Thursday, May 16, 2013

Iraq’s Troubled Agricultural Sector

In May 2013 Deputy Agricultural Minister Ghazi Obeidi told the press that Iraq’s farm sector was booming. He claimed that the country would soon be meeting domestic demand for fruits, vegetables, and wheat. Obeidi went on to state that was due to the Agricultural Ministry’s policies, which include the banning of certain imports, and providing new crops to help Iraqi farmers. Agriculture is one of the most important industries after oil and gas. It is the second largest employer, and one-third of the population lives in rural areas. Currently the countryside is suffering from high rates of poverty and food insecurity, which has led to a mass migration to Iraq’s cities. After decades of neglect due to sanctions and wars, agriculture could be one field that with proper development could provide much needed jobs to Iraqis, and stabilize farming regions. Unfortunately, there are major structural barriers to achieving these goals, despite the deputy minister’s pronouncement.

Farmers like this one in Basra face a number of structural and environmental barriers to succeeding (Reuters)

Farming in Iraq has suffered some hard times over the last few decades. It accounted for 23.5% of jobs in 2008, but only contributed 3.9% of GDP. Those figures have been going down as the Agricultural Ministry reported a drop in the number of farmers and areas underproduction in recent years. As a result, Iraq’s agricultural yields are 50-75% lower than its neighbors, and that difference has increased in the last ten years. The United States Agency for International Development reported that crop production in Iraq went up from 2001 to 2002, and then fluctuated before hitting a steady decline after 2005. Using 1999-2001 as a baseline, the country’s output was up 6% in 2005, and then went down by 17% by 2009. That compared to the rest of the Middle East and North Africa that saw a steady increase during the 2000s going from up 1% in 2001 to up 25% by 2009. After the end of sanctions in 2003, Iraq’s agricultural sector should have been freed of restrictions, and had a renaissance. Instead, government and environmental factors have led to its decline. 

Crop Production Index (1999-2001=100)

Income Countries

Rural areas of Iraq are suffering. 39% of the countryside is poor compared to 16% in urban areas. That is a direct reflection of the sorry state of farming, which provides the main livelihood for rural families. The country has been flooded from cheap food imports from neighboring countries like Iran, Turkey, Jordan, and Syria, which Iraqi producers cannot compete with. In 2012, the country bought 50-80% of its vegetables from abroad. One major reason is that the United States removed many tariffs immediately after the 2003 invasion. Another is that Iraqis are using 30 year old farm techniques due to sanctions, and the lingering affects of past wars that isolated them from modern improvements like the use of sprinklers and drip irrigation to new seeds to new equipment. That underdevelopment means that there is huge potential for growth in the industry. Baghdad has talked about jump starting the farm sector to provide jobs and development in rural areas for years, but these policies have largely failed.

The Iraqi government has tried a number of different tactics to help agriculture, but they have not worked. One problem is that not enough money has been budgeted for the Agricultural Ministry. In 2010 it received $1.4 billion for investment, which was below the mark set in the 5-year national development plan. Even with that money, the Ministry’s policies were ill advised. In 2008 it attempted to double the prices it paid to farmers in an effort to boost production. In 2009 and 2011, the government tried banning the import of vegetables and fruits, and in the former year it tried to impose a tariff to raise the cost on cheap foreign farm products. This year, it announced that it would increase the purchase of wheat, barley, and corn to help out farmers, provide them with loans, and assist with new irrigation equipment. So far, none of those policies have worked. The 2009 tariff for instance, was never enforced, and the import bans caused huge price increases, because domestic farmers could not meet demand. Iraq’s water supply system is also inefficient and fragmented. There are three different delivery systems, one in Kurdistan, one run by the central government to the provinces, and one for Baghdad. None of them are coordinated. There are no meters on the system, so there is no way for the authorities to collect fees on users, which means there’s no check on usage. Finally, the government restricts the use of new seeds, fertilizer, and other inputs, all of which are under state control. It takes up to two years to register new seed varieties, and can cost anywhere from $2,000-$3,700, a huge sum for the average Iraqi. The Agricultural Ministry, and others control state-run enterprises that make fertilizer, farming chemicals, and other agricultural products. Those plants are not productive, which cause constant shortages, and the publicly produced fertilizer and other inputs are given to middlemen free of charge who then sell them at very high rates to farmers. All together these are huge hurdles for any rural family to overcome. The state’s policies have often backfired, and hurt farmers. On top of that, the government mismanages the production and distribution of products necessary for their work. All together the authorities have been a hindrance rather than a benefit to the agriculture sector.

