Conflict overshadows everything about Iraq, including its grains sector. Fighting and the occupation of a large area by rebels have disrupted the production, processing and distribution of grain. Large numbers of people have been displaced inside the country and feeding them has placed major strains on the country’s resources.
“Large population shifts, as well as the fact that a large portion of Iraq’s cereal belt has become a battlefield, have put a strain on markets,” a report published by the charity Oxfam earlier this year said.
The International Grains Council (IGC) puts Iraq’s 2016-17 grains crop at 4.8 million tonnes, up from 4.5 million in the previous year. Wheat production is put at 3.4 million tonnes, up from 3.3 million. Barley output is put at 1.1 million tonnes for 2016-17.
Iraq’s total grains imports in 2016-17 are projected at 2.7 million tonnes, up from 2.4 million the year before, with wheat imports at 2.5 million tonnes, up from 2.2 million the year before.
Source:Foreign Agricultural Service, Official USDA estimates
The IGC’s most recent quarterly update on world trade in wheat flour shows Iraq importing a projected 2.3 million tonnes in 2016-17, unchanged from 2015-2016. The level makes the country the largest wheat importer in the world.
The situation has changed dramatically from the time in 2015 when Iraq was reported by the Bloomberg news agency to have ambitions to be a net exporter of wheat by 2017.
The continuing conflict in Iraq means that large numbers of people have been forced to flee their homes. According to International Organization for Migration (IOM) figures cited by the U.S. Agency for International Development, there have been 3.4 million internally displaced persons in Iraq since January.
“Since December 2013, heavy fighting between the Iraqi security forces and armed opposition groups in the governorates throughout northern Iraq has resulted in instability, violence, and population displacement,” IOM says on its website. “As of Aug. 18, 2014, IOM identified 218,435 families (an estimated 1,310,610 individuals) displaced from violence, as well as 1,483 IDP sites. Iraq’s humanitarian challenges are immense. More than 1.3 million Iraqis have been confirmed displaced in 2014, in three distinct displacement waves 1) those displaced from the Anbar conflict starting in early January, 2) the Mosul conflict, which began in early June and 3) the Sinjar crisis, which began on Aug. 4. While many Iraqis have found their way to displacement camps, many are living in schools, mosques, churches and in unfinished buildings.”
In a recent analysis of the Iraqi food supply situation, the World Food Programme (WFP) also explained that the country is now a temporary home to 249,395 Syrian refugees.
Distribution System deteriorating
Source: International Grains Council
According to a bulletin published by the WFP, household access to rations under Iraq’s Public Distribution System is deteriorating.
“May and June data indicate a deterioration in household access to PDS rations: 63% of all respondents said they did not receive PDS rations in May compared with 49% in February,” the bulletin said. “In particular, respondents in Babil, Najaf, Baghdad, Basrah, Diyala, Dohuk, Salah al-Din and Thi-Qar reported a significant deterioration in PDS distributions. Nationally, just 1% of households are receiving a full PDS ration and in most governorates, no respondents received a full ration in May. Data collected in conflict hotspots in June confirmed this trend, as even more households reported not receiving PDS in June.”
Over the past two months, wheat flour is the only item that has been distributed regularly, the WFP said.
“PDS wheat flour distribution in 2016 is reportedly providing 70% of requirements,” the WFP said. “However, quality issues have dogged the distributions, as domestic, low-protein wheat from southern and central Iraq has not proved satisfactory to PDS recipients. Even if the 2016 domestic wheat crop exceeds 4 million tonnes and domestic procurement exceeds 3 million tonnes, domestic wheat needs to be blended with imported wheat to yield acceptable flour for bread-making.”
The WFP also said that PDS effectively ran out of rice at the end of 2015.
“Rice distribution was meeting 70% of requirements in December 2015 but distribution fell to 1% in February 2016,” according to the bulletin. “Unless additional purchases are made, PDS will provide under one-third of rice requirements in 2016.”
A report by Emmeline Saint, humanitarian consultant, published by Oxfam in March, described the Public Distribution System that provides wheat flour to the population.
“The PDS is a government subsidy scheme that was created in 1991 as a mechanism for the distribution of locally produced food and imports (initially in the context of UN sanctions to ensure the availability of food),” the report said. “It is supervised by the Ministry of Trade and provides subsidized food commodities to most of the Iraqi population, using ration cards. The government-run General Company for Grain Trading (GCGT) is in charge of providing adequate amounts of cereals to PDS cardholders. The PDS is currently not targeting only the poorest households: every registered resident in Iraq is entitled to receive monthly rations. In theory, the ration card provides the following commodities (quantities are per person per month): locally produced wheat flour (9 kg), rice (3 kg), sugar (2 kg), vegetable oil (1 liter) and powdered milk (three packs of 450 grams each). Grain mills are mostly in the private sector and grind wheat under contracts with the GCGT.”
