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By Sami Zaptia.
London, 23 August 2020:
The Libyan market may reopen for Tunisian agricultural products next week, Ibrahim Trabelsi, a member of the Executive Office of the Tunisian Union for Agriculture and Fisheries in charge of Fruit Trees and Maghreb trade said Friday.
The Libyan market has been closed to Tunisian fruit, vegetables, and fisheries products for nearly a month due to the effects of the Coronavirus and payment conditions imposed by the Libyan state.
Speaking to Tunisian news agency TAP, Trabelsi said that Libyan importers were very keen for the resumption of Tunisian agricultural products, especially in light of the tradition of financial dealing between economic traders in the two countries.
He pointed out that the Libyan authorities, which earlier required dealing through the mechanism of Letters of Credit, decided to give Tunisian producers and exporters an additional six months, especially in light of their lack of financial readiness to deal through this mechanism.
Tunisia exports about 60 percent of agricultural products such as peaches, plums, pomegranates and pears to the Libyan market, which provides significant export revenues, according to Trabelsi.
Tunisian fruit and vegetable storage capacity reached its peak
In the same context, Trabelsi called on Tunisian authorities to take action on the issue of exports of agricultural products to Libya, especially since the storage sites have reached their peak, which threatens to destroy the stored products.
Tunisian fruit exports fell sharply in 2020
It must also be borne in mind that Tunisian fruit exports fell sharply, by 41 percent in quantity, from 30,300 tons to 17,700 tons, and by 27 percent in value from about 70 million TND to 50.6 million TND, from January to 18 August this year. This is in comparison for the same period last year.
Effects on prices and supply
The resumption of Tunisian agricultural products entering Libya will have two conflicting effects. They will be bad news for Libyan farmers who have enjoyed some increased demand/prices as a result of the closed market over the last few months. However, they will be welcomed by Libyan consumers as Tunisian prices offer more variety and lower prices.
Use of Letters of Credit
With regards to the issue of Letters of Credit, Libya is suffering an acute cash crisis and the authorities are attempting to encourage the use of e-payments to reduce demand for cash. Equally, the authorities are trying to reduce the black-market exchange rate against the dinar by reducing demand for imports.
However, the reality is that most Tunisian fruit exporters and Libyan importers, are small scale traders working in the informal cash market. They neither want nor can operate on the basis of documentary bank Letters of Credit.
Working through the Libyan and Tunisian banking systems is very bureaucratic, slow and unresponsive to demand. They entail importers having all their company’s documents in order. This in itself is a huge bureaucratic paper chase.
Also, fruit and vegetable markets work in short demand-supply cycles with Tunisian goods often ordered by Libyan importers by phone for delivery within days. Formalization of this sector is difficult and would destroy the sector.
