Like the rest of the economy agriculture is facing a crisis in Iraq. That’s because the system is dominated by the state, which is not making enough money to pay its bills. This is a legacy of the Baathist system implemented in the 1970s which placed the government at the center of all transactions in the farming business.
Farmers rely upon the state in every step of the food system. The Water Ministry provides water and irrigation to farmers at little to no costs. The seeds, fertilizers, pesticides, and machinery are all provided by the Agriculture Ministry usually via State Owned Enterprises (SOEs). The Finance Ministry provides subsidies and loans which are usually not paid back. The Trade and Industry Ministries run more SOEs that buy and store agriculture products, process them and distribute them to markets. Many goods are bought by the government for the food ration system which then distribute them. SOEs also import almost 50% of the country’s food needs because the farm sector has struggled and been neglected for decades. These are all huge bills. The food ration system for instance cost $1.43 million in 2019. The purchase of wheat and barley from farmers cost another $1.25 billion. At the same time the Agriculture Ministry’s budget has been cut from $426 million in 2015 to just $142 million in 2019. Currently Baghdad isn’t making enough money to pay oil companies, its salaries or pensions let alone all these farm programs. That means farmers may not be paid for some time while the economic crisis lasts.
This entire system was created under President Ahmad Hassan al-Bakr with the Agrarian Reform Law of 1970. Early on in the Baath rule the party tried to implement socialist policies. One of those was agricultural reform with the 1970 law. It confiscated land, redistributed it to peasants and provided vast government support from equipment to fertilizers to insecticides to land reclamation projects to storage, shipping, marketing and loans all via the state. The government thus became the main overseer of the entire system. Even then it was never productive enough to meet with demand especially as the urban population grew with migration from the rural areas that also undercut agricultural production. The role of the government has changed little in the fifty years since the Agrarian Reform Law has passed. It is and always has been inefficient. It ties farmers to the state to the extent that they don’t even think about trying to sell to private businesses.
The limits of this process was apparent decades ago and yet it hasn’t changed. Now that the country is in the largest financial crisis since 2003 there is no way that farmers can be expected to be paid for their products or receive their usual amount of aid as before. This could lead to a decline in production putting more pressure on Baghdad to import necessities. If the situation got really bad it could provide even more incentive for people to leave the land and move to the cities, which only exacerbates the situation. It highlights that while the political system has changed the economy remains largely the same since the Batthist period.
Fathallah, Hadi, “Iraq’s Governance Crisis and Food Insecurity,” Sada, 6/4/20
Khadduri, Majid, Socialist Iraq: A Study in Iraqi Politics Since 1968, Washington D.C.: The Middle East Institute, 1978