By land and sea: Water scarcity remains a concern as the sector looks for new growth opportunities

With benefits such as year-round favourable weather in the Jordan Valley, Jordan is self-sufficient in a wide variety of agricultural products and is a net exporter of many fruits and vegetables, making agriculture a substantial contributor to national trade. The kingdom is, however, one of the driest countries in the world and suffers from dwindling renewable freshwater resources. In recent years a number of initiatives have been implemented to improve the availability of such resources. These include a major project to begin pumping water from a large southern aquifer to Amman set to begin operations in 2013, which should significantly reduce shortages in the kingdom for at least 20 years, as well as longer-term plans for large-scale desalination projects.

LAND & OUTPUT: Total agricultural land stands at 10,250 sq km, or around 11.5% of the kingdom’s territory, according to the World Bank. Of this, 9.2% was irrigated as of 2009, the bank said in its most recent report on the sector. The main centres for agricultural production in the kingdom are the Jordan Valley, which benefits from a warm climate and fertile soil, and the northern highlands, which receive high levels of rainfall. Land availability is a challenge for the sector, exacerbated by the rapid growth of major cities. However the government is also working to increase the supply of farmable territory through offering farmers free land reclamation services, which has received support from the UN’s World Food Programme.

Total output from agriculture, forestry and fishing in 2011 represented around 2.92% of GDP at market prices, according to the Department of Statistics (DoS), while the World Bank put the figure at 3.3%. Agricultural output in 2011 was up 6.7% on 2010, or 3.9% in real terms, according to DoS figures. Output has grown strongly in recent years, at a compound average growth rate of 8% in real terms between 2007 and 2011. However, production declined in the first three quarters of 2012 by 2.5% year-on-year in nominal terms, or 9.6% based on constant prices.

FRUITS & VEGETABLES: Total production of vegetables stood at 1.93m tonnes in 2011, up from 1.79m tonnes in 2010, according to Ministry of Agriculture (MoA) figures. Tomatoes were the largest vegetable crop by weight, representing 40% of the total, followed by cucumbers at 12% and potatoes at 11%. Production from fruit trees stood at 426,530 tonnes in 2011, down from 460,240 tonnes in 2010, however over 2012 local olive production increased by 12%, according to the latest DoS measures. Olives were the largest fruit crop by volume, accounting for 30.9% of the total, followed by oranges at 14.3% and apples at 9.3%. The kingdom is the world’s eighth largest producer of olive oil, though most production is consumed domestically.

Ahmad Shukri Al Rimawi, a professor of development and extension at the University of Jordan’s Faculty of Agriculture, told OBG that olive cultivation is a secondary activity for as many as 90% of olive growers, who have other primary sources of income and devote limited attention to it. High land prices and the seasonality of production make commercialisation of the segment difficult.

CEREALS: Total wheat and barley production in 2011 was 19,801 tonnes and 29,285 tonnes, respectively, according to figures provided by the MoA. Almost all cereals consumed in the kingdom are imported, with domestic production accounting for 4.3% of wheat consumption and 4.4% of barley consumption.

Cereals face a major challenge in the form of limited water supply, as well as other issues, such as urban expansion encroaching on much of the most suitable land for growing them.

In order to address Jordan’s reliance on imports and its vulnerability to fluctuating cereals prices, the authorities have been looking at options such as encouraging more Jordanian investment in production abroad. In February 2012 the government announced it had received permission from Russia for Jordanian investment in wheat joint ventures there.

Some industry figures have also called for incentives for more production at home, using water from the Disi aquifer project (see below) once it comes on-line. However, others are sceptical. “In the past growing wheat in the south using underground water was looked at, but farms tend to switch to other crops like potatoes when wheat is not profitable enough,” Al Rimawi told OBG.

LIVESTOCK, DAIRY & FISH: The country exports eggs, can meet its own milk needs and is close to self-sufficiency in chicken and goat meat, according to MoA data. However it remains reliant on imports of beef and fish. The total value of livestock farming output stood at JD919.8m ($1.29bn) in 2011, according to the DoS, down slightly from JD946.2m ($1.33bn) in 2010. The largest category of production by value was broiler chickens, worth JD326m ($458.52m), followed by newborn sheep, at JD185.1m ($260.34m). Cattle milk production was worth JD94.5m ($132.9m) and dairy product output was JD9.8m ($13.78m). By weight, total production of liquid milk stood at 323,000 tonnes in 2011, while the total number of eggs produced was 900m. Fish production stood at 1100 tonnes, and there is interest in expanding the segment. For example, Shaheen International Farms and Agriculture has three fish farms in the kingdom and a fourth is under development. The company intends to have seven varieties of fish on offer by June 2013.

