ECONOMIC INTEGRATION OF THE AGRICULTURAL SECTORIN AND PALESTINE

Protokoll zum Vorbereitungsseminar für die Beantragung des DFG-Projektes vom 4. bis 7. November 2007 in Jerusalem

Rico Ihle

21. November 2007 Inhaltsverzeichnis

4. November 20071

5. November 20073

6. November 20075

7. November 2007 12 Zusammenfassung

Im Protokoll werden folgende Abkürzungen für die Namen der Beteiligten verwendet: AA Adar Assaf (Agrexco) HA Hillel Adiri (IPCRI/Parc) HG Harald Grethe IF Israel Finkelshtain LG Linde Götz MK Mahmoud El-Jafari RI Rico Ihle SC Stephan von Cramon-Taubadel UK Uli Kleinwechter YK Yael Kachel 4. November 2007

Zusammenfassung

Exkursion mit Mahmoud El-Jafari nach Jericho

Organisator:

Dr. Mahmoud K. El-Jafari Professor of Economics & Director Al-Quds University of Jerusalem Faculty of Graduate Studies, Institute of Business & Economics PO Box 1012 Betlehem, , Palestine Tel Fax(office) +972-2-279-9497, Tel Fax(home) +972-2-274-4218 E-mail: [email protected] Homepage: http://www.alquds.edu/ Gesprächspartner:

Azzam Tubaileh (PhD) Deputy Minister Palestinian National Authority, Ministry of Agriculture PO Box 197 Ramallah, West Bank, Palestine Tel Fax(office) +972-2-240-3320, Tel Fax(home) +972-2-240-3312 E-mail: [email protected]

Ibrahim Qtishat Director Palestinian National Authority, Ministry of Agriculture Jericho Agriculture Department Jericho City, West Bank, Palestine Tel +972-2-232-2425/4460, Tel +972-2-232-1280, Mobile +972-59-956-9014 E-mail: [email protected]

Ibrahim Id’iq Director of Jericho Palm Association Jericho City, West Bank, Palestine

Muhammad Hamidaan Manager of Dates Packing Factory Parc Jericho City, West Bank, Palestine

2 5. November 2007

Zusammenfassung

Exkursion mit Israel Finkelshtain, Yael Kachel und israelischen Partnern

Organisator:

Liron Tamir Head Economist Israel Dairy Board (Production & Marketing) Aderet House 46 Derech Hamaccabim PO Box 15578 Rishon-Le’Zion 75054, Israel Tel +972-3-956-4753/50, Fax +972-3-956-4766, Mobile +972-50-569-7063 E-mail: [email protected] Homepage: http://www.israeldairy.com/ Excursion Israeli Milk Market - 5/11/2007 (by Liron Tamir) • Sion - Israeli Company for Artificial Insemination & Breeding Ltd ( Cha- fetz Chaim): Dr. Yoel Zaron - professional manager Main insemination facility in Israel (more than 90% of inseminations), company is owned by the growers • Presentation on the Israeli milk sector - Ralf Ginsburg, responsible for milk quality, and Liron Tamir, economist, both from the Milk Marketing Board • Food Center Kvutzat (Kibbutz) - Zwika Sarid, Manager The food center supplies food to about 6000 milk cows (I remember 9000???) in 60 farms (10 Kibbutzim and 50 family farms). The center sells about 300 ton mixed fodder per day, some of it as far away as cowsheds in the Arava area south of the Dead sea. For family farms the service includes also food distribution in the cowshed. • Cowshed Kvutzat Yavne - Assaf, responsible for the cowshed First-rate cowshed. Milk quota 4.2 million liter, actual production is higher - pro- duction over quota is supplied to the kibbutz for own consumption (Kvutzat Yav- ne is a religious kibbutz, which still adheres to the collective ideology). 350-400 milk cows + 80% heifers. Fattening of own calves. Food is supplied from the food center. We observed the showering of the cows for cooling and the milking. • Farm Chanan Cohen, Bnaia: Family cowshed, Quota 520,000 liter (about 50 milking cows). The farmer Cha- nan works with one Thai worker, food is supplied by the food center Kvutzat Yav- ne. Fattening of own cows. In addition to cowshed some field crops are grown. • Farm Yaakov Kabala, Moshav Bnaia: Family cowshed and small dairy, Quota about 500,000 liter. The farmer Chanan works with one Thai worker, food is supplied by the food center Kvutzat Yavne. Fattening of own cows. In addition to cowshed some field crops are grown. The dairy produces about 300 t of cheese per year from own milk, milk from other cowsheds and milk powder (3 kinds of soft, salty cheeses - Bulgarit, Zfatit and cheese for backing and cooking). The cheese is sold to shops, bakeries and the institutional sector (catering). • Farm Shmuel Aharon, Moshav Bnaia: Family cowshed (father and son). Quota ca. 2 million liter (= the farmer has a joint venture with another farmer from Bnaia and produces also the milk for an additional farmer from another Moshav), about 200 milking cows. The farmer produces his own food. Fattening o f calves.

