$Unique_ID{COW01877} $Pretitle{225} $Title{Israel Chapter 4C. Cropping Patterns and Production} $Subtitle{} $Author{Richard F. Nyrop} $Affiliation{HQ, Department of the Army} $Subject{percent industrial tons production million products oil value industry israeli} $Date{1979} $Log{} Country: Israel Book: Israel, A Country Study Author: Richard F. Nyrop Affiliation: HQ, Department of the Army Date: 1979 Chapter 4C. Cropping Patterns and Production The primary areas of cultivation formed the letter C, starting in the valleys and some slopes of the mountainous north and swinging to the coastal plain of the central section and inland again to the northern Negev Desert below the lower West Bank border and inland from the Gaza Strip (see fig. 1). By the mid-1970s more than two-fifths of the cultivated land lay in the northern Negev and the Lakhish region northwest of Beersheba as a result of the development and extension of the national water system. The other main area of cultivation lay on the coastal plain, accounting for about one-quarter of the cultivated land. The variation in topographical and climatic conditions allowed cultivation of a wide range of crops. North of the Sea of Galilee, for example, apples and bananas grew only fifty kilometers apart. A number of factors contributed to a shift in cropping patterns. At independence the agricultural economy concentrated on a few crops, primarily grains, oranges, olives, and grapes. The extension of irrigation along with the variety of climatic conditions made possible a much wider range of activities, and market factors stimulated their development. The increase of the urban population, rising incomes, and the growth of local manufacturing created local markets for new produce. Moreover Israel's location and its early agricultural seasons permitted cultivation of off-season and early season fruits, vegetables, and cut flowers for European markets. The social need for rising farm incomes, balance-of-payments pressure to maximize exports, and the limited amount of irrigation and agricultural land led to government policies shifting farming activities toward high value products. The government's intent and policies were to maximize agricultural income and take advantage of the country's comparative advantages rather than achieve self-sufficiency in foods. By 1978 cropping patterns had shifted, but a continuation toward high value produce was likely in the future. By AY 1976 field crops still dominated cropping patterns, accounting for about 65 percent of the cultivated land compared with 73 percent in AY 1950. Wheat was by far the most important crop in terms of area (although not in value), occupying 26 percent of the cultivated area and supplying somewhat less than half of the country's grain requirements (see table 14, Appendix A). Field crops that were developed since 1948 included cotton, sugar beets, and oilseeds. Although there was some shift in field crops toward those of higher value, the main shift was toward fruits and vegetables (see table 15, Appendix A). In the 1960s a number of new products was added, such as cut flowers, almonds, avocados, and subtropical fruits. Many of the new products were introduced for export to West European markets. Crops were the most important agricultural activity, contributing 57 percent of the total value of agricultural production (11.7 billion Israeli Pounds) in AY 1976. The value of crop production was 6.7 billion Israeli Pounds, of which fruits accounted for 48 percent (citrus fruits, 29 percent); field crops, 32 percent; vegetables, 17 percent; and miscellaneous, 3 percent. Over 90 percent of the value of the citrus crop was exported either fresh or processed (primarily as orange juice). Meat (including poultry and fish) and dairy products were valued at 5.1 billion Israeli Pounds in AY 1976; meat accounted for 47 percent; milk, 27 percent; eggs, 20 percent; fish, 4 percent; and miscellaneous, 2 percent. By the mid-1970s local production largely satisfied domestic requirements (and even provided some export) of milk, eggs, poultry, and fish, but the lack of grazing land and a shortage of fodder required large imports of meat. The diet generally included little meat-only on special occasions for many families. Fishing and poultry raising (primarily chicken and turkey) were expanded in the 1960s and 1970s to add to the sources of protein. The high technical efficiency, large increases in yields, and rising incomes of Jewish farms were only partly shared by non-Jewish farms. The lack of irrigation was the primary factor, since only 6,500 hectares were irrigated out of 85,000 hectares of cultivated land on non-Jewish farms in AY 1976. Field crops predominated on Arab farms, but most of these farms were small, mechanization was relatively rare, and yields were modest. The most important fruit cultivated on Arab farms was olives, the yield of which rose spectacularly only in an occasional year since 1948, apparently because of the rainfall pattern. Aside from a few wealthy Arab farmers, most earned a very modest income although considerably improved since 1948 and substantially higher than most Arab farmers in Jordan or the West Bank before 1967. Fishing and Forestry Zionist pioneers in Palestine encouraged fishing to add protein to the