EXPORTS: According to the World Trade Organisation (WTO), agricultural product exports accounted for 16.2% of total Jordanian exports in 2011. Total exports of food, live animals, beverages and tobacco stood at JD781.7m ($1.1bn) in 2011, which was an increase from JD684m ($962m) in 2010. Vegetables accounted for more than half of this, at JD356.1m ($500.85m). Exports of vegetables in the first nine months of 2012 stood at JD277.1m ($389.7m), up from JD267.5m ($376.24m) in the same period of 2011. By volume, vegetable exports stood at around 755,000 tonnes in 2011 (around 39% of production), up from 672,000 in 2010, while fruit exports stood at 87,000 tonnes (up from 78,000 tonnes), according to MoA figures. Tomatoes accounted for the bulk of fruit and vegetable exports at 434,000 tonnes (around 56% of total tomato production), followed by cucumbers at 124,000 tonnes.

Jordan exports fruit and vegetables to most of the Arab countries, especially Iraq, Syria, Lebanon and the Arab Gulf states. Some 94% of its output is directed to those countries. The rest of the exports are to Eastern and Western Europe, and a few others, Rami Al Habahbeh, the director of Policies and Studies at the MoA, told OBG. However, the conflict in Syria has blocked access to some of the kingdom’s main export destinations. Syria itself is a major buyer of Jordanian produce – it was the largest importer of Jordanian vegetables in 2011, accounting for about 24% of the total – and is also the gateway for overland exports to Turkey, Eastern Europe and beyond. “We were thinking of starting to sell to Eastern Europe, however, this option is not currently possible in light of the conflict,” Wael K Haddadin, who helps run Kareem Haddadin Farms, told OBG, illustrating the effect the conflict has had on farmers’ export plans. Restrictions on agricultural imports by Iraq have also hit exports. Combined with the Syrian situation, these have led to a slump in the prices of some produce. Farmers dumped aubergines in the street in December 2012 to protest their inability to sell the crop.

However, other export markets are also opening. In March 2012 Saudi Arabia began importing Jordanian vegetables and tomatoes for the first time in over 20 years. This followed an announcement by Russia in February 2012 that it would fully exempt Jordanian agricultural imports from taxes in the winter. “Russia would be a potential market for tomatoes, cucumbers and peppers,” Haddadin told OBG. He did note that the Syrian situation was posing obstacles for exports elsewhere and that the sector needed more support from local airlines to begin flying produce some of the journey. Earlier plans to build an airport in the Jordan Valley to help with airfreight of agricultural products were subsequently scrapped after the MoA deemed them uneconomical. The ministry stated that only 5% of produce was exported to Europe via air cargo, and the majority of produce exported to the Gulf and surrounding countries is done by overland transport.

Haddadin told OBG there are plans in place for an express lane for Jordanian trucks at the port of Haifa in Israel, where they would board roll-on roll-off (ro-ro) ships for Turkey, in order to mitigate the impact of the Syrian crisis; a ro-ro route from Haifa to the southern Turkish port of Iskenderun entered into service in November. “It could be a good solution, though it’s not clear if there’s enough capacity as Israel exports a lot of produce to Russia and European markets, and imposes high taxes and fees for produce coming from Jordan,” he told OBG. In September 2012 the MoA said it was coordinating with Iraq to try to activate a transit agreement there to allow it to export produce to Turkey and Europe via the country. The MoA is also working with Royal Jordanian Airlines to step up exports via airfreight.

AGRICULTURAL WORKFORCE: In 2011 113,593 people worked in the agricultural sector in the kingdom, comprising 21,722 Jordanians and 91,821 foreign workers, according to the MoA. Agriculture accounted for 7.9% of total employment and for 1.5% of Jordanian workers. Rising labour costs may be helping push up the price of production. “Agricultural labourers are mostly Egyptian but the government is trying to restrict the numbers entering into Jordan; furthermore, many Egyptians who come to Jordan to work in agriculture subsequently leave to work in the construction sector,” said Al Rimawi. Adding the company focuses on non-labour-intensive products because of the cost, Al Rimawi also said, “Labour is the biggest concern in the sector, ahead even of water,” said Haddadin.

WATER RESOURCES: Available per capita renewable freshwater resources stood at 110 cu metres per year in 2011 according to World Bank data, ranking the country as the 12th water-poorest country in the world in per capita terms. The figure is just a fraction of the upper limit of “absolute water scarcity” (sometimes known as the water poverty line) of 500 cu metres per person per year, as defined by the Falkenmark Water Stress Index (one of the most commonly used water scarcity measures). Water availability is also falling: renewable freshwater resources are down from 120 cu metres per year in 2007 and 289 cu metres in 1982.