4 6. November 2007

Zusammenfassung

Arbeitstreffen im Notre Dame Hotel. 9:15 Eröffnung und Begrüßung durch Stephan, Material Göttingen verteilt

SC Vortrag "German Research Council Trilateral Projects" Tasks of the workshop: • Commitment to proposed cooperation • Ex ante assessment of contribs • Critical assessment of pre-proposal • Comprehensive to-do-list: – Who is going to contribute what? – And by when? • Deadline: April 2008, extension (hopefully) not necessary • Starting date: fall 2008, Sep1 / Dec 1 2008 • Finish proposal by early march 2008 (or Jan 2009 in case of delays etc.) IF How modelling consistent with publication focus? → to be discussed MJ Why no post-doc for Palestine? How lond post-doc position? SC Send presentations around and create project homepage with presentations etc. IF Replacing PhD students by Master studs? - possible as long as budget neutral SC Data - Costs? Availability? Collection necessary? → determines time line IF Funds for data collection possible? Of for hiring company services for this task? yes, but DFG favours incorporation of MSc/ BSc students into projects MJ Topics: • Labour not the whole subject • Palestinians leaving for Israel & coming back from Israel → technology transfer • Trade more important • Data available to a broad extent, but reliability problematic SC • Broaden focus to movement of agric. products & inputs, away from labour mi- gration • Data necessary, part. prices in high frequency MJ Vortrag: Structure of Pal agriculture (Vortrag noch nicht eingesandt) 10:00 • Main indicators of agr sector – Increasing importance (share in prod sector %/ little in GDP) – # employees in agr 45.000 - 85.000 – Cultivated area constant: only 10% of territories – Allocations to crops change – Detailed stats 1993/94 - 2004/05 for wide range of products – Vegs & field crops: increasing val of prod – Data on district level

6 • Westbank (WB): 10% irrigated, mainly dayland agr: olives, figs etc. • Consumer prices generally lower than Is prices • Time series 1995 - 2005: monthly for beef, lamb, chicken (strong fluctuatioins), eggs, milk, fish, cucumbers cheaper than fish • Pal agr exports: & due to mobility restrictions (1996-2004), shift from perishable to non-persihable prods • Total exports: roughly constant, but also highly variable • Pal imports: stable, slightly %, some transshipment not recorded, not entirely registered, size: around 10-fold of exports HG Estimates for error of non-recorded trade? MJ Up to 50%, problems regarding recording • Export data by origin & destination • Re-exporting to Israel occurs, but to very small extent (East Jerusalem e.g.) • Pal prices lower than Is ones → consumer movements to Pal markets • Contraints facing the agr sector in Pal (own article) SC Could this paper be cited in the proposal? • For export to Is: cars from Is have to be rented • (Policy) objectives from the Pal perspective: increase local prod & decrease imports for improvement of trade balance • Trilateral agr trade agreements (Is,Pal, Jordan): some contradictions SC Possible to include fourth country into proposal, e.g. Jordan MJ Majool, oranges exported via Jordan → Jordan will be involved in any way • Some specialisation on prod in WB: – Vegetables & (v&f) in North & Jordan valley – Lifestock in South • Prod not enough • Some seasons shortages: produce from Is imported • Monthly price data available, but strong daily changes → not reflected in month- ly averages → higher frequency data required, e.g. during holidays prices % (because of insufficient infrastructure) SC Daily/ weekly data available? Feasable to collect? MJ Wholesale/ auction prices, very small margins (differences of 0.5-1 NIS) SC Same frequency data on Is side necessary YK Daily, weekly & monthly prices for v&f on wholesale level available MJ • Farmers in Jenin & Nablus: from farm direct delivery to retailers • 6-7 wholesale markets in WB in major cities (Jenin, Nablus, Ramallah, Betle- hem, Hebron etc.)