diet, but Jewish settlers had little experience or interest in fishing. Fishing remained largely an Arab activity until the Arab uprisings of the 1930s. After that the Jewish fishing industry developed, relying on imported modern equipment and techniques rather than on the traditional ways of the area. The fish catch increased from 7,000 tons in AY 1950 to 24,000 tons in AY 1976 (of which a little more than 1,000 tons was exported). Fishing remained a minor part of the agricultural sector in the 1970s. The bulk of the fish was raised and caught in fish ponds that dot the countryside, primarily on kibbutzim in the north and along the coastal plain. The ponds used water unfit for agriculture. The principal fish was carp, which ate grains and food wastes, but to maximize the use of land and water a few other varieties were stocked to provide year-round breeding. Israeli yearly yields, averaging 2.7 tons per hectare in AY 1976, were among the highest in the world and substantially above European fish ponds, Some ponds had achieved over 4 tons of fish per hectare. The fish catch from fish ponds amounted to 13,800 tons in AY 1976. Aside from 2,000 tons of fish caught in the Sea of Galilee in AY 1976, the rest of the fish were caught offshore. Modern vessels operated from Eilat and Mediterranean ports. The largest catch (5,300 tons) was in the Atlantic Ocean and off the east coast of Africa. Sardines were the usual catch along Israel's Mediterranean coast, but they amounted to only 1,200 tons. Forests were much more extensive in biblical times than in present-day Israel. In the intervening centuries, the trees had been cut to make room for cultivation and particularly to supply fuel. Zionist settlers started afforestation programs to reduce erosion, but the bulk of the afforestation was accomplished after independence. The government and the Jewish National Fund undertook most of the his programs until an agreement in 1959 gave the fund responsibility for afforestation. Tree planting was important in Zionist ideology. Diaspora Jews were frequently requested to make donations "to plant a tree in Israel" to commemorate special events such as the birth of a child. The impact often was dramatic to the visitor's eyes and nose in some of the arid stretches-the desert had been made to bloom. By 1976 there were 35,000 hectares of natural forests, primarily in Galilee, and nearly 61,000 hectares of afforested land broadly scattered across the country. The afforested areas were predominantly coniferous and eucalyptus. The Jewish National Fund owned about 49,000 hectares of the afforested land, the government 11,000 hectares, and all others a little more than 1,000 hectares. Tree plantings were in forests, in groves (such as around settlements), in belts (often for windbreaks), and along roadways in order to anchor the soil. Industry Industry was the fastest growing major sector of the economy and by the late 1970s was the most important, contributing 33 percent of GNP in 1976. It also provided a major source of employment and 87 percent of commodity exports. Output of the manufacturing sector was similar in range and sophistication of products to that of the smaller industrialized countries of the world. Industrial expansion occurred in spite of a notable lack of natural resources, including energy, on which to base manufacturing and mining, and in a short period of time; Japan's industrialization took much longer, for example. Moreover Israel's future viability largely depended on continued industrialization to provide the jobs for an expanding population, including additional immigrants, and a rapid expansion of exports to ease the strain on the balance of payments. The Israelis had no real alternative but to continue efforts to develop industry rapidly. Some industry-largely food processing-textiles, and building materials had developed during the years of Jewish settlement. World War II stimulated industrial expansion to meet the needs of Allied Forces in the area, but industrial output quickly regressed at the war's end. The huge influx of immigrants (some with industrial skills) and the growth of agricultural production after 1948 enlarged the market and provided additional materials and labor for a resurgence of industrial growth. Between 1955 and 1970 the value of industrial output (in constant prices) increased by an average of 12.4 percent a year. In 1971 and 1972 real industrial growth continued at a high rate, averaging about 11 percent a year, but from 1973 through 1976 the value of industrial production (in constant prices) averaged only 4.1 percent a year because of an economic recession. Industrial output increased about 4 to 5 percent in 1977. Industrial employment increased from 90,000 in 1950 to 278,000 in 1976, accounting for 25 percent of the work force in 1976. Exports of industrial products increased in value (current prices) from US $18 million in 1950 to US $2.1 billion in 1976. Energy and Natural Resources By the end of 1977 the country had virtually no known domestic sources of energy. Hydroelectric potential and coal deposits were lacking. Extensive exploration since 1948 had discovered only small deposits of crude oil and natural gas. The oil deposits were located near Ashqelon and the gas deposits near the southern end