Page 1 of 11
Journal for Studies in Management and Planning
Available at
http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue
02
March 2015
P a g e | 19 Available online: http://internationaljournalofresearch.org/
Assessing Competitiveness of
Jordanian Olive Production a Policy
Analysis Matrix (PAM)
D r . M a s n a t A b d e l H a l e e m A l - H i a r y
National Center for Agricultural Research and Extension/ NCARE, Jordan,
Telefax: 00 962 6 5371807, Mobile: 00 962 77 252 7008, E-mail: masnath@yahoo.com
ABSTRACT
The olive sector is considered one of the most important agricultural sectors in Jordan, and
the value of investments in this sector is about one billion JD.
The goal of this study was to evaluate olive crop competitiveness through using the
different competitive standards. The objectives to achieve the setup goal were to: (i)
evaluate the impacts of macroeconomic and agricultural policies, (ii) analyze private and
social profits to olive production, (iii) examine the efficiency and competitiveness of olive
production, and (iv) analyze the impacts of policy shifts on the financial competitiveness of
olive production.
The Policy Analysis Matrix (PAM) was used as the analytical tool. Results showed that olive
oil (in terms of fresh olives) does not enjoy a comparative advantage in all governorates.
The DRCs are higher than one.
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.
The study proposed some recommendations that will contribute to increase olive
competitiveness through 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.
Keywords: olive, The Policy Analysis Matrix (PAM), competitiveness, agricultural policies
INTRODUCTION
Jordan is considered one of the homelands of cultivated olives and cradles of its oil, as
olive oil trees are the most important fruit trees grown in Jordan. It covers about 75% of
the total planted area 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). More attention and
care had been given last years to this olive tree as it was reflected by the increasing in
cultivated areas, about 200% in the year 2006, compared to 1991. It covers now about
126,000 ha, with a total of 17.000.000 trees in the country. Large numbers of olive farms
belong to small and medium-size holders, which are considered as a source of income for
Page 2 of 11
Journal for Studies in Management and Planning
Available at
http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue
02
March 2015
P a g e | 20 Available online: http://internationaljournalofresearch.org/
many of Jordanian families, and provide many seasonal job opportunities. Around 60,000
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% (Ministry
of Agriculture, 2013).
The production was about 171 thousand tons of fruits and about 15-17% of this
production was used for pickling olives (green and black) and the rest for the extraction of
oil. Oil production reached 27.3 thousand tons (Ministry of Agriculture, 2011).
Approximately 80 thousand Jordanian families are depending on financial return of the
cultivation of olives (Al Wahwah, 2008). Olive oil is also an important source of national
income; its contribution is estimated at about 100 million JD.
Olive oil is converted from fresh olives based on a conversion factor of 17.5%. This means
100 kg of fresh olives yield about 17.5 kg of olive oil. The processing cost was deducted
from the oil prices. Olive mills usually take about 10% of the extracted oil as the cost of
processing (Jabarin et al, 2002).
Olive growing in Jordan is facing number of challenges, including lower productivity,
increased costs and the depletion of groundwater, which resulted from the expansion of
olive cultivation in irrigated areas. In the light of the limited water resources, there is a
need to study the comparative advantage and competitiveness of olive to provide farmers
and decision makers with recommendations.
During the last decades, few studies were conducted by Ministry of Agriculture in Jordan
related to policy analysis, of which only two used the PAM as the main tool of analysis.
The estimated coefficients for olive oil indicated that olive oil (in terms of fresh olives)
does not enjoy a comparative advantage in either the rain-fed or the irrigated areas. The
DRCs for both systems are much higher than one. The other protection coefficients (the
Nominal Protection Coefficients for outputs, NPCo and the Effective Protection
Coefficients, EPC) are also higher than one, which reflect a high level of protection
provided to olive production in the country (MoA and EsCWA, 1996), (MoA and GTZ,
2000).
OBJECTIVES
The goal of this study was to evaluate olive crop competitiveness in six governorates
(Amman, Balqa, Irbid, Jerash, Mafraq, and Madaba) through using the different
competitive standards.
Page 3 of 11
Journal for Studies in Management and Planning
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e-ISSN: 2395-0463
Volume 01 Issue
02
March 2015
P a g e | 21 Available online: http://internationaljournalofresearch.org/
The objectives to achieve the setup goal were to: (i) evaluate the impacts of
macroeconomic and agricultural policies, (ii) analyze private and social profits of olive
production,(iii) examine the efficiency and competitiveness of olive production, and (iv)
analyze the impacts of policy shifts on the financial competitiveness of olive production.
METHODOLOGY AND TECHNIQUES USED
Data collection
Secondary data was collected from different sources and the primary data was collected
through field survey. A questionnaire was designed and filled in the six governorates, and
the data was analyzed using a program of statistical analysis. The survey included about
76% of the total planted area of olive in Jordan. About 223 questionnaires were collected
from the six governorates.
Method of Analysis
The Policy Analysis Matrix (PAM) approach serves both as a logical framework for thinking
about the effects of changes in economic and agricultural policies and as an empirical
analytical tool for measuring the policy impacts (Monke et. al, 1989).
PAM was used as the analytical tool. Private and social budgets were built for olive crop in
the different governorates. Protection and comparative advantage coefficients were used
to provide policy bids and recommendations. Economic profit is the fundamental part of
the Policy Analysis Matrix analysis. Profit is defined as the difference between the value of
outputs (revenues) and the costs of all inputs (costs).
Input-output tables was used to calculate quantities , prices at the farm gate , quantities
and prices of inputs used for production (such as seeds, fertilizers, pesticides, machinery,
labor and land ... etc.).
The domestic prices of tradable outputs and inputs have been adjusted to economic
prices using import and export equations, and the domestic prices of production inputs
such as machinery, pesticides and mulch have been adjusted using special and shadow
prices.
The economic prices of non-tradable inputs which are the local resources that are not
traded in world markets were evaluated through the local economy of the country as
follows: -