7 • For producers in WB very small margin (Jenin/ Tulkarem and Jericho production centers, consumption centers Ramallah, Hebron) • For imports from Is larger margins • Why shift of consumption towards meat during the last 10 years? SC Coping strategies: consumer behaviour acc. to supply fluctuations might be very interes- ting to study MJ Ramadan & Sept/ Oct/ Dec: consumption % appr. 200.000 foreign Pal workers from Gulf states in summer back home: consump- tion % 10:45 Break YK Vortrag: "" 10:55

11:20 Coffee break SC New topic/ changes of focal points Consider barriers inside WB? MJ High frequency for observing price variation necessary Political contraints first IF How to measure barriers? MJ Trancactions costs (TC) → shift of production as a result IF Try to quantify waiting costs for trucks etc. Study by Kislev: incorporation of sectors other than dairy for modelling, compare "Economic Aspects of Trade Relations - Efrat Hadas 2001" HG Initial idea: General Equilibrium Model (CGE) for agr as a whole - update exiting SAMs? Partial Equ. Model (PE) for dairy sector

Followed by lively discussion concerning component 2A) of preproposal

Is a zero-tariff trade policy really the optimal solution for Pal? IF → Talk to more people about this option Trade regime driven by revenue considerations SC in some cases YK Compontent 1B) of preproposal: branding • Real coop between Is & Pal exporters working under 1 common brand • Collective brands • Involvement of government in branding on Is side (Jaffa, Carmel) • Consumer precetion of diff branding, e.g. Is-Pal coop, fair tradem common brands HG "Peace dates from the moon valley" • Talk to experts for background, e.g. SIA (?)

8 12:45 Mittagspause YK Vortrag: "Branding - Coop in Exports" 15:30 Contingent valuation : demand of german consumers for all kinds of combinations of SC products & destinations (Is, Pal, both) YK Objectives of research: application & theoretical modelling Methodology: • Expert interviews • Theoretical modelling SC Focus on research topic preferable to general theor. modelling • Consumer survey SC Should be mentioned in proposal SC Willingsness to pay for ethnical component IF Econometrics of differentiable goods well publishable → could be applied in this context LG Choice experiments (majool dates) Contingent valuation → improve methods?? (Marg- graf) YK Inproposal emphasis on practical/ applied aspects MJ Mix of quantitative & qualitative methods HG Vortrag: "CGE and PE Modelling" 16:15

IF How demand & supply functions usually modelled? HG Usually not modelled, taken from literature (behavioral functions: a few thousands of them needed) IF How detailed the proposal? HG General & detailed SC What models for what big questions? CGE? PE? Rest of world? IF Agr labour force in Is not very important → PE more favourable since nearly no macro effects SC GTAP7: Is a stand alone country? → quick & inexpensive application of CGE for Is For details in agr trade & focused products PE necessary HG • Sectoral cost curve → supply function • Competition dep on product in PE • One can build on existing work, but still work to be done by PhD studs: at least 1 year of pre-investment needed • dairy: 1 PhD student • CGE: 1 PhD student • Country coverage: small country assumption → regionalize Pal? → base data for zones necessary → different challenge

