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Executive Summary
The "Greening Growth: Empowering MSMEs in the Agriculture and Agri-Food sector" project, funded by BMZ and implemented by Acted in partnership with GIZ, is aimed at bolstering the agricultural and agri-food sectors in Lebanon. This report provides an in-depth analysis of the Value Chain (VC) identification analysis, and findings, with a particular focus on the challenges and opportunities for Micro, Small and Medium Enterprises (MSMEs) in the districts of Baalbeck, Chouf, Hasbaya, and Bekaa. Predominantly the project aimed to identify and prioritize viable value chains; integrate circular economy solutions within these value chains; and enhance market access for MSMEs.
Context and Rationale
Lebanon’s agriculture sector, heavily reliant on MSMEs, is grappling with multifaceted crises that include limited access to capital, extreme inflation, and climate risks. Dependence on imports for basic supplies and devaluation of the Lebanese currency have escalated operational costs for MSMEs. Consequently, this sector struggles with food security threats, economic sustainability, and employment instability, particularly in rural areas. The compounding challenges underscore the urgent need for an innovative approach like the circular economy to counteract traditional resource-intensive practices and transition towards sustainable growth. Embracing circular models—such as resource recycling, waste reduction, and product regeneration—holds promise for establishing a more resilient and environmentally sustainable agricultural sector. As a part of the project, Acted undertook a value chain analysis to identify circular solutions within these agri-value chains and their feasibility.
Methodology
The analysis involved a participatory, multi-step approach to understand and identify feasible circular solutions within key VCs, selected based on their economic and environmental potential. The selected VCs were: Olive, Honey, Dairy, Apple, Aromatic Plants, Wheat and Barley, Vegetables and Legumes, Figs, and Grapes and Vineyards. Stakeholder consultations, focus groups, and key informant interviews were conducted with representatives from several Ministries, Chamber of Commerce, industry experts, and MSMEs to ensure a robust assessment. The study utilized secondary data reviews of three primary reports, including the GIZ Value Chain Report 2022, Acted's Circular Agriculture Assessment 2022 and Acted’s Study Report Towards Circular Economy 2020. Findings from these consultations and secondary data review informed a SWOT analysis and a matrix scoring each VC’s potential, ultimately selecting priority VCs for their circular economy suitability. The methodology is detailed further in this report.
Key findings within the prioritized value chains:
- Olives: Lebanon’s olive industry, significant for local employment and exports, faces issues such as high production costs and limited processing facilities. Circular solutions include utilizing olive pomace for eco-friendly building materials, producing olive leaf tea, and extracting polyphenols from wastewater, aligning with global health and wellness trends.
- Honey: This high-demand VC is beneficial to biodiversity but vulnerable to environmental changes. Proposed circular solutions involve beeswax-based products, such as natural candles and fruit coatings, which capitalize on the eco-conscious consumer market.
- Dairy: Lebanon’s dairy sector is integral to rural livelihoods but is impacted by high feed costs and inadequate infrastructure. The report suggests value-added processing of whey into products like sports drinks and yellow cheese to minimize waste and increase profitability.
- Apples: Apple cultivation in Chouf and Hasbaya is challenged by climate impacts and quality control issues. Suggested circular initiatives include producing gluten-free flour from apple pomace, pectin extraction, and cider production from unsold apples, enhancing market diversity.
- Aromatic Plants: Ideal for Chouf’s environment, this sector benefits from minimal resource requirements and high consumer demand. Circular options include producing natural repellents and essential oil-based beauty products, meeting the expanding market for natural alternatives in personal care.
- Wheat and Barley: Essential for local food security but hindered by high labor demands and climate variability. Circular economy options include using wheat straw for mushroom cultivation and sprouting barley as local livestock feed, addressing feed shortages sustainably.
- Grapes: A valuable export VC in Baalbeck and Bekaa, hindered by limited storage. Opportunities identified include grape pomace use in health foods, grape seed oil extraction, and producing disinfectants from low-quality alcohol, which aligns with sustainable health and safety products.
- Vegetables and Legumes: A crucial sector for local nutrition with challenges in storage and market access. Recommended solutions involve producing powdered onion and garlic using dry freezing techniques, extending shelf life and catering to consumer demand for natural spices.
- Figs: Cultivated mainly in Hasbaya, figs have export potential but require careful handling. Circular approaches include integrating figs into cereal bars and snacks, capitalizing on the growing health food market.