An additional issue is the food ration system. Started during the 1990s sanctions, the state-run food distribution system is the largest in the world, and a major impediment to the growth of farming. The rations require huge imports of products that could be produced domestically. In 2012 for instance, Iraq bought 5.4 tons of foreign food products for the system. Those subsidized imports lower prices by an estimated 20%, and undercut domestic farmers. According to the United Nations, Iraqis are less dependent upon the ration system than before, with the exceptions of wheat and rice. In November 2012, when the cabinet proposed ending the rations, and replacing it with cash payments it reversed itself in five days due to political pressure, namely concerns about how the change would play out during the 2013 provincial elections. Not only that, but the system is highly inefficient and corrupt, yet there’s no political will to modify or end it once again undermining farmers.

Regional and environmental factors also impede the development of the agricultural industry. The land of two rivers is getting less and less water from those two giants the Euphrates and the Tigris. Only 3% of the Euphrates and 32% of the Tigris originate in Iraq. In contrast, 68% of the Tigris comes from Turkey and Iran. That means those two upstream countries along with Syria control much of Iraq’s water, and they have been building dams and diverting the water for their own uses cutting Iraq’s supply since the 1990s. There is no cooperation with Iran, Turkey, and Syria over water policy, which means the problem is going to get worse. Within Iraq, demand has gone up, and there have been successive droughts over the last few years. That has meant the country has gone from water secure to water stressed, and the U.N. has warned that it could become water scarce by 2025. Finally, southern Iraq is suffering from high levels of soil salinity. Up to 50% of the cultivated land has salt issues, and the farming techniques used have made it worse. Baghdad has consistently called for talks with its neighbors over the Tigris and Euphrates, but that has gone nowhere, and the other nations don’t seem interested to begin with. Because Iraq is so behind in its farming methods the salinity issue is also going to get worse. Finally, the droughts are natural disasters, which the government has found no solutions to, because it is so inefficient, and lacks the planning to deal with such issues.

Iraq needs a sound government policy if it hopes to save its declining farming sector. A strategic plan needs to be put into place that involves modernizing the industry, loosening state control over inputs, while strengthening limits on water usage, reforming the food ration system, dealing with the cheap imports, and seriously addressing the problems it has with its neighbors. Baghdad has done little of this. Instead it has followed a haphazard approach that is uncoordinated, and often hurts those that it is trying to help. Sometimes it doesn’t even follow its own policies like with the tariff on foreign farm goods. The root cause of these problems is the lack of political will to make any meaningful changes, and a lack of effective planning. That is resulting in the continued decline in agriculture, and the migration of farmers to the cities. That is having a ripple affect upon society by increasing the housing shortage. This is a shame since farming could be a major source of jobs, and a way to diversify the economy away from its dependence upon oil. Farmers simply don’t have the means to overcome all these structural and environmental factors on their own, and until the government gets its act together, and gives this topic the attention it deserves the rural areas of Iraq will continue to suffer.


Adel, Shaymaa, “Iraq imported more than 5 million tons of food last year,” Azzaman, 3/29/13

Al-Aukaili, Khawla, “Iraqi agricultural sector booming, says deputy minister,” Azzaman, 5/14/13

Decamme, Guillaume, “Iraq ration card reform sparks anger,” Agence France Presse, 11/12/12

IRIN, “Less dependent on food rations,” 5/7/13

Kadhem, Adel, “Iraq’s wheat harvest exceeded 3 million tons in 2012,” Azzaman, 2/15/13

Shafaq News, “6,500 acres of Diyala’s farms and orchards threatened by drought,” 3/23/13

Al-Shaher, Omar, “Iraqi Agriculture in Crisis,” Al-Monitor, 1/29/13

Al-Taie, Khalid, “Iraq aims to support local farmers through new proposal,” Al-Shorfa, 4/12/13

Tijara Provincial Economic Growth Program, “Assessment of Current and Anticipated Economic Priority In Iraq,” United States Agency for International Development, 10/4/12

Al-Ukaili, Khawla, “Iraq raises prices of locally produced grains,” Azzaman, 4/17/13

Al-Zubaidi, Hassan Latif, “social welfare flip-flop: why iraq’s ration card can’t be scrapped,” Niqash, 11/15/12

1 comment:

Steve Donnelly, AICP said...

Excellent analysis. All the riches in the world, but no planning, and structural problems. Who won't get out of the way?

Everybody subsidizes agriculture, because it drives employment. Removing the barriers, as you indicated, flooded the market, actually interfering with free market. Plenty of smart Iraqi farmers who would figufre all this stuff out quickly if the government would create conditions for success---the tarriffs on imports, linkage to the ration card purchases--same as our US ag sets a floor and market.

Just came back from MD's eastern shore where the big private sector ag firms, Perdue, etc., balance the markets, make investment possible and productive. Iraq had regionalized systems like that (some good, some "land barons," but it takes a while to find the mix, and hard to find investment/capital without some basic national structures:

Even under regionalization, the waters of Iraq need some kind of national management, and without an effective management strategy, it is a big drag. But too many hands in the pot to want to change things at the national levels.