9 • Disaggregation of households/ farms? • Static/ dynamic? IF Issue of price fluctuation → pronounced short-termed HG Challenging to model Relate to village CGEs SC Interaction point of price transmission & modelling Estimation of technology transfer HG Innovative linkage between emp. estimation of relationships and modelling i.o.t. avoid heavily assumption-based models → innovative and easily publishable Link: econometrics/ game theoretic applications with modelling • Market structure (border closures + monopolistic) • Net trade vs. spatial? → types of price transmission • Pars e.g. dairy supply fucntions Spatial: transportation cost model (programming approach) → econometrics? estimate TC (non-stationary)? Data requirements: prices & quantities IF Easily data for dairy prices (at prod. level), for v&f more difficult - are not collected at growers level in Is SC Name modelling approaches & which questions to answer 17:30 Coffee break UK Vortrag: "Village CGEs - Modelling and data requirements" 17:45

IF Milk quotas only tradable inside villages or land → suitable for village CGEs UK Data collection effort per interviewer : • 1 interview 1-2 h • 4 interviews/ day • 25 days IF Apparently very suitable for Kibbutzim

MJ Usually no isolated villages despite of road blocks → in general well integrated Consumer behaviour: buy products during summer (low prices) → make them storable at home SC Security regions = "villages"? → challenge of data collection, much effort needed MJ Unclear whether regional consumption data for Pal available, for sure until 1996 in the Is Bureau of Statistics SC NGO data?

10 → village CGEs do not seem appropriate since no local equilibrium processes HG Separated zones necessary for village CGEs, level? MJ Data on (security) zone level no problem People for successful data collection available HG 2-3 zones with potentially large effects and also with high overlap with administrative zones to be selected MJ Zones acc. to decreasing order of price level: 1. Jerusalem, Ramallah & Betlehem 2. Nablus & Hebron 3. Tulkarem & Jenin → 3 regions HG Perishable goods Labour → CGE IF Consumption of services highly regionally concentrated (partic. non-tradables, health, finance) → Their prices increase sharply in case of closure HG SAMs for zones difficult & challenging Question of suitable people on Pal side for data collection important local CGEs?

11 7. November 2007

Zusammenfassung

Besprechung im Notre Dame Hotel.

Gäste: Adar Assaf Product Manager Carmel Agrexco 121 Ha’hashmonaim St., Tel Aviv 67133, Israel Tel +972-(0)3-563-0873, Fax +972-(0)3-563-0918, Mobile +972-(0)54-792-0754 E-mail: [email protected] Homepage: http://www.agrexco.com, http://www.agrexco.de

Hillel Adiri Consultant, Agricultural Training, Development & Marketing Israel/ Palestine Center for research and Information IPCRI and Parc 38 Moshav Yarkona, 45915 Tel +972-9-740-6818, Fax +972-9-745-0577, Mobile +972-52-881-3337 E-mail: [email protected] Homepage: http://www.ipcri.org YK Vortrag: "Trade Relations Is-Pal" 10:25 • Linear programming • 3 entities: WB, Gaza, Is • 2 prods • Demand estimation for 30 v&f • Quaterly data 1973-1993 • Scenarios • Largest effect: decrease in labour in Is by 15% (price increase: fruits 42%, vegs 59%) HG Consider findings, but don’t use model IF Really leave out v&f? • Most important prods • Most int. insights into shadow prices • Costs of replacing Pal workers in v&f sector IF Data updating can be done by Is side HG Problem of different quality degrees (quality differentiation) YK Disaggregation only to citrus, melons etc. IF ··· or to perishable vs less perishable products HG • Regionalized PE Pal • CGE Is & Pal on national level • CGE agriculture • What SAMs for Is are available? • How close to our purposes? 11:00 • If not available no advantage, either start with something else Adar Assaf: Carmel/ Agrexco Hillel Adiri: IPCRI/ Parc IF Past experience in coop in trade Is-Pal

Adar Assaf AA • 23 years in Agrexco • Agrexco only marketing, no partners of producers, only infrastructure & marke- ting services • Free from farmers/ growers interests • Strawberries: Gaza strip • Grapes • Change from Carmel to different bradn name for Pal products

