Above photo: Kibbutz fields near Nahal Oz on the Israeli border with Gaza. Amir Tayeboun.
Since the beginning of the brutal war waged by the Zionist enemy on Gaza, the agricultural industry in the Zionist entity has witnessed a significant shortage of agricultural labor. The Israeli government issued a decree prohibiting Palestinian workers—some of whom work in the agricultural sector—from entering the Occupied Territories. This was accompanied by the departure of around 8,000 Thai workers from the Occupied Territories at the beginning of the war. This crisis posed a challenge for Zionist farmers, especially in the Gaza Envelope, who suffered from a significant shortage of labor, leading to an inability to harvest crops.
In fact, the agricultural industry in the entity employed about 15,000 Palestinian workers, and today the Israeli government is attempting to replace them with foreign workers from India, Sri Lanka, and Moldova. Hebrew media reports speak of a plan to bring in around 100,000 foreign workers to work in the construction and agricultural industries. Foreign workers have already begun to arrive in the Occupied Territories, but Israeli farmers are struggling because these foreign workers coming from Asia and Europe lack experience, as indicated by numerous reports published in “Israel.”
The agriculture industry in Israel relied heavily on Palestinian workers due to their agricultural skills on one hand, and their proficiency in speaking Hebrew on the other, which enables them to communicate effectively with employers, apart from their relatively low wages. This is not new, but rather the result of a historical trajectory of the transformation of the agricultural industry in “Israel” from a model of family farms to medium and large agricultural corporations. However, while this transformation has been promoted as a success story, the current war reveals other dimensions that may constitute strategic vulnerabilities for “Israel.”
History of labor in the Israeli agricultural industry
The structure of “Israel’s” settlement was initially based on agriculture. Ideologically, agriculture represented a way of life, deeper than just a means of earning income. Economically, agriculture constituted a significant part of the national revenue and exports for many years, and it played a crucial role in ensuring food security for waves of immigrants who came from various parts of the world.
Jewish settlements were built in their early stages on the idea of agricultural settlements. Since the late 19th century, Jews from Europe arrived in Palestine and established agricultural projects, mostly orchards (citrus and grapes), initially relying on Palestinian labor distinguished by its availability and low cost. In the early 20th century, Jewish socialist immigrants attempted to compete with Palestinian labor in agricultural work, but they were not successful[1]. Therefore, these immigrants established their own agricultural settlements. Two types of settlements prevailed: the “kibbutz” and the “moshav.” The “kibbutz” is a community in which each individual produces according to their ability and consumes according to their needs. The “moshav,” on the other hand, is a semi-cooperative village consisting of individual family farms, which engage in activities such as purchasing, marketing, and financing collectively to exploit economies of scale. As a result, farms were planned to rely solely on family labor.
However, after the establishment of the state of Israel in 1948, there was a reduction in reliance on the principle of self-employment or family work on their own farms, due to the need to increase food production and to provide employment opportunities for new immigrants on the other. This led to an increase in state investments in infrastructure, research, and agricultural training, resulting in a significant increase in agricultural production. By the 1960s, the entity achieved self-sufficiency in fresh agricultural products [2].
After the 1967 war and the occupation of the West Bank and Gaza Strip, Palestinian workers in the Occupied Territories were forced to work at low wages, gradually replacing some unskilled Israeli workers. Following this, a transformation wave began among agricultural workers in “Israel,” with a large number of Palestinian agricultural workers filling the needs of the Israeli agricultural industry, and with its growth, there was sufficient abundance for export.
The Palestinian labor force in the Israeli agricultural industry continued to expand until the first Palestinian Intifada, where Palestinian workers became a “security burden” for “Israel,” and many of them were unable to go to work regularly due to repeated blockades[3]. Starting in 1993, the Israeli government allowed its farmers to bring in a few foreign workers from Thailand to replace Palestinians, with the number of permits increasing in the following five years, as the security situation deteriorated. Between 1996 and 2000, the number of permits for foreign workers in agriculture reached about 17,000. Since 2002, the number has been around 27,000 [4], and remained so until 2023.
