Photo: BEIRUT, LEBANON - May 8, 2011: A bird's eye view of Hamra and Ras Beirut / Omar Chatriwala / CC BY-NC-ND 2.0
Halal certification activity is currently limited in Lebanon but there is significant potential to organize it at a national level and reduce the country’s net reliance on food imports. National oversight is needed, say industry players, to boost market and public confidence in the sector, and boost Lebanon’s halal exports.
|YOUR PAIN POINTS ADDRESSED
|You are a food manufacturer in Lebanon seeking to export sophisticated, high-end products to new markets
How attractive are Lebanon's halal food domestic and export markets?
|What is the size and growth trajectory of Lebanon’s food and beverage industry, and how prevalent is halal certification?
|What are the challenges in the halal industry?
|What are the opportunities for growth?
The level of halal certification in Lebanon is low. As in other Arab countries, there is a widespread belief or assumption in Lebanon that all food, especially meat, is halal.
“People think food is 'kullu halal' (all halal), but in certain areas of the country Lebanese eat pork, so there is the issue of cross contamination,” Reem Hamzeh, a food safety specialist at the American University of Beirut, told Salaam Gateway.
“At the larger suppliers and slaughterhouses, meat is slaughtered in accordance with halal principles, but at smaller butchers, are they doing other meat than just meat and chicken? You don’t know,” he added.
Lebanon has just under 6 million people, with an estimated 1.5 million Syrian refugees, according to World Bank and United Nations figures.
While the country has agricultural potential, just 5 percent of GDP comes from agriculture, with exports estimated at $761.3 million. Lebanon imports up to 80 percent of its food needs, valued at $3.4 billion, according to the Ministry of Agriculture.
LEBANON F&B MARKET VITAL STATS
3 million: Around 3 million Muslims in Lebanon
18 different religious sects
$761.3 million: All agricultural exports, halal and non-halal. These contribute 5 percent to GDP (Source: Mininstry of Agriculture)
$3.4 billion: Lebanon imports 80 percent of all its food needs. This is valued at $3.4 billion (Source: Ministry of Agriculture)
$4 billion: Muslims in Lebanon spent an estimated $4 billion on F&B in 2015, just under 50 percent of total F&B spend in that year
$4.9 billion: Projected growth of Muslim spend on F&B is 3 percent per year to reach $4.9 billion in 2021 (Sources: National estimates and DinarStandard analysis)
Lack of unity in standards
The country's sectarian mix causes compliance issues and a lack of unity in standards. “For a country like Lebanon with 18 different religious sects and every major company having a multi-sectarian workforce, it can be difficult to require certain employees (such as slaughtermen) to be Muslim,” said Dr Mahmoud Lababedi, CEO of International Quality Services, a halal certifier in Beirut.
“Another problem is there are Sunni and Shia certifiers, and some details are not the same,” said Lababedi, adding that some consumers will only buy food certified by their sect.
Indicative of the lack of unified standards and oversight is at slaughterhouses. “Some use a tape recorder (to play the audio of ‘Bismillah’ and ‘Allahu Akbar’) for the slaughter, others say it,” said AUB’s Hamzeh. This is a particular issue at smaller slaughterhouses that import live cattle, while most food manufacturers, supermarkets and restaurants buy imported frozen or chilled meat from Europe, South America and Australia.
“There are no regulations to say imports have to be halal, but nearly all meat that is imported is halal, as it is a very important plus for sales,” said Hovig Kozobiokian, Managing Partner of Dekerco, a meat and food importer in Beirut. Chicken however is primarily locally sourced due to high import tariffs.
Lack of trust in local halal certification
There is a lack of trust in local halal certification, said Lababedi, which has been further undermined by recent food safety scandals. One case involved a major chicken meat processor in which the ingredients for mortadella (a popular cold cut) were discovered to not be halal certified. “There is a particular problem with meat products that have non-halal gelatin and binding agents,” said AUB’s Hamzeh.
Food safety scandals also involved unhygienic slaughterhouses, and dairies using unlabeled ingredients. “Two years ago food safety was horrible. It is getting slightly better due to a new safety law (passed in November 2015) but enforcement is another issue,” she added.
The new law will establish an agency responsible for coordinating policy and overseeing inspections, but its establishment and funding has yet to be approved.
The scandals have however prompted larger companies to better self-regulate to bolster consumer confidence, with higher sales in recent years of pre-packaged food.
“All the food industries right now, including restaurants, are buying from certified suppliers, especially ISO certified, and going towards pre-packed meats. But for daily needs, people are still going to their local butcher,” said Hamzeh.
Furthermore, there are around 12 Lebanese halal certifiers, according to Lababedi, but certification activity is minimal, he added, with his firm certifying just six or seven companies a year, primarily for export.
The lack of a national certifier and government oversight, combined with different standards being used by certifiers, has impacted Lebanon's export potential, particularly to the affluent Gulf Cooperation Council (GCC) countries.
That said, in the GCC, halal food import requirements are not as strict as in other markets, such as in Southeast Asia. “If Saudi Arabia said that next year all products need to be halal-certified, there would be many new customers for certification,” said Lababedi.
Lebanese exports have however been negatively affected by the conflict in neighboring Syria, now into its sixth year.
Prior to the start of the conflict in 2011, half of all exports went through Syria, dropping to less than 35 percent from 2013 onwards.
As a result, exporters are having to use air and sea cargo instead, significantly adding to transportation costs.
On top of this is higher labor costs compared to Egypt and Jordan, while electricity and operational costs are also higher due to power shortages. “Lebanese food producers are very limited in size compared to the ones in Saudi Arabia and the United Arab Emirates. And due to the economic situation, the food industry is suffering,” said Hamzeh.
AFFECTED BY RELATED SECTORS
The food production sector has been impacted by the drop in tourism revenues due to regional instability, with hospitality revenues dropping by half since 2010, to $3.2 billion, according to Lebanon's Touristic Firms Syndicate.
The hospitality and tourism sector also lacks halal certification, said Lababedi, which should be addressed to bolster halal tourism from the GCC countries once there is greater stability in the country and neighboring Syria.
While Lebanon has formidable challenges to bolster exports, high-end products are indicative of the country's potential.
For example, Le Ferme St Jacques produces halal-certified duck pate and foie gras that is exported throughout the Middle East, with annual revenues of $1.5 million.
But for the overall sector to capitalize on the growth in the halal sector, governmental oversight and a national certifier is considered key.
“Some meats are truly halal but we need a national authority to oversee the sector, so that all meat gets certified and people actually see it as halal-certified,” said Hamzeh.
This needs legislation, for certifiers to work hand-in-hand with the government. We also need to work on consumers, as they only check to see if meat is halal, not other products,” she added.
Introduce sophisticated products in the market: Understand the consumer and seek to identify gaps in the market, in particular for high-end luxury products
Work with international certifiers to establish best practices: Circumvent potential negative perceptions in export markets by working with major international producers
Identify high potential export markets and dedicated business development activities towards establishing international distribution for select product lines
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