Surface water accounts for around 37% of water supplies, while ground water accounts for around 54%, according to the strategy document. The German Development Bank (known as KfW due to its former full name, Kreditanstalt für Wiederaufbau) says the level of ground water reserves is falling by around one metre annually as a result of unsustainable withdrawals; the national water deficit stood at around 400m cu metres in 2012. The kingdom has 12 major aquifers; however several of these are now dry or nearly dry as a result of over-pumping from them, exacerbated by the existence of a large number of illegally built wells.

CONSUMPTION: Freshwater withdrawals stood at approximately 1bn cu metres in 2011, according to World Bank data; local press, citing government figures, said consumption in 2012 grew by approximately 6%. Per capita consumption is around 85 litres per day. Due to shortages, supply is rationed, with most Jordanian households receiving water once or twice a week for several hours at a time and supplementing this where they can with other sources. These include individual wells, collected rainwater and privately purchased water delivered by tanker, as well as bottled water.

Agriculture accounts for the bulk of consumption; according to World Bank data, 65% of freshwater withdrawals in 2011 went to farming, followed by 31% to households and 4% to industry. DoS figures put total supply to households and municipalities at 330.1m cu metres in 2011, or around a third of total consumption, up from 327.7m cu metres the previous year and 300.8 cu metres in 2007.

Measures to limit consumption growth form an important part of the kingdom’s water strategy. These include setting limits on agriculture in the highlands and putting in place water tariffs and incentives to encourage more efficient use. Moves to implement these measures are under way; for example, in September 2012 the Jordan Valley Authority said it intended to increase irrigation tariffs. Al Habahbeh told OBG the authorities aim to increase the efficiency of water use on agricultural land, through the application of modern irrigation methods and water demand management.

Khalid Kamhawi, the managing partner at Delta Energy Services, argues the government also needs to put in place policies to disincentivise farmers from growing water-intensive crops in the Jordan Valley, such as bananas. A 2012 study found farmers were willing to switch to less water-intensive crops, but required technical and financial support in order to be able to do so.

Some farms are starting to experiment with new technologies in order to save more water. For example, Mohammed O Shaheen, the deputy general manager of Shaheen International, told OBG that his company is using soilless trays in climate-controlled containers. Shaheen also said that the process uses 80% less water than traditional production, is less expensive and has better quality control, and creates double the nutritional value than importing feed, though the initial capital investment is high. “It is inevitable that more farms in Jordan will begin to use such technology,” he told OBG.

INFRASTRUCTURE: There are currently 10 major dams in place, giving a total national dammed storage capacity of around 325m cu metres. Work on a new project – the Kufranjah barrage, which will create a 6m-cu-metre reservoir and increase water supply to the Ajloun region – began in 2011 and is due to be completed in 2014, at a construction cost of around JD20m ($28.13m).

The state of some infrastructure contributes to water shortages; around half of the water flow through the kingdom’s pipe networks is lost to leaks, according to the KfW. Illegal tapping of pipes to steal water is also a problem. The authorities are working to improve the situation, with steel drinking water pipes in Amman currently being replaced with polyethylene ones, which are less prone to leaking. Other initiatives to tackle water losses included an announcement in 2012 of plans to spend JD34m ($47.82m) to reduce leakages in Karak and in the north of the country. The US Agency for International Development is also working on a project to reduce losses in the Zarqa governorate water network to 35%, from a present rate of 52%.

PRIVATE INVESTMENT: Private companies are involved in the sector through public-private partnerships (PPPs) at a number of levels. In 2011 France’s Veolia and Jordan’s AquaTreat were awarded a contract to provide management services to Al Yarmouk Water Company, which is responsible for water and wastewater provision in the kingdom’s northern gov-ernorates. Other smaller regional networks have also contracted private firms to provide management services. Amman’s water network was also previously managed by a privately owned consortium under a PPP between 1999 and 2006, but since then has been operated by Miyahuna, a company owned by the Water Authority of Jordan.

Private firms are also active in the segment, such as through build-operate-transfer (BOT) infrastructure projects in activities such as pumping groundwater, desalinating brackish water, contracts for wastewater treatment plans, and water transfer projects such as Disi and the planned Jordan Red Sea Project.