Neoliberal economics transformed agriculture
In the late 1970s, “Israel” experienced a shift towards neoliberalism, aligning with the Western trend towards free market economies and reducing government intervention. This changed the agricultural labor force to include Palestinians and foreigners. This transformation was massive compared to the kibbutz and moshav systems, which no longer played a structural role in the occupation’s agricultural industry.
In 1977, after Menachem Begin became the head of the first right-wing government in the entity’s history, public policy became less favorable to the agricultural industry. Trade controls were lifted, government support for exports and some import taxes were abolished, causing difficulties for the agricultural industry, especially with the inflationary recession that hit the Israeli economy in the 1980s. With the inflation-fighting measures taken in 1985, which involved a significant increase in interest rates, Israeli farmers faced a crisis in repaying their large loans, as most agricultural cooperatives suffered from heavy debts during those years due to cheap and subsidized credit prevailing in the 1970s.
Despite debt restructuring reforms initiated by the Israeli government in subsequent years, many agricultural cooperatives collapsed financially, and the remaining farmers had to adapt to the new situation without the safety net and support system provided by the cooperatives. Perhaps this was the most radical institutional change ever experienced by the Israeli agricultural sector, and it occurred within a very short period, which made it difficult for farmers to adapt to the new reality [5].
This impacted small-scale farmers who gradually exited the market due to increasing financial difficulties they faced. After 1985, the number of farms in “Israel” began to decline, with an average annual decrease rate of 5% in the 1990s. Additionally, the growth rate of value contributed by the agricultural industry to the economy became negative (-0.9%) in the 1990s, after peaking at an annual growth rate of 6.4% in the 1970s. Moreover, farmers’ incomes decreased significantly due to a reduction in the volume of agricultural exports, which accounted for about 13% of total production after 1981, compared to between 32% and 40% before that [6].
These adverse conditions in the agricultural industry forced surviving farmers to invest in industries and markets other than agriculture to increase their profits. This was suitable for large-scale farmers, who possessed large amounts of capital and capabilities that helped them withstand losses and invest in other markets. The exit of small-scale farmers from the market also helped these large-scale farmers expand their farms.
This structural change in the agricultural industry was also a result of the introduction of new technologies into the industry. Technology typically contributes to increasing productivity, thereby giving those who possess it an advantage over their competitors. As large farms are more adaptable and capable of adopting new technologies in the agricultural industry, they had a significant advantage [7].
“Israel” benefited from the introduction of technology into the agricultural industry, and even made efforts to develop it, becoming one of the pioneers in this field worldwide. This was supported by the Israeli government, with the Israel Innovation Authority providing support for research and development in agricultural technology companies, contributing between 20% and 50% of research and development budgets to assist in developing new products and technologies in this field [8]. This made the agricultural technology industry one of the most important industries of “high-tech” or advanced technology in “Israel,” accounting for about 17% of Israeli GDP [9].
Technological innovations in the agricultural industry include computer-controlled drip irrigation, computerized early warning systems for leaks, thermal imaging to detect crop water stress, biological methods of pest control, and new varieties of fruits and vegetables [10]. All these technological solutions have become important sources of Israeli technological service exports. The Israeli agricultural technology industry has positioned itself as a “savior” of agriculture industries worldwide, attempting to export its technologies to countries suffering from food insecurity, especially in Africa.
This technological focus of the Israeli agricultural industry further reinforced the structural transformation in the industry. Ultimately, this structural change removed some small-scale farmers from the market. In contrast, large farms that require hired labor became dominant, opening opportunities for increased Palestinian and later Southeast Asian labor in this industry.
Strategic error
The structural change in the Israeli agricultural industry not only affected the composition of workers in the industry but also had repercussions on food policy in the entity, which became more reliant on importing foodstuffs. This was due to the slowdown of growth of the agricultural industry, which coincided with a significant expansion in the population, compounded by the political desire to lower prices, which opened the door to imports [11].
