Jordanian government actively introduces smart farms through the establishment of a 2022-2025 agricultural development plan
Opportunities for domestic smart farm companies to enter the local market are likely to increase
Jordan suffers from low agricultural efficiency and productivity due to chronic water shortages, labor shortages in the agricultural sector, and unfavorable climatic conditions. In response, the Jordanian government launched a four-year plan for the period from 2022 to 2025 for sustainable agricultural development, and began to improve agricultural productivity. Learn about Jordan's agricultural status and opportunities for Korean companies to advance.
Overview of Jordan's Agricultural Sector
Jordan has a land area of about 890 million hectares, of which 90% has a dry climate, with average rainfall not exceeding 150 mm per year. Only the northern-eastern highlands (about 4%) exceed 300 mm of annual rainfall. As of 2019, Jordan's total arable land area is about 25 hectares, which is about 6% of the total land area. Among them, the cultivated area for crops and grains is about 3 hectares, the cultivated area for vegetables is 78,335 hectares, and the number of fruits such as tangerines is 44,161 hectares.
<Jordan's main crops>
[Source: Jordanian Ministry of Agriculture]
As of 2020, the export volume of Jordanian vegetables is about 30 tons and the import volume is about 4000 tons, which is about 2 times higher than the import volume. The main exporting country is Saudi Arabia, a neighboring country, and other exporting countries are also Arab countries such as Kuwait, United Arab Emirates, and Bahrain. Most of the importing countries are Egypt, and neighboring countries such as France and Hungary also import vegetables. In the case of fruits, exports amounted to 2000 tons, with the largest export to Saudi Arabia as in the case of vegetables. Egypt also occupies the largest portion of the importing country of fruit items.
<Jordan vegetable import and export trend in 2020>
(Unit: Ton)
[Source: Jordan Statistics Korea]
<Trends of Import and Export of Jordanian Fruit in 2020>
(Unit: Ton)
[Source: Jordan Statistics Korea]
There are three main challenges Jordan faces in the agricultural sector. The first problem is a serious water shortage. According to a UNICEF study, Jordan is the second most water-scarce country in the world, with more than 90% of the country receiving less than 150mm of annual precipitation. To make matters worse, the demand for water in Jordan is increasing significantly, due to the continuous drought, lack of rainfall, and rapid population growth (2011 million in 500 → 2022 million as of 1,100) due to the influx of refugees from neighboring countries. Currently, the amount of water that one person can use in Jordan is 1㎥, but if this trend continues, it is expected to drop to 148㎥ by 2025. According to Jordan Valley Union, Jordan's largest farmers' association, due to the recent government's frequent water supply cutoffs, most farmers are turning to low-income crops, such as chickpeas, which use only half the water compared to general crops. said to have switched.
The second problem is the shortage of labor. Employment in Jordan's agricultural sector is significantly lower than in the industrial and service sector. As of 2020, skilled workers in the agricultural sector account for only 1.4% of the total workforce, and the remaining 98.6% are engaged in industrial and service sectors. According to a 2018 survey by the International Labor Organization (ILO), Jordanian labor laws are not practically applicable to most agricultural workers, with 75% of Jordanian agricultural workplaces never being visited by a labor inspectorate. The treatment of agricultural workers is also poor, and the workers have to pay their own expenses and purchase industrial accident insurance, and even if they do, comprehensive wage guarantees are not provided. For this reason, the proportion of foreign workers in Jordan's agricultural sector is also low, making it difficult to maintain agriculture.
A third problem is the increased cost of reliance on excessively high energy imports. Unlike other Gulf countries such as Saudi Arabia and the UAE, Jordan is a non-oil producing country. Thus, Jordan's imports cover 5% of its energy demand at a cost equivalent to about one-fifth of its GDP. Energy is also consumed for purification, desalination, and water transportation, which are essential for domestic agriculture. When import prices are unstable, workers' wages, taxes, transportation costs, and marketing costs, in addition to basic water and electricity taxes, increase, increasing the burden on farm owners.
Jordanian government's agricultural promotion policy
The Jordanian Ministry of Agriculture published “the National Plan for Sustainable Agriculture 2022-1” on 17 January 2022. The policy is derived from the “Jordan Green Growth National Action Plans 2025-2022” and includes 2025 detailed projects with a total value of JPY 2021 million to address challenges in the agricultural sector. Of these, 2025 projects will be promoted in 2021 alone.
There are three main policy goals of this policy. The first goal is to improve the living standards of local farmers. To this end, policies are put in place to reduce the excessive operating costs borne by Jordanian farmers, including costs related to energy, labor, animal feed, fertilizers, pesticides and seeds. In addition, activities such as educating farmers on skills related to food processing and freezing and drying of fruits and vegetables, and establishing an agricultural insurance system to protect against crop disasters and fires are included.
The second goal is to increase productivity in the agricultural sector. In order to increase the productivity of the agricultural sector, the Jordanian government is selecting crops with high export competitiveness and studying the possibility of export expansion. In addition, the agricultural product packaging and marketing services involved in the distribution of agricultural products are provided to farmers to stabilize the supply of agricultural products. At this time, the most important part for improving agricultural productivity is digital innovation in the agricultural sector, and the Jordanian government plans to provide all services for farmers and investment companies in the agricultural sector online from 2022. The government also promotes soft loans (low interest rate loans) to local farmers to finance agriculture.
The third goal is to improve the efficiency of Jordan's irrigation system and water management. The government intends to reduce water consumption for agriculture by more than 30% compared to the present by using the latest irrigation technology. To this end, the government is recommending agricultural techniques such as aquaponics that combine hydroponics and fish farming in addition to hydroponics to farmers. The government also provides financial support to startups related to irrigation systems.