WATER PROJECTS: Under its 2008-22 water strategy, the government aims to raise available water resources to 1.63bn cu metres a year by 2022 (from around 900m cu metres in 2008), relying on a combination of several major new water transportation and desalination projects, as well as increased use of treated wastewater. The first major project to come on-line will be an initiative to tap the Disi aquifer on the border with Saudi Arabia and pump water from it via a 350-km pipeline to Amman; the government also intends to extend the pipeline to Zarqa and other cities in the kingdom.

The project is being implemented by GAMA Ener-ji of Turkey on a BOT basis, at a cost of around $1bn, and will provide an additional 100m cu metres of water supplies to the kingdom a year. Work began in 2007 and in March 2013 the government said the scheme was 93% complete and that water was expected to reach Amman by July 2013.

The scheme should provide the country with fresh water supplies for up to 50 years – though some put the figure lower, at between 20 and 25 years – and reduce the need for rationing in Amman and elsewhere. “This project should double the amount of water people in Amman have access to, which could significantly improve their well-being,” Ahmet Lig-vani, the project manager and country head for GAMA in Jordan, told OBG. The project has been the subject of controversy due to findings by US scientists that the aquifer’s water has naturally occurring radiation levels that exceed international health guidelines; the government has said it will address this by diluting the supply with water from other sources, as well as other yet-to-be-finalised measures.

For longer-term supplies, the kingdom’s planners are focusing on the desalination of water from the Red Sea. Two projects are under consideration, both of which will extract water from the Gulf of Aqaba and pump it north to the Dead Sea to help reverse the latter’s depletion (caused by Jordanian and Israeli potash extraction, as well as reduced flow into the sea from the Jordan river) while also desalinating some of the supply along the way to produce potable water. The passage of the water downhill from the Red Sea to the Dead Sea will also generate hydroelectricity.

PUSHING THROUGH: The first of the two projects is the Red Sea Dead Sea Water Conveyance Project (also known as the Red-Dead project), a joint Jordanian, Israeli and Palestinian initiative backed by the World Bank. In January 2013 the bank published a study reporting that the project, which has been under discussion for many years, was feasible. The report put the capital cost of the project configuration it recommended at an estimated $9.97bn and proposed a total annual potable water supply to Jordan from the scheme of 226m cu metres a year in 2020, rising to 559m cu metres a year by 2060, though it noted that final allocation of desalinated water to each of the three participants will have to be negotiated among them. Environmental groups have criticised the project, arguing it will change the chemical make-up of the Dead Sea’s water. The proposed scheme was opened to public consultation in February 2013, ahead of the publication of the final versions of studies in April, after which the future of the project remained uncertain.

The other project under consideration is the Jordan Red Sea Project (JRSP), a fully Jordanian initiative to be built through a PPP, for which six bidders were pre-qualified in early 2011. The first phase of the JRSP will see 70m cu metres of water desalinated a year, reduced by a government decision in November 2012 from an initially envisaged 260m cu metres. In March 2012 the authorities said implementation of the first phase would begin in 2013, with plans for it to enter into operation by 2018. As of early 2013 the government was reportedly in the process of completing documents for the tender of the first phase project.

SUSTAINABLE SUPPLIES: Irrespective of what decisions are taken in regards to the two specific projects currently under consideration, industry figures say desalination offers Jordan with a viable long-term solution to its water deficit. “Jordan can survive off seawater; the Gulf states already do,” said Rami Irshaidat, the executive manager at Irshaidat, which has a unit specialised in water projects, though he noted that desalination in the Gulf of Aqaba posed particular environmental and technical challenges due to factors such as its small size and high salt levels. “Water issues in Aqaba will come to a head in 2015 as this is when a majority of the water-guzzling real estate projects will come on-line,” said Naem Saleh, the general manager of Aqaba Water Company.

The development of renewable energy in the kingdom (see Energy chapter) also offers a potential sustainable source of power for potable water production. “The technology for solar-powered desalination already exists; we just need the prices to come down, which will happen,” Irshaidat told OBG.

OUTLOOK: With the Disi project about to come on-line, the kingdom’s water supply problems are set to be significantly reduced for many years to come. The long-term future of water availability will depend in large part on decisions regarding the Red-Dead projects under consideration, though in any case desalination of Red Sea water is likely to play a prominent role in the country’s water strategy. Improved availability of water through such projects, as well as expanded treatment of wastewater for irrigation (see analysis) will also improve availability for agriculture, though the costs of water provision and the large amount of water consumed by the sector in comparison to its contribution to GDP are likely to drive further efforts to improve efficiency of use. Farmers are also likely to come under increasing pressure to reduce exports of water intensive crops, while the outlook for agricultural exports more generally will depend to a great extent on factors such as the course of the conflict in Syria and political decisions taken in neighbouring countries.