Syria: Does export of basic food items affect their availability, pricing
The decision to allow the export of essential food items in Syria, including olive oil, has sparked public criticism due to concerns about their availability and potential price hikes amidst the worsening living conditions and income decline for the population.
According to a decision issued by the Syrian Prime Ministry on December 6, the export of filtered and packaged olive oil is permitted in containers not exceeding five liters or kilograms, with a maximum quantity of 5000 tons. These quantities may be increased based on market developments.
The recommendation was based on consultations held between the Syrian-Chinese Business Council, the Federation of Syrian Chambers of Industry and Commerce, and the Ministry of Foreign Affairs to identify exportable materials and to allow the export of olive oil to China in small packages.
The decision also permits the export of male Awassi sheep and mountain goats throughout the year, except during the breeding period extending from January 12 to the end of March annually, in accordance with the specified health conditions by the Ministry of Agriculture.
Furthermore, based on the Advisory Committee’s recommendation, the decision allows the export of locally manufactured pastries and noodles equal to the quantities of imported wheat by the manufacturing companies.
The decision also permits the export of canned legumes after importing them for processing and packaging by applicable factories, depending on the export volume for those facilities, as well as allowing them to use foreign currency resulting from exports to import dry legumes in proportion to the production capacity of these factories.
What are the implications?
This decision to allow the export of olive oil comes three months after a ban was imposed on its export since the beginning of September, based on the recommendations of the Economic Committee and the study of the production status for the 2023-2024 season and the expected produced volumes and comparing it to the actual needs and surplus marketing methods.
According to Abeer Johar, the head of the Olive Office at the Ministry of Agriculture, the purpose of the export ban was to meet the local market’s needs for olive oil at affordable prices due to a decrease in production compared to previous seasons, caused by “climate changes and being an annual production in most provinces.”
Economic researcher Adham Qadimati told Enab Baladi that exporting essential goods, including olive oil, outside its season could lead to further price increases and consequently increase the burden on residents in regime-controlled areas.
Qadimati also believes that there will be no tangible impact on the Syrian economy after allowing exports, citing the cost of royalties and the absence of fundamental infrastructure for trade and industry, such as electricity.
Ibrahim Qosheji, a professor at Hama University’s Faculty of Economics, told the state-run Tishreen newspaper on December 9 that import or export bans in their various forms are only partial solutions for a limited sector, not comprehensive measures for the overall economy.
He stated that exports help ease pressure on the exchange rate of the Syrian pound against the dollar on the condition that the foreign exchange returns or import financing and exports do not lead to capital flight or the remaining returns of local investments heading abroad, making them a cause and means for migration.
Regarding the impact of exports, Qosheji stated that it would affect local commodity prices, contributing to their rise. For example, if a tin of oil is currently sold for 1.2 million Syrian pounds, its price could increase to 1.5 million pounds or more with the start of exports.
Syria ranked third among Arab countries in terms of people’s ability to access and afford food, with an 11% increase in food prices this year compared to 2019, according to a report by the United Nations Economic and Social Commission for Western Asia (ESCWA).
A report by the World Food Programme (WFP) revealed that the standard reference food basket price for essential food items in Syria has increased by 100% since the beginning of this year, triple last year’s prices.
What are the reasons?
The issued decision justifies allowing the export of olive oil by stating that it was in response to requests from companies producing olive oil packaging, as the export ban led to the loss of “foreign markets and one of the largest sources of foreign currency.”
Ghazwan al-Masri, the President of the Federation of Syrian Chambers of Industry, told the local news website Athr Press that the approvals require the import of raw materials for export. For example, those who want to export pasta must import wheat. Regarding olive oil, it must be packaged in small quantities and specific packages, thereby “not affecting the price.”
Al-Masri added that the federation requested approvals for exporting these goods “to support industries since the Syrian market currently suffers from weak purchasing power.” These approvals aim to ensure the continued operation of factories.
Al-Masri emphasized that these goods were allowed for export before the COVID-19 crisis. He called for easing export procedures, which sometimes delay export operations.
Exporting is one of the most important sources of foreign currency for Syria and ensures the full utilization of factories’ production capacity, as they are currently operating at only about 25-30% of their capacity.
According to economic researcher Adham Qadimati, the decision to export these essential food items came after lifting the subsidies on many commodities that had been supported in Syria during the previous period. This was an attempt by the regime’s government to increase foreign currency inflows through increased exports to “friendly” countries.
Despite the fact that the populations of these countries do not consume Syrian goods, the export licenses slightly activate the export process, according to the researcher.
Qadimati believes that the Syrian government is trying to promote externally that the situation in Syria is “safe and export doors are open to traders” to attract them and encourage their return to the country. However, he doubts the feasibility of this promotion, as goods exported from factories face paying royalties during shipping within Syria, which increases the cost for exporters.
Previous decisions by the government allowing the export of essential food items resulted in their scarcity and price increases in the local market.
In May, the regime’s government opened the door for potato exports of quantities exceeding the local market’s needs, estimated at 40,000 tons, until the quantity was depleted.
It also allowed the export of green garlic for a maximum quantity of 5000 tons for a period of two months. The government claimed that the decision to export these two commodities aimed to “support farmers and ensure they do not incur losses due to the high cost of fertilizers and fuel, and as they depend entirely on the domestic market, it would mean a significant loss for this season.”
These decisions at the time led to price hikes for both commodities in the market, especially since potatoes are considered a saving vegetable for many households amid the declining purchasing power of the population, with 90% of them living below the poverty line.
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