Agriculture Sector Agriculture Workforce – More than half of national workforce is employed in the agriculture sector. Two thirds of the population is rural – 16 million people. Agriculture Area - Cultivated area is 1.4 million hectares, 2 - 3 percent of total land area with more than 1.2 million farmers. Less than 50% of crop area is dependent upon rainfall (most agriculture production is groundwater dependent). Agriculture Constraints -. Water Scarcity, Qat Competition, Lack of Access to Markets, Low Agricultural Productivity and Limited Investment Capital. Agriculture Workforce - The sector provides employment for over 3.5 million people (more than half the national work forces). Women are an important role part of the work force and according to a Ministry of Agriculture and Irrigation study provide up to in producing or the commodity lines with differing roles. One third of the population is urban with an annual urbanization rate of 4.6% according to WFP. More than 16 million live in rural areas. Note: Yemen’s total population is 24 million and according to the World Food Program around 46% of the population is under 15 years of age and the median age is 18.1 years. Agriculture Area - According to the Ministry of Agriculture and Irrigation , the cultivated area at 1.4 million hectares amounts to approximately 3 percent of total land area with more than 1,191,981 farmers less than half of crop area dependent upon rainfall; tube wells provide water to 29 percent of crop area water while the remainder accesses water through dams, floods and streams. Agriculture Constraints -. Water resources are a primary constraint to the sector with, market access to lucrative export markets is limited.

USAID Yemen Agriculture Program Community Livelihoods Program - Past programs in agriculture focused on stabilization activities (designed to reach large number of beneficiaries but unsustainable over long term). Agriculture Value Chain Program – Short term (nine month) value chain approach: honey, coffee and horticulture. Assessing situation, developing strategic approach, focus on marketing pilots (especially for coffee), and coordinating activities with stakeholders, existing programs, and other donors. Agriculture Livelihoods Program – Market-focused program aimed at improving value chains in food insecure areas by linking farmers to high value markets, providing assistance to improve productivity and yields, and developing farm-gate purchase agreements. CLP Agriculture Program June 201 and August 2012. $5 million investment assisted 53,000 farmers to improve agriculture and animal husbandry practices. 1.7 million animals vaccinated against PPR (pests de petit ruminants) and Sheep Pox benefiting 46,000 families. Food production (home gardens) training provided to 3,250 households. 329 MAI Extension Agents trained. CLP Short Term Transition Program October 2012 – June 2013 Value Chain Focus – Coffee, Horticulture and Honey. $3.5 million – Market assessment, pilot activities to improve productivity, processing and market access. Focus on export markets – US specialty coffee market. Europe and US for honey exports.

Source: World Bank Water Presentation, Sana’a Yemen – September 2012 Water Scarcity Freshwater availability is 115 m3/citizen/year – this is equivalent to 10% of Middle East North Africa availability and only 2% of the world average. There are 55,000 operational wells in Yemen and about 800 rigs. Water table drops by 1 to 7 meters in many basins. Fossil groundwater is fast depleting. Wells are going dry in bulk increasing the possibility of conflict. In the rural sector, 50% to 60% of investments have no sustainability beyond 5 years. Water scarcity is the 900 pound gorilla in the room. Different studies over the last five years indicate that Yemen will : Undergo a major shift in domestic demand for water where there will be increasing pressure to take water from the agriculture sector (agriculture uses 90% of current water sources – and with that sector, one crop, qat, uses 40% of the water). Agriculture production systems that can not mitigate the impact of decreasing water resources will not be tenable (in some areas rural investments will not be sustainable within 5 to 6 years due to decreasing access to water) . A key part of what USAID Yemen wants to do is looking at water conservation and water efficiency improvements that can be put in place on highly commercial and valuable crops – coffee, horticulture and honey. Source: World Bank Water Presentation, Sana’a Yemen – September 2012

Qat Production A breakdown of the value of agriculture production in Yemen illustrates one of the critical problems faced by the sector: dramatically increasing qat production which has increased from an annual yield of 76,000 MT in 1991 to more than 176,000 MT in 2010. Qat, a mildly narcotic drug contained in the leaves of Catha edulis, impacts negatively on food security, contributes to rising poverty levels, and is using more and more scarce water resources. The value of qat production in 2010 amounted to $1.39 billion or 29 percent of the total value of Yemen’s agriculture production. In 2011, the highest level of qat production was in Sana’a governorate with over 39,920 hectares, a yield of 36,158 MT, and estimated gross value of $347.6 million (net profit would be around 50 percent of gross value). Source: FAO and Ministry of Agriculture and Irrigation, “Qat Production in Yemen: Water Use, Competitiveness and Possible Policy Options for Change” September 2008,

Five Governorates Provide the Best Opportunity for Sustainable Agriculture: Security, Ag Potential & Synergy with Humanitarian Assistance.

Five International NGOs have expressed an interest in learning more about Feed the Future agriculture program activities in key geographic areas in order to determine how to coordinate efforts. ADRA Save the Children ACTED Islamic Relief Yemen CHF International Discussion s will continue as the Feed the Future funded agriculture program moves forward.