of the Dead Sea; they supplied a tiny fraction of the country's energy requirements. The 1967 war gave Israel control of Egyptian oil fields on the western coast of the Sinai Peninsula and offshore in the Red Sea. The amount of crude oil obtained during the Israeli occupation was not published, but Egyptian production data in the mid-1960s suggested that Israel may have obtained more than half of its annual requirements from the Egyptian fields. The fields were returned to Egypt in mid-1975 under the Sinai Agreement of that year (see Aspects of Foreign Relations, ch. 3). In early 1978 Egyptian officials suggested submitting a bill to Israel for US $2.1 billion in compensation for the oil extracted during the Israeli occupation. In 1977 oil was discovered farther south offshore from At Tur, on the lower west coast of Sinai in Egyptian territorial waters that Israel maintained it controlled under the provisions of the 1975 Sinai II Agreement. The discovery and subsequent development was made by an American firm operating under a concession granted by Israel. By March 1978 three wells were reportedly producing at an annual rate of about 1 million barrels (approximately 150,000 tons), which was shipped by tanker to Eilat. Although the size and pumping rate of the field probably had not yet been determined, some Israelis claimed that the discovery was large enough to satisfy the country's needs and would last about thirty years. Also in 1977 commercial quantities of natural gas were discovered in northeastern Sinai just below the Gaza Strip. The size and significance of the deposits were not known by early 1978. The status of the new discoveries would be a matter for negotiation between Egypt and Israel if an agreement for an Israeli withdrawal from Sinai was reached. Some Israeli officials were suggesting joint development with the Egyptians for mutual benefit. In 1977 energy requirements were met largely by imports, primarily crude oil. Iran probably was the major source; the Arab countries would supply none. In 1978 Mexico agreed to sell oil to Israel on short- or long-term contracts. There were refineries at Haifa and near Ashqelon primarily for local needs. A 105-centimeter pipeline extended from Eilat to a crude oil terminal in the Mediterranean near Ashqelon by which large quantities of crude transited Israel for ongoing shipment. The pipeline capacity was on the order of 40 million tons a year with the possibility of being increased to 60 million if needed. A branch from the Eilat-Mediterranean pipeline carried crude to the two refineries. Small pipelines distributed products from the refineries to major consumption centers, including one extending from the Ashquelon refinery to Eilat. The refineries also exported some products in earlier years, but trade statistics in the mid-1970s showed no exports of petroleum products. In 1977 the country reportedly required about 7.3 million tons of crude oil a year. Over 25 percent of the fuel fired electric generating plants. Between 5 and 10 percent was used in petrochemical industries. Most of the remainder was used in the transportation system. The country's petroleum import bill was US $681 million in 1976, 16 percent of total commodity imports. About half of United States economic aid since 1976 may be viewed as offsetting the increased cost of fuel resulting from the Israeli return of Egyptian oil fields on the west coast of Sinai. The first electric power station in Palestine was installed in the early 1920s, and rapid expansion followed. Except for a hydroelectric plant completed just south of the Sea of Galilee at the junction of the Jordan and Yarmuk rivers in 1932, most of the larger facilities have been located on the Mediterranean coast for access to water for cooling. From the beginning a broad area network was envisioned with transmission lines from generating centers to consuming areas. Installation of small, local powers system was limited. Rural electrification was also a goal, partly to operate pumps in order to expand irrigation. With independence capacity and generation accelerated, and a national grid started. Installed capacity of the state-owned electric company increased from 100 megawatts in 1950 to 2,157 megawatts at the beginning of 1977, an average rate of growth of 12.5 percent a year. Most of the generating sets were oil fired, but a few gas turbines were used for peak loads. Between 1949 and 1977 2,470 kilometers of high-tension transmission lines were added to the national grid that covered the country including Eilat. Generation of electricity increased from 543 million kilowatthours (KWH) in 1950 to 9,968 million KWH in 1976. Sales of electricity amounted to 8,579 million KWH in 1976, of which 34 percent was sold to industry, 28 percent to residences, 18 percent to water pumping, 4 percent to agriculture, and 16 percent to trade establishments. Fuel consumption by the state electric systems amounted to nearly 2.4 million tons of petroleum products in 1976. Electric rates were controlled after 1970 as part of the effort to keep prices of key commodities from rising too rapidly, but rates were increased substantially after 1973 to reflect the tremendous jump in fuel costs. During the 1970s consumption of electricity had been expanding steadily, averaging