<The Jordanian Government's Agricultural Promotion Plan for 2022>
[Source: Jordanian Ministry of Agriculture]
In addition, as the global food supply chain is endangered due to the recent COVID-19 pandemic and the Russian-Ukrainian war, the Jordanian government is actively investing in the agricultural sector. In February 2022, Jordan's National Center for Agricultural Research (NACR), funded by the French Agency for Development (AFD), launched an agricultural innovation incubating service providing technical, legal and commercial support to local entrepreneurs, farmers, food manufacturers and businesses. Through this service, technology development such as irrigation system efficiency, crop selection and cultivation, and water recycling will be supported. In addition, the Jordanian government is carrying out various projects to improve agricultural infrastructure through collaboration with foreign organizations, such as the Sahara Forest Project and the Water Innovation Technologies project.
<Major projects related to agriculture in Jordan>
[Source: client website and project introduction materials]
Jordan's Smart Farm Field
A smart farm is a farm that manages the growing environment of crops and livestock in an optimal state remotely and automatically by combining ICT technology with agriculture. It's a controllable skill. Smart farm includes not only production activities but also the concept of distribution and consumption, and aims to increase agricultural production, reduce working hours, and reduce farm operation costs. Currently, smart farm technology can be combined with big data technology to predict the harvest time, yield, and quality of agricultural products.
According to Obit Jordan, the head of AI agricultural applications, a Jordanian smart farm company, Jordanian farmers are very interested in smart farm technologies, including smart irrigation solutions, energy technologies, and marketing and distribution technologies. According to him, the transition to smart agriculture is essential to minimize the impact of Jordan's dry climate and water scarcity problems. In recent years, water shortages have been frequent in Jordan's agricultural sector, and in May 2021, farmers in the Haidan Valley of Madaba State, Jordan's third largest farm agglomeration, protested to the government over the continuing water shortage problem. There are a total of 5 farms in the Haidan Valley, and the farmland size reaches 3 hectares, and about 83 to 500 liters of water are needed per hour to maintain the crops being grown. Also, in January 200, damage to crops followed due to freezing due to dry weather. At the time, the water supply was cut off in Al-Tafilah State due to freezing in the Jordan Valley, and the air conditioner in the greenhouse was not working due to frost.
Due to the increase in demand for smart farms, more than a dozen agricultural-related startups have been active in Jordan since 2014. Founded in 12, Jordan’s first agricultural technology accelerator “HASSAD” is operated by “VentureX”, an integrated enterprise program development company, which provides agricultural business support programs designed for agricultural technology and agro-food startups in Jordan. As water scarcity and climate change are the biggest problems in agriculture in Jordan, start-ups related to hydroponics, aquaponics, and vertical agriculture are the main ones.
<Major agricultural start-ups in Jordan since 2014>
[Source: HASSAD]
Jordan imports about $40 billion worth of food and agricultural products and is a country dependent on grain imports for about 90%. Therefore, it is difficult for foreign companies to make an investment in Jordan's agricultural sector. In addition, high operating costs, high taxes and difficulties in obtaining legal permits in Jordan's agricultural sector are other investment barriers for foreign investors.
Recently, the number of cases of pilot application of smart farm technology in Jordanian farms is increasing. The table below summarizes examples of smart farm technology adoption in Jordan.
<Jordan Smart Farm Introduction Case>
[Source: company website and press release]
Interviews with smart farm-related companies and organizations
KOTRA's Amman Trade Office conducted interviews with farm owners and agricultural organizations to understand the local situation in more detail.
<Interview 1: Jordanian agricultural sector investment company>
[Source: KOTRA Amman Trade Center Self-Investigation]
<Interview 2: Jordanian agricultural sector government agency>
[Source: KOTRA Amman Trade Center Self-Investigation]
<Interview 3: Jordanian Agricultural Sector Private Association>
[Source: KOTRA Amman Trade Center Self-Investigation]
The table below summarizes smart farm technologies that are in high demand in Jordan's agricultural sector through these interviews.
<Jordan Smart Farm Demand Area>
[Source: Comprehensive interviews with local companies/organizations]
Prospects and Implications
Farmers and farmers in Jordan's agricultural sector are struggling to operate their farms due to water scarcity, frequent climate change, labor shortages, and high operating costs related to taxes and utilities. About 98% of Jordan's farms are operated in traditional ways and do not incorporate smart farming technologies, putting a financial strain on Jordanian farmers due to extreme weather conditions, reduced water supplies and high operating costs. In such a situation, the transition to smart agriculture is becoming an essential condition for survival for many Jordanian farmers.
However, it is difficult for Jordanian farmers to raise the necessary funds for smart farm projects due to frequent crop failures and high farm operation costs. To solve this problem, the Jordanian government is making efforts, such as preparing a loan budget of 4 million Jordanian dinars in its 3500-year agricultural promotion plan. In addition, the government is supporting farmers who want to invest in efficient irrigation systems and smart farming technologies based on AI and machine learning models. However, since unilateral financial support is limited, the government recognizes that it is essential to attract investment based on local and foreign private sector companies and participants, and is looking for companies that can collaborate or support.
Domestic smart farm companies need to seek entry into the local market through technologies that meet local demand, such as cultivation and distribution technologies including four-season cultivation and hydroponics, and vertical farms. In addition, IT technologies such as artificial intelligence, Internet of Things, and sensors are essential in smart farm technology fields such as irrigation systems, monitoring, management software, and energy systems.
Source: Jordanian Ministry of Agriculture, Jordan Statistics Korea, HASSAD, interviews with officials, and KOTRA Amman Trade Center’s own research data