04 Dec 2023 --- The Palestinian agri-food industry is facing “a monumental transformation,” with trade in the West Bank heavily disrupted, international exports almost ended, business contracts canceled, reported settler crop destruction and tens of thousands of farm workers prevented from traveling or transporting goods. Produce is rotting en masse, and the market is operating at roughly 25% of prior year levels. 

Adnan Matouq, a market intelligence and resource development specialist at The Palestinian Trade Center, tells us exact figures and data are still being processed, but “no one really knows what comes next.”

“From policies to daily life, the landscape is in a constant state of change, and projections for the next year are far from optimistic.”

The agricultural sector comprises 6% of the national GDP, according to the Palestinian Monetary Authority’s (PMA) 2022 Annual Report, estimated to be roughly US$16 billion. The World Bank puts it closer to US$20 billion. 

Before the October 7 Hamas attacks, the MENA region was profiting from booming olive oil prices amid droughts in Europe. The PMA noted a 3.6% growth in the West Bank economy, reaching about US$12.9 billion, and an approximately 5.6% rise in the Gaza Strip economy, which totaled around US$2.7 billion. 

According to the PMA, this growth was also propelled by the increasing number of Palestinian workers in Israel and improvement in consumption, which in turn contributed to the growth of the trade and services sectors. 

Now, at least 180,000 Palestinian workers have reportedly been barred from entering Israeli territories from Gaza, and checkpoints restrict movement within and between the West Bank’s three official areas. The International Labor Organization estimates almost 400,000 Palestinians have lost their jobs since the war’s outbreak. 

West Bank divisions 
The Israel Defense Forces (IDF) says these measures are for security, needed in the wake of the Hamas attacks. Israel’s agri-food trade is also suffering from the dro in labor, with Knesset ministers recently signing a joint call for volunteers to help nclick="updateothersitehits('Articlepage','External','OtherSitelink','West Bank division, Gaza destruction: How the Israel-Hamas war is killing Palestine’s agri-food industry','West Bank division, Gaza destruction: How the Israel-Hamas war is killing Palestine’s agri-food industry','338077','https://www.foodingredientsfirst.com/news/israels-food-technology-sector-battles-wartime-upheaval-as-hamas-conflict-rages-on.html', 'article','West Bank division, Gaza destruction: How the Israel-Hamas war is killing Palestine’s agri-food industry');return no_reload();">save the nation’s industry. 

In the West Bank, the Oslo Accords stipulate that Areas A and B are under the control of the Palestinian Authority and Area C is under Israeli control until a transfer can be made to the Palestinians. Area C, which comprises over 60% of the West Bank and is the only contiguous zone, isnclick="updateothersitehits('Articlepage','External','OtherSitelink','West Bank division, Gaza destruction: How the Israel-Hamas war is killing Palestine’s agri-food industry','West Bank division, Gaza destruction: How the Israel-Hamas war is killing Palestine’s agri-food industry','338077','https://elibrary.worldbank.org/doi/abs/10.1596/978-1-4648-0193-8', 'article','West Bank division, Gaza destruction: How the Israel-Hamas war is killing Palestine’s agri-food industry');return no_reload();"> rich in natural resources and holds most of the arable land. 

Since the attacks, access to Area C has been closed almost entirely for Palestinians living in the other two zones, and roadblocks have been erected throughout Areas A and B, slowing down transport and disrupting businesses. According to reports, signs warning that trespassers will be shot have been put up around the area’s borders. 

Izzat Zeidan, director of projects at Palestinian Agricultural Relief Committees, says the West Bank’s agricultural sector has contributed up to 25% of its GDP, but the contribution has been reduced in recent years amid growth in other sectors like goods and services. 

“Agriculture used to be a shock absorber and last resort for Palestinians in times of crisis like this,” he tells Food Ingredients First. “It’s a social issue rather than just economical. It’s a matter of stability.”

The value of the sector is a minimum of US$300-400 million, he estimates. Up to 29% of Palestine’s agricultural workforce relies on access to Israeli controlled territories, Zeidan says.

Bouncing checks, crop destruction 
With so many workers restricted from travel and with imports from Israel cut off, incomes have dropped, demand for goods has risen and prices have shot up, Zeiden explains. So, the shock absorber mechanism is losing its social power and economic value. 

According to the Palestine Farmers’ unio, the crisis is hitting the olive harvesting season hard, which was projected to draw in around US$70 million this year. And with so many trade barriers and spoiling produce, businesses are losing contracts. 

“The private sector heavily depended on the occupation for most of its exports (80%), and a lot of those contracts have now been terminated. We are witnessing a ban on Palestinian products in the state of Israel, and many businesses who have pending checks are now unable to cash them, resulting in a horrific increase in bounced checks,” says Matouq. 

A compounding issue is attacks from Israeli settlers, with accusations of crop destruction and intimidation against Palestinians on the rise. According to the Ministry of Health, at least 237 Palestinians have been killed and about 2,850 others injured by Israeli forces in the West Bank since October 7. According to Human Rights Watch, over 1,000 people have been displaced. 

“Settler violence continues to increase,” Matouq says. “This has created a state of panic for Palestinians as they are afraid to leave their cities, towns or villages to conduct their business. It is almost always a risk to leave the city you reside in right now.” 

Gaza’s plight 
With the IDF continuing a total blockade on the Gaza Strip and conducting a ground invasion in the region’s north, agri-food trade has toppled. Last week, the Palestinian Central Bureau of Statistics (PCBS) estimated that at least US$2 million is being lost daily, with US$1.6 million attributed to stalled production alone.

In 2022, agriculture contributed 11% to Gaza’s GDP, with a total value of roughly US$575 million. Of this, 54% accounts for plant production, 16.7% for horticulture and trees, 69.7% for vegetables and 13.6% for field crops. The percentage of animal production reached 46% (52.2% for meat, 26% for fish).

“It should also be noted that many families have lost their livelihood from fish production as a result of the destruction of fishing boats,” says PCBS. 

“Several reports issued about Gaza Strip on the agricultural sector indicate that the total agricultural losses will exceed US$180 million in light of the destruction of thousands of trees by the occupation during its recent aggression and the bulldozing of many agricultural areas.”

Matouq says the war is unlikely to impact the international F&B trade much since Palestinian produce currently accounts for so little. 

“However, in the past few years, the private sector has been working diligently to obtain (and many have already obtained) internationally accredited certifications such as ISO, USDA Organic, Ecocert and many others. This was part of the Palestinian brand trying to build trust and loyalty in the international market to give our products a competitive advantage,” he says.

“But this initiative has been marred by the war. only time will tell what more the Palestinian brand will have to accomplish to regain its momentum in the international market.”