FAOITALIAN GOVERNMENT COOPERATIVE PROGRAMME

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FAO-ITALIAN GOVERNMENT COOPERATIVE PROGRAMME

• ASSISTANCE IN INSTITUTIONAL STRENGTHENING AND
  AGRICULTURAL POLICY IN SYRIA
• SECOND NATIONAL AGRICULTURAL POLICY WORKSHOP
• Damascus, January 12, 2002
• Agricultural Development Strategy in Syria
• Alexander SarrisProf.

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1- PAST AND CURRENT AGRICULTURAL STRATEGY AND
POLICIES

• Factors that shaped the agricultural strategy and
  policies of Syria from 1960 onwards
• Land reform
• External political environment of the 1950s and
  1960s, namely the international alliances
  dictated by the cold war
• Insecurities imposed by the Middle East
  developments
• The uncertainties inherent in the international
  trade system.
• Development paradigm since 1970 has been
  state-led import substituting industrialisation
• Consequences for agricultural strategy
• Strategy of self-sufficiency in major food
  staples
• The state undertook a major role in production
  and trade, especially with respect to the major
  products and inputs
• Foreign trade became almost completely a state
  monopoly
• Several publicly owned industrial plants were
  established for food and other agro-processing
  activities.
• Links between agriculture and the macroeconomy
• Agricultural production is almost totally
  privately based
• The bulk of marketing and processing for the main
  strategic products (wheat, cotton, tobacco, and
  sugarbeet), as well as fertiliser distribution,
  are publicly controlled.
• Via the process of public control of the upstream
  and downstream activities relevant to
  agriculture, the government can exercise
  considerable control on production and
  distribution of the strategic agricultural
  products
• Control of trade in strategic agricultural
  products implies that the government can capture
  much better the implicit tax involved in the
  overvaluation of the currency.
• A major factor in the orientation of agricultural
  sector strategy and policies in the past was the
  severe lack of foreign exchange.

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• The main long-term objectives of the current
  agricultural sector strategy
• achieving a high level of self sufficiency in the
  main food staples
• optimal utilisation of the natural agricultural
  resources and improving their productivity
• securing the raw material requirements of the
  domestic processing plants
• increasing agricultural exports
• enhancing investments that are considered as one
  of the tools for comprehensive development
• improving the rural living standards and
  containing rural-urban migration
• generating employment for rural labour
• improving the food consumption in both rural and
  urban areas

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The agricultural policies until the mid-1980s had
the following features

• Mandatory determination of areas planted for
  strategic crops both at the governorate and
  district levels
• Official pricing and marketing of a large group
  of agricultural products (all the strategic
  crops, some vegetables (such as onions, tomatoes
  and potatoes), broilers, eggs, milk, and others
• Subsidisation of agricultural inputs
• Easy access to land and water resources through
  the regulations involving land reform and
  distribution and rental of state property
• Investment programs
• Provision of loans to agricultural producers
• Since 1985, these polices have undergone the
  following changes
• Limiting official pricing to the strategic crops
• Shifting from mandatory to indicative planning
• Limiting monopolistic public marketing to the
  strategic crops processed by public processing
  plants (cotton, tobacco, and sugarbeet), and
  opening marketing and processing of other
  products to the private sector
• Opening the export of all agricultural products
  (except wheat, cotton, and tobacco) to the
  private sector
• Promoting private investments in agro-processing
  and agricultural marketing under the investment
  law 10 of 1991
• Exempting exported fruit and vegetables, olive
  oil, and cotton and its products from
  agricultural production taxes
• Increasing the volume of agricultural loans
• Increasing the investment budget of the MAAR
• The basic instrument for implementing
  agricultural policies has been and still is the
  annual production plan

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AGRICULTURE AND THE MACROECONOMY2-In 1999,
according to calculations based on official
statistics, the real per capita GDP stood at a
level 2.5 percent lower than that of
1980Structure and growth of real GDP (at 1995
market prices) for various sectors from 1985 to
1999
Source. Central Bureau of Statistics. Statistical
Abstract 2000
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Real per capita private consumption expenditures
have exhibited stagnation since 1985, never
having surpassed the level of that year during
the last fifteen years.Average annual growth
rates of real per capita expenditures on GDP
Source. Computed from the data of table 2.1.2.
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The average annual growth rate of real investment
in agriculture during the period 1990-99 has been
the lowest of all sectorsDistribution and growth
of real gross fixed capital formation by sector
and component
Source. Computed from Central Bureau of
Statistics. Statistical Abstract 2000.
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• The inflation in food prices, at 5.5 percent
  annually during 1990-99, has been much lower than
  that of non-food items, which was near 9 percent
  annually during the same period.
• The total labour force employed in agriculture in
  1999 was equal to 828 thousand people (114
  thousand female and 704 thousand male). This
  amounts to 17.6 percent of the estimated active
  labour force, and compares with 1081 thousand in
  1998 and 918 thousand people in 1991, or 28.2
  percent of the total employment then.
• Public enterprises receive more than two thirds
  of total bank credit. During 1994-99, ninety
  percent of credit to the public sector was
  allocated to the two largest public companies,
  which are both agriculture related, namely the
  General Organisation of Cotton Ginning and
  Marketing (GOCGM), and the General Organization
  for Cereals Production and Trade (GOCTP).
• Major feature of the banking system is the meagre
  incentives it offers for private formal savings
  (real interest rates have been negative for much
  of the last two decades).
• Syrias external position has improved
  substantially in the last few years because of
  the increase in oil related exports, while
  private exports have remained steady.
• Crude oil accounts for 63 percent of total
  exports, with fruit and vegetables second at 10.7
  percent of exports, and raw cotton third at 4.5
  percent of exports.
• Incentives to stimulate private sector exports
  were introduced during 1996-99, but have not been
  sufficient to generate significant growth of
  exports.
• Imports have gradually been liberalised

