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$Unique_ID{bob00271}
$Pretitle{}
$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
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oil
israeli
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see
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see
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}
$Date{1979}
$Log{}
Title:       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.