Rainfall in Feed the Future Focus Area Rainfall in Yemen Opportunity to Coordinate with Humanitarian Assistance in Rebuilding Key Infrastructure Needed for Resilient Agriculture USAID Yemen is moving forward with the design of a $20 million, four year, Feed the Future (FTF) funded agricultural program focused on key value chains with the aim of increasing rural incomes in food insecure areas. Current US Government Humanitarian Assistance to Yemen exceeds $116 million annually. There is an opportunity to coordinate efforts in a five governorate area to address humanitarian assistance objectives while supporting a transition to sustainable development. A pilot programming and coordination effort linking the FTF program with USG humanitarian assistance could serve as a model for achieving the Agency’s priority for innovative, scalable programs which leverage additional investments, create synergy, and build resilience in a persistent emergency beneficiary caseload. Coffee Terraces Rainfall in Feed the Future Focus Area

Agriculture Productivity, Market Access & Capital Low Productivity - A World Bank study indicates that the productivity of Yemeni agriculture (particularly crops and livestock sub-sectors) is at least 50% lower than Middle Eastern countries with comparable environments. Irrigation systems are inefficient, resulting in significant waste of water, estimated to be in the range of 50% to 65%. Limited Export Market – Ag exports constitute less than 9 percent of total exports ($551 million in agriculture exports out of $6.4 billion total). Market share of high value export markets is decreasing in coffee and honey. Lack of Access to Investment Capital - Commercial banking sector is not effectively addressing agriculture sector. Loans according to the International Finance Corporation require high interest rates (up to 60% annually) and banks can request collateral (preferably housing and land) up to 400% of loan size. Low Crops Yields & High Post Harvest Loss – A World Bank study indicates that the productivity of Yemeni agriculture (particularly crops and livestock sub-sectors) is at least 50% lower than Middle Eastern countries with comparable environments. Post-harvest losses due to poor handling, packaging and transport are estimated to effect 20% of the crop output. Average yields in kilograms per hectare for coffee world wide average between 300 kgs. To 1,000 kgs. In Yemen, the yields are low at 350 kgs to 450 kgs per hectare compared to Uganda with yields of 750 kgs per hectare. There is low productivity in horticulture which is further complicated by post harvest losses estimated at $250 million per year. Yemen has 40,000 beekeepers and a strong production capacity but it is losing high value export markets due to phyto-sanitary problems, lack of quality control, and a non-functioning traceability system in honey production. Water Use – Irrigation from well water has increased from 37,000 ha in 1970 to 567,000 ha in 2008 with 80% of the total cropped area under irrigation uses ground water as source – fossil water resources are fast being depleted. Overall irrigation efficiency is very low (35% to 40%). Qat is biggest consumer of water (40% of water used in Yemen). World Bank presentation indicates that rural investments in many areas will be untenable within 5 to 6 years due to water shortages. Limited Export Market - The sector constitutes less than 9 percent of total exports ($551 million in agriculture exports out of $6.4 billion total) with fish, fruits, milk and coffee/tea among the leading agriculture products exported in 2011. Ministry of Agriculture and Irrigation “2011 Agriculture Exports” Agriculture Credit Markets - Access to ag credit is difficult with high interest and collateral requirements.

Agriculture Strategy Emerging strategy in agriculture sector focuses on a value chain approach -- linking producers with other players in the market. Focus on honey, coffee & horticulture. Focus on rainwater harvesting for sustainable production. Targeted focus on value chains is expected to improve market access, increase productivity and quality, strengthen small-scale farmer opportunities for partnerships with the private sector. Value chain approach seeks to reduce private sector risk thus encouraging greater private investment in the sector. Overall goal is to promote resilient agriculture based on a market-driven approach using sustainable production, processing and marketing mechanisms promoting broad-based economic growth. Urgent action is needed to address the constraints facing the Yemen agriculture sector. The old methods of promoting “push” development practices aimed at increasing production and productivity will not be sufficient under the environment found in Yemen. Unless development activities are directly connected to the “pull” of strong market forces, forces that can compete with the profit margins of qat, it is likely that support provided in areas where qat is grown will result in a diversion of this support to expanded qat production.   The way forward must start with the focus on markets, markets that create the opportunity to increase productivity, are supportive of improved water management, and provide the level of profitability to compete with qat. An analysis of the Yemeni agriculture sector and a review of Republic of Yemen Government proposed interventions in the sector as well as discussions with public and private sector representatives, Other Donor and Multi-Lateral Organization staff indicates that increasing market access, productivity and quality of three value chains can result in a significant increase in agricultural GDP over five years. The value chains are coffee, honey and horticulture. Improvements in the production, processing and marketing of these products can significantly increase rural incomes. Demonstrating technology to increase rainwater harvesting, improve irrigation efficiency, increase productivity and quality, and increase high value market share can result in sustainable agricultural production systems.

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