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The exchange rate system has undergone
considerable changes in the last decade.
Generally, Syria has implemented a system of
multiple fixed exchange rates. During the most
recent period Syria has made substantial progress
in reducing the exchange rate distortions.
Exchange rate developments in Syria (all rates
in SP per US , except where indicated

• An interesting puzzle is why, given the inflation
  rate differentials between Syria and most of its
  (officially) trading countries, such as the EU
  and the Arab countries, the open market exchange
  rate has stayed nominally constant, and in real
  terms appreciated.

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3. STRUCTURAL ASPECTS OF SYRIAN AGRICULTURE
RELEVANT FOR STRATEGY FORMULATIONTotal farm
holdings and proportion of holders with main job
farming in 1981 and 1994
Source. 1981 and 1994 census of agriculture
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Types of farm households

• landed holders whose main occupation is not
  farming (mainly absentees)
• landed holders with farming as a main occupation,
  i.e. owner-operators
• landless holders whose main occupation is not
  farming (mainly absentees)
• landless holders with farming as a main
  occupation, i.e. owner-operators without land
• sharecroppers and tenants on private land having
  a written or oral agreement with the owner of the
  land
• land reform beneficiaries and state land
  distribution beneficiaries that do not yet fully
  own their land.
• tenants on public land, renting in lands
  belonging to the old state land establishment or
  to the expropriated land reform areas not
  distributed to beneficiaries
• squatters on public land -a category of workers
  aiming at becoming legal tenants and for which
  regularisation is on-going
• squatters on private land, who are mainly
  sharecroppers whose contract has expired and
  whose rights are awaiting arbitration
• labourers in state farms, joint ventures or
  larger private farms with a permanent contract,
  which is a very small category as most contracts
  are for short term casual labour
• landless and near landless labourers, mainly
  descending from small owner or sharecropping
  households with inadequate land base to
  redistribute to children.
• Agricultural entrepreneurs, these operators rent
  or own large areas of land, especially in the
  Northeast part of the country.
• These groups can be overlapping

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Size distribution of holdings with land according
to types of tenure
Source. Computed from the 1994 census of
agriculture
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Distribution of different sizes of holdings
across mohafazat in 1994
Source. Computed from 1994 census of agriculture
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The basic characteristic of the Syrian land
tenure system is the co-existence of formalised
systems of tenure side by side with customary
institutions (urf).Allocation of original
state land and land expropriated according to
land reform law
Source. Forni 2001 A considerable tenure problem
involves squatters on both public and private
land. Of the 69 thousand families that rent state
land, about 23 thousand are estimated to be
paying squatters, namely holders whose contracts
have ended and await renegotiations. There are
also a considerable number of squatters on
private land.
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Labour utilised by farm holdings by size
categories
Source. Computed from the 1994 Agricultural
census
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Pattern of irrigated land across holders of
different sizes
Source. Computed from 1994 census of agriculture
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Capital-labour ratios for different sizes of
farms in Syria

• Source. Computed from the 1994 census of
  agriculture
• There appear to be more machines per Ha among
  small holdings than among large holdings
• The opportunity cost of family labour (the
  so-called shadow price of labour) is lower for
  smaller holdings, compared to large ones. This is
  consistent with excess supply of labour by
  smaller holdings

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The overall water balance for the country is
currently negative.Proportions of farm holdings
irrigated by different methods and average
irrigated areas by farm size classes for all Syria
Source. Computed from 1994 census of agriculture
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4. PERFORMANCE OF THE AGRICULTURAL
SECTORIndices of the volume of agricultural
production (1995100)
Source Various Annual Statistical Abstracts
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Allocation of cultivable land in Syria for 1999
Source. Westlake (2000)
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Per capita production of major products, and
population of animals 1990-97
Source. Computed from FAO project data base
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Yield developments and variability from 1989 to
1999 for strategic crops
Source. Computed from data in FAO project data
base