As mentioned earlier, the slow growth of the industry in the 1980s was the result of inflationary recession factors that affected the Israeli economy during that period, coupled with the neoliberal policies followed by Israeli governments since the late 1970s, which reduced the amount of government support for agriculture. Consequently, population growth, over time, became faster than agricultural production growth. In the 1950s, the annual growth rate of production was about 12.8%, compared to a population growth rate of 4.6%. However, this dynamic shifted in the 1990s, the decade when population growth surpassed agricultural production growth, remaining so until now, with the former reaching 2.8% while the latter reached 2% [12]. This led to dependence on food imports to meet the increasing local demand. The result was that the entity became completely dependent on imports of sugar, vegetable oils, oilseeds, animal feed, and grains [13]. Moreover, domestic production of animal products relies on imports of feed and live animals.
This coincided with the neoliberal transformation in the Israeli economy, where the focus in the 1990s shifted towards high-value industries, especially the technology industry. Even agriculture took a significant share of this industry, with a focus on developing agricultural technology surpassing interest in agricultural production itself. At this stage, Israel chose the neoliberal model based on export orientation. The purpose of this policy was to improve the current account balance—reducing the deficit or increasing the surplus—attracting foreign direct investment, reducing external debt, and building foreign currency reserves by the central bank [14]. In contrast, other industries, including agriculture, saw declining growth rates, and their products lost competitiveness, even in domestic markets, due to the high production costs.
It is not sustainable to be a First World Country—meaning a country with an economy focused on high-value production while abandoning quantitative production, especially concerning basic goods like food—in a hostile region that does not accept you. No matter how significant Western support may be, there are economic rules in the real-world economy that cannot be bypassed or ignored. Consumers need consumer goods, and herein lies the strategic mistake committed by the Israeli entity during the formation stage of its modern economy, specifically after the neoliberal transformation it underwent in the late 1980s. Under export-oriented neoliberalism, the focus shifted to enhancing the economy’s status on the international stage. In this context, “Israel” was able to achieve its goal. However, it simultaneously relinquished a crucial aspect of its security, which is food security.
Amidst the brutal war that “Israel” is waging against the people of Gaza, other fronts have opened up. The attacks carried out by Yemen in the Red Sea imposing a blockade on Israeli ports from the early weeks of the ongoing war have proven that the anti-Israel camp is capable of reducing its ability to import. This poses an even larger problem in the event of a broader regional war. While today only the port of Eilat is affected by the blockade in the Red Sea, the situation could worsen if a war threatens other Israeli ports, especially those located on the Mediterranean Sea. This could trigger a food security crisis in “Israel,” which abandoned a fundamental element of its survival amidst the transition to neoliberalism.
Notes:
[1] Kimhi, Ayal. “Are Migrant Agricultural Workers Replacing the Local Workforce?” 2015.
[2] Ayal Kimhi and Nitzan Tzur-Ilan. “Structural Changes in Israeli Family Farms: Long-Run Trends in the Farm Size Distribution and the Role of Part-Time Farming.” 2021.
[3] Angrist, Joshua. “Short-Term Demand for Palestinian Labor.” 1996.
[4] See reference 2.
[5] See reference 2.
[6] See reference 2.
[7] See reference 2.
[8] “How Israel Planted the Seeds of Its AgTech Success” Israeli Ministry of Trade website.
[9] “Israel: 2023 Article IV Consultation” International Monetary Fund, 2023.
[10] “The Future of Skills: A Case Study of the Agri-Tech Sector in Israel,” European Union Training Foundation, 2020.
[11] Kimhi, Ayal. “Food Security in Israel: Challenges and Policies” 2024.
[12] See reference 11.
[13] “Israeli Food Supply Chains,” US Department of Agriculture, Foreign Agricultural Service, 2022.
[14] Krampf, Arie. “Israel’s Neoliberal Turn and its National Security Paradigm” 2018.