and the rehabilitation of wastewater networks. In doing so, Jordan is killing two birds with one stone: introducing much-needed capacity to the wastewater sector and increasing the amount of treated wastewater that can be put to other vital uses. The proposed nuclear reactor alone, for example, would need 40m cu metres of water; part of newly treated wastewater could be directed to it.

Perhaps the most striking example of this integrated approach is the planned expansion of the Al Samra Wastewater Treatment plant. The expansion, which will be undertaken with investment from a Jordanian-French-American consortium of companies, will satisfy the region’s wastewater needs until 2025.

Additionally, Telfah told OBG, “The outlet water will be conveyed to support irrigated agriculture in the Jordan valley and will also drive a 2-MW hydroelectric plant on the way.” This project is in fact part of a broader Programme for Energy Efficiency in water. “We think 25% of the electricity consumed by the water sector could be saved, which would reduce national energy consumption by 3%,” he said.

Hydropower is to be integrated on a much larger scale in the long-anticipated Jordan Red Sea Project (JRSP). In 2012 the government is to announce a successful bidder for the project, which is set to convey water from the Red Sea to the Dead Sea. While extracting 2.15bn cu metres from the Red Sea every year and transporting 1.22bn cu metres of this to the Dead Sea, the project is set to generate 180 MW of hydroelectric power along the way. “In order to help offset the costs of transporting the water,” Subah said, “the successful bidder will also have the opportunity to develop tourist resorts and other revenue-generating projects.” As with other projects the aim is not just to solve a water crisis, but to bring wide-ranging benefits to the economy.

BANKING ON RED-DEAD: Of all the solutions to the water problem, the most vital is the desalination of water from the Red Sea. Both Jordan’s unilateral JRSP project and the Red-Dead Water Conveyance Project led by the World Bank are currently undergoing feasibility studies, which are expected to be finished by the middle of 2012 (see analysis). If it receives the go-ahead, the JRSP is due to be completed by 2050, by which time some 930m cu metres of the conveyed water will be desalinated as freshwater. The first 410m cu metres are due at the end of the first phase.

By contrast, the Disi water conveyance project, which is due to be completed in 2013, will convey 100m cu metres of fresh water to Amman – a vital contribution, but only a stop-gap in a country whose annual water demand is set to grow from 900m cu metres in 2009 to 1.6bn by 2015. Indeed, the degree to which the country is relying on the Red-Dead project is illustrated in the “Water for Life” strategy, which postulates a deficit in 2022 of only 3m cu metres with the injection of Red Sea water; without these additional supplies, that figure is set to be 503m cu metres.

OUTLOOK: Jordan’s water security will depend on the successful implementation of mega supply projects and efficiency initiatives. With the government throwing its support behind a comprehensive water strategy, foreign private sector investment remains crucial. The increasing emphasis on water efficiency could impact negatively on parts of the agricultural sector. yet, at the same time, the government is pushing to increase certain agricultural exports, especially olives, to European and other markets. The prospects for agribusinesses seem good, a growing phenomenon in the country, which is tapping new regional markets and increasing production of high-value products.