13 • New brand: Coral for Pal marketing • First product: Strawberries 2002 (no flowers, vegs etc.) • Reasons: – Produce not from Is – Produce from other side of the border • Unitl 2007 no larger Pal exporter emerged -Why? • 51% of Agrexco belong to Is government • Used to be monopolistic before liberalization • 75% of all agr exports of Is • "Natural monopol"because of knowledge, expertise & infrastructure • 92 US$ for airshipments soon increase by 20% • Alternative: vessels to Marseille suitable for flowers, table grapes, strawberries (60% via sea) • Once a week, every Thursday • Another line to Triest • Coral brand: 200 ha strawberries (Gaza) • Challenges/ problems: 1. Quality 2. Production structure/ Mentality 3. Border Situation Comments to these points: 1. 2. • No space anymore for small producers • Packing houses, ... EuroGAP etc necessary infrastructure • Only few dunams (1 dunam = 0.1 ha) per family (1-2) without infrastructural facilities • # growers about 300 → responsibility question • Organized in cooperatives, formerly 1 contact per coop • UNique identification suggested → only partial success 3. • Waiting time at border terminals • Reloading necessary because of security constraints • Before 200/ 1994 easier, even direct crossing possible • Not suitable circumstances for perishable/ food products • Second security check for air shipping necessary → temp cannot be kept constant at the required level • Minimum price cannot be reached due to additional expenses • Quality standards not met by Pal side → out of portfolio

14 • EuroGAP main constraint for export to Europe • 300 ha of strawberries → ≥ 2000t programs and commitments necessary for succesful marketing • Transfer of inputs to Gaza not possible • Normal harvest ≈ 1200t/season • Security and administration around infrastructure & quality critical points • Condition: every grower needs EuroGAP certificate • Production process: – May: motherplants, Aug/ Sep planting → further information regarding flo- wering – Season: Nov-Feb – Sep/ Oct agreements with clients in Europe → this year not possible be- cause of security situation • For flowers very similar process • Backup beweeen Gaza & Westbank in case of failure in either region (e.g. stra- wberries in Westbank, grapes in Jordan valley - difficult) • Smuggling of Pal products via Is farmers • Cherry tomatoes, cluster tomatoes, paprika • 1200 t strawberries: 6-7 Euro/kg sales price - duties, transport, dealers/ impor- ters costs etc • Edeka, Kaufland, Metro direct contracts • But usually contracts with importers because of distribution facilities

Hillel Adiri HA • Flowers specialist • Nov 90 to Gaza strip (in short: Gaza) (during Intifada) • 10-12 labour days/ year needed for citrus • 360 labour days/ year needed for flowers → very intensive crop → remedy for hogh unemployment in gaza strip • 700,000 Pal passed as labourers from Gaza into Is in 1991 • 80% of inputs provided by Is, 5.6 ha in 1991 • 1994: 100 mill flower heads, 80 ha, 0.15/0.16 Euro/head • 2007: 50 ha, 58 growers • 1 labourer/dunum • Highest labour intensity & very suitable climate in Gaza • Carnation flowers (Nelken) in Gaza recommended by auctions in Holland

15 Transfer of inputs and knowledge

• 220 NIS/day labour price in Is • 40/ 45 NIS/day highest in Gaza • Win-win-business • Inputs from Is → both sides share interest in successful export 13:00 Lunch break LG Vortrag: "Brainstorming - Price Transmission" 14:00

RI Vortrag: "Price Transmission - Methodological Background" 14:00

MJ Pal Bureau of Statistics might sell weekly data, no need th collect then... SC How do consumers cope with price changes? What is the effective price? MJ • Livestock less sensitive (can be stored) • v&f much more sensitive • Trade Is → Pal more stable, margins ≈ constant • Trade Pal → Is more volantile SC • Storage literature • Storability of product and consumer behaviour important aspects → Qualitative study? → How frequently what products are bought? → Consider work with consumer surveys • Price data should be trade weighted IF Several hundred obs would be sufficient MJ Field workers (professionals) & MSc students for data collection Price & quality (postbone buying decisions to Saturdays) LG Panel data for hourseholds? IF Vortrag: "Agricultural Protection in Israel - A Political Economy Approach" 15:00

Ideensammlung/ Abwandlung des Vorantrages: "Ideas and Modifications of the Prepososal"(Seiten 9 ff.)

18:15 Ende der Besprechung

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