about 5 percent a year. The government-owned electric company planned to increase capacity to meet the growth in demand. By the mid-1970s, however, planned installation was behind schedule. Until the early 1980s additions to capacity were to be oil- and coal-fired thermal units, but after that reliance was to be on nuclear power generators. The Israelis took an early interest in atomic energy, even before independence. In 1952 the Atomic Energy Commission was established, and basic and applied research were encouraged. Subsequently two research centers (Sorek and Dimona) were established with their own reactors. By the late 1970s a number of scientists and engineers had been trained and valuable research conducted. Commercial application included the use of radiation to sterilize medical supplies and to prolong storage life of agricultural produce. Israeli experts had helped other developing countries with their own atomic energy problems. It was natural and anticipated that Israel, short of other energy sources, would eventually turn to nuclear powered electric generators. In fact a survey team searched the country for deposits of uranium and thorium in the 1950s but found only low-grade deposits (associated with phosphate rocks) for which the commercial use in atomic energy was uncertain. There were many observers who believed that Israeli interest in atomic energy was not limited to peaceful uses but included nuclear weapons. A potential energy source existed in the deposits of bituminous limestone (oil shale) that underlay much of the country. So far a technology had not been discovered to process oil shale cheaply enough to make it competitive with other fuels. A proposal was advanced in 1977 suggesting that processing oil shale deposits near the southern end of the Dead Sea in conjunction with electric power generation, sulfuric acid production, and chemical recovery from Dead Sea brine was economically feasible. Development was some years away even if further studies proved the practicality of such a large project. The severe scarcity of other natural resources also hampered industrial development. The country lacked commercial grade iron ore and most nonferrous metals except for copper ore deposits in the southern Negev Desert near Eilat. Copper was mined there in biblical times also, although in a geological strata closer to the surface. The ore in the modern mine averaged 1.4 percent of copper, and ore reserves probably exceeded 20 million tons. Mining was both open cast and underground. In 1958 a state-owned copper plant was completed and mining begun. The plant processed the ore into copper cement (about 80 percent metallic copper), which was then exported for final refining. The country imported copper products. Ore production amounted to 11,000 tons in 1970, but by 1975 it was down to 8,000 tons and in 1976 to 2,100 tons probably because the open-cast deposits were essentially exploited, and costs exceeded the value of copper recovered. Physical difficulties in the mines and pay scales for underground miners hampered extraction of the deep underground deposits. Exports of copper amounted to US $6.7 million in 1976 and US $10 million in 1975. The Dead Sea is the country's major mineral source; its water has a salt content ranging between 28 and 31 percent, making it the most saline of the world's large bodies of water. The principal salts are chlorides of magnesium, sodium (table salt), potassium (potash), and calcium and also some magnesium bromide. The estimated reserves ranged from about 1 billion tons of magnesium bromide to 21 billion tons of magnesium chloride. Modern processing of the brine began in the 1930s in a plant constructed by Jewish and British investors located at the north end of the lake. This plant, in territory that became Jordan's, was destroyed in the 1948 War of Independence. The Dead Sea Works was formed in 1952 (the government holding most of the shares) and processing facilities and infrastructure constructed at the south end of the lake near Sedom. Not until the late 1950s did production regain the preindependence level. In 1977 potash production at the Dead Sea Works amounted to 1.2 million tons, and exports were 1.3 million tons (partly from stocks) valued at US $50 million. Expansion was planned to raise capacity to about 1.5 million tons annually. Other facilities nearby produced 30,000 tons of bromine and the country's needs for table salt. Some residual brines were transported to facilities near Dimona to produce refractory grade magnesium oxide and phosphoric acid. A chlorine plant at Sedom was completed in 1977 to produce about 23,000 tons a year plus about 26,000 tons of caustic soda. The chlorine will be used to raise production of bromine to about 46,000 tons (worth about US $40 million at 1977 export prices) in 1978. Renovations at the bromine plant would raise capacity to about 60,000 tons annually by 1979. The Mediterranean phosphate belt that extended from Morocco in the west to Jordan in the east resulted in numerous potentially exploitable deposits, although not very rich, of phosphate rock in the northern and central Negev Desert. Potential reserves were on the order of 500 million tons, part of which could be mined by open pit methods. Mining began in the early 1950s, and