April 15, 2018
Masnat Al Hairy, Director of the Socio- economic Studies Directorate, NCARE, Jordan
With more than 20 million trees across the Kingdom, Jordan is among the top 10 olive producing countries in the world. Olive trees occupy 130,000 hectares of the country’s total terrain. About 78% of olive trees are planted in rainfed areas where the average rainfall exceeds 300 mm and the rest is planted under irrigation. Perennial olives have relatively low water consumption compared to the other tree crops, and are mostly unirrigated in Jordan.
Olive tree is the most important fruit tree grown in Jordan. It covers about 72% of the total area planted with fruit trees and 36% of the total cultivated area (80% of the total olive cultivar is harvested for olive oil and 20% for table olives). Jordan reached self-sufficiency in olives and olive oil production since the year 2000.
Large numbers of olive farms belong to small and medium-size holders which are considered as a source of income for many of Jordanian families, and provide many seasonal job opportunities. Around 180,000 families receive some or all of their income from olive production. There are 80% of productive trees in the country, with 2 main producing regions: western mountains (rainfed), with 76% of olive plantation; and eastern region (irrigated) with 24%.
The olive sector is considered one of the most important agricultural sectors in Jordan, and the value of investments in this sector is more than US $ 1.5 billion. The Policy Analysis Matrix (PAM) showed that olive oil (in terms of fresh olives) does not enjoy a comparative advantage; the Domestic Resource Costs (DRCs) are higher than one (Table 1). The production of olive in Jordan can be competitive if we reduce the social costs of domestic resources, or reduce social costs of tradable inputs. Supporting research to reduce production costs, introducing new high-yield varieties, and developing advanced agricultural technologies that will lead to reduction of production costs and increase of the productivity of the crop will contribute to increase olive competitiveness.
Table 1: Competitiveness, Efficiency and Policy Impact Indicators for Olive Crop
Source: Calculated by the researcher
The effective protection coefficient (EPC) for olive crop was greater than one. It was 1.43 in Madaba, 1.44 in Jerash, 1.79 in Irbid, 1.38 in Balqa, 1.78 in Amman, and 1.43 in Mafraq governorates. This means that there are incentives for the agricultural product, as a result of the negative impact of the policy of support for the agricultural inputs and outputs.
The nominal protection coefficients for input (NPCI) was less than one, it was about 0.64 in Madaba, and 0.95 in Jerash, 0.89 in Irbid, 0.88 in Balqa, 0.98 in Amman, and 0.70 in Mafraq. This means that there is a reduction in costs paid by olive producers as a result of the policy support provided to him, and domestic prices for inputs are less than global prices.
The rate of olive oil production per donum reached 63.5 kg and the average price of olives was US $ 1.4/ kg, while the average selling price of olive oil has amounted to 4.2 US $ /kg.. There are opportunities for Jordan to develop this sector, Jordan occupies the eighth rank in the world in the production of olives, but there are problems in the marketing of olive oil due to the absence of an entity responsible for pricing and marketing of olive oil as well as rising operational costs. Therefore, there is a necessity of activating the role of the Ministry of Agriculture (technical advice, treatment, support and production inputs) and issue legislation to serve this sector.
Al-Hiary, Masnat A. "Assessing Competitiveness of Jordanian Olive Production an Olive Production Policy Analysis Matrix." Journal for Studies in Management and Planning 1, no. 2 (March 2015): 19-29.
Al-Hiary, Masnat A. The Economic and Social Characteristics of Olive Farmers and the Study of the Enterprise Budget of Olive Crop in the Hashemite Kingdom of Jordan. Socio- Economic Studies Directorate, National Center for Agricultural Research and Extension (NCARE). Amman, 2011.