production just exceeded 1 million tons in 1974. By 1976 production had declined to 639,000 tons, probably because of depressed international market conditions. The remaining natural resources of commercial significance were clays, sand, and building materials. There were adequate supplies of these for most industrial purposes. Domestic plants supplied many of the processed materials needed by the construction industry, such as tiles, bricks, glass, and cement. Cement production, for example, expanded from about 440,000 tons in 1951 to nearly 2 million in 1976. Structure and Organization Israeli industry is a mixture of some large plants (by Israeli standards) and a large number of small plants and owner-operated shops. In 1976 there were nearly 12,000 industrial establishments employing 278,000 people. About 70 percent of the establishments had fewer than ten workers, accounting for about 12 percent of industrial employees. At the other extreme, 7 percent of the larger plants employed 68 percent of the workers. There were 301 establishments employing 100 to 300 workers and 153 plants with more than 300 workers. One hundred of the largest plants, employing more than 300 workers, accounted for about 40 percent of industrial output and over 80 percent of industrial exports in 1977. The nearly 5,000 medium-sized plants, employing twenty-five to 300 workers, accounted for nearly 45 percent of industrial production and 18 percent of industrial exports. The bulk of the industrial concerns (over 10,000) had fewer than twenty-five workers and produced 17 percent of industrial output, very little of which was exported. Private owners operated 96 percent of the industrial establishments and employed 70 percent of the industrial workers. Government-owned establishments numbered thirty-six and employed 14 percent of the industrial workers. Histadrut, through its various organizations, owned 494 establishments and had 46,000 workers. Ownership and employment data greatly understated the role of government and Histadrut plants in industrial production, however, for their plants were generally much larger, more highly mechanized, and more productive than most privately owned plants. Public enterprises were active in most branches of industry except diamonds but were concentrated in defense, chemicals and petrochemicals, oil refining, shipyards, aviation, and mining and quarrying. Histadrut-affiliated establishments were largely in basic metals, nonmetallic minerals, wood products, machinery, and quarrying. All of industry, public and private, was primarily located in the coastal plain and particularly near Tel Aviv and around Haifa. Government policy had encouraged industrial development in the less populated areas for years with some success. Considerable structural change accompanied the rapid growth of industry after independence. In 1955 half of the value of industrial production was by food processing (24 percent) and textile, leather, and footwear (26 percent); metal and electronics accounted for 16 percent; chemicals, fuels, and plastics for 10 percent; and diamonds for 3 percent. Wood and paper products (including printing and publishing) and mining and quarrying and their related manufactured products contributed the remaining 21 percent. During the 1950s the opportunities for easy import substitution in production of such consumer products as processed foods and textiles were largely exhausted. Investments were channeled into a variety of industrial branches, significantly expanding the range and depth of manufacturing. By the 1970s the most rapidly expanding branches of industry were in those that were relatively new and partly export oriented. In 1970 the metal and electronics branch accounted for 29 percent of the value of industrial production; chemicals, fuels, and plastics, 13 percent; and diamonds, 6 percent. The average growth rate of the value of industrial production (in constant prices) of metals and electronics was about 16 percent a year between 1955 and 1970 and chemicals, fuels, and plastics nearly 14 percent a year-both branches increasing substantially faster than the rest of the economy. Such other industrial branches as food, textiles and footwear, and wood and paper products increased at rates closer to the general economy, thus losing some of their importance. In 1970 food processing accounted for 19 percent of the value of industrial production, textiles and footwear production for 17 percent, wood and paper products, 11 percent, and mining and related products, 6 percent. The changing structure of industry was continuing in the late 1970s, partly because of government policies. The structural shifts of industry caused a very substantial increase in the range of goods supplied to local and foreign markets. Partly there was diversification in products from older industries. Textile manufacturers, for example, began producing knitwear, synthetic fabrics, and high-fashion clothes. More important, many industrial processes were added, resulting in such new products as consumer durables, chemicals, plastics, machinery, electronics, scientific and optical equipment, and transportation equipment. By the late 1970s Israeli industry produced a range of goods similar to older, more developed industrialized countries.