The report focused on the northern areas affected by conflict, particularly the Ninewa plains.
“The Ministry of Trade used to contract around two dozen flour mills across Ninewa, but most of these are now in ISIS-controlled areas,” the report noted. “There are currently only 4 to 5 mills operating in the target areas. Imported wheat is blended with domestic wheat prior to milling. Millers have a contract with the government (via the GCGT) to produce wheat flour for PDS rations and are no longer allowed to buy grain and sell wheat flour independently. Since the beginning of 2015, millers have been responsible for transporting wheat from silos to the mills and from the mills to the local PDS food agents. Previously, transporters were specifically contracted by the government for that purpose, but the PDS has not been able to sustain that system. Transporting wheat flour to the newly liberated areas on their own budgets is proving particularly challenging for millers.”
For the study, three millers were interviewed, producing an average of between 1,300 and 2,300 tonnes of flour a month.
“Stocks are replenished at the beginning of each month, with support from the GCGT,” the report said. “Millers only grind the amount that they receive. Usually, the volumes received do not need a whole month to be milled, and all mills have the capacity to mill more.”
Overall, Iraq did have approximately 200 flour milling plants before the conflict, although there are reports that flour mills have been destroyed by military activity. According to the Oxfam report, the host communities and the displaced persons it looks at “all complement their wheat flour needs by acquiring imported wheat flour from local traders. The better-off host households and IDPs without baking equipment or those with two or less members in the household usually buy bread from bakeries.”
The investigators interviewed traders who sell imported wheat flour from Turkey.
“Wheat flour is bought from Turkey by importers and wholesalers at IQD 370,000-450,000 per tonne, then sold to large traders at IQD 500,000-550,000 per tonne and finally on to bakeries and village traders at IQD 560,000-580,000 per tonne,” the report said. “A 50-kg bag of wheat flour is sold by village traders at IQD 25,000-35,000 (equivalent to IQD 500,000-700,000 per tonne). Bakeries buy only imported wheat flour, mainly from Turkey. Currently, their main challenge is shortages of fuel and gas, as the government does not provide fuel support as regularly as it used to. Electricity cuts are frequent and fuel is needed to operate generators.”
The report explained that more households are baking their own bread as a result of the economic crisis.
Population: 37,056,169 (July 2015 est.)
Religions: Muslim (official) 99% (Shia 60%-65%, Sunni 32%-37%), Christian 0.8%, Hindu <0.1, Buddhist <0.1, Jewish <0.1, folk religion <0.1, unafilliated 0.1, other <0.1.
Location: Middle East, bordering the Persian Gulf, between Iran and Kuwait.
Government: Federal parliamentary republic. Chief of state: President Fuad Masum (since July 24, 2014); head of government: Prime Minister Haydar al-Abadi (since Sept. 8, 2014).
Economy: During 2015, worsening security and financial stability throughout Iraq – driven by an ongoing insurgency, decreasing oil prices, and political upheaval – decreased prospects for improving the country’s economic environment and securing much-needed foreign investment. Long-term fiscal health, a strengthened investment climate, and sustained improvements in the overall standard of living still depend on a rebound in global oil prices, the central government passing major policy reforms, and finishing the conflict with ISIL. Iraq’s largely state-run economy is dominated by the oil sector, which provides more than 90% of government revenue. Oil exports in 2015 averaged 3 million barrels per day, up from 2014, but a failed revenue- and oil-sharing agreement with the Iraqi Kurdistan Region’s (IKR) autonomous Kurdistan Regional Government (KRG) resulted in a loss of exports from northern oil fields. Moreover, falling global oil prices resulted in declining export revenues. Iraq’s contracts with major oil companies have the potential to further expand oil exports and revenues, but Iraq will need to make significant upgrades to its oil processing, pipeline, and export infrastructure to enable these deals to reach their economic potential. The IKR’s autonomous KRG passed its own oil law in 2007, and has directly signed about 50 contracts to develop IKR energy reserves. The federal government has disputed the legal authority of the KRG to conclude most of these contracts, some of which are also in areas with unresolved administrative boundaries in dispute between the federal and regional government. In December 2014, the federal government and the KRG agreed to sell oil exports from Kurdish-controlled oilfields under the federal oil ministry, in exchange for the central government paying $1 billion to the Kurdish Peshmerga forces and resuming budget transfers to the KRG that amount to 17% of Iraq’s national budget. However, that deal fell apart in 2015.
GDP per capita: $15,500 (2015 est.); inflation: 1.4% (2015 est.); unemployment: 16% (2012 est.).
Currency: Iraqi dinars (IQD): 1 U.S. dollar equals 1,182 dinars (Aug. 17, 2016).
Exports: $54.65 billion (2015 est.): crude oil 84%, crude materials excluding fuels, food, live animals.
Imports: $42.94 billion (2015 est.): food, medicine, manufactures.
Major crops/agricultural products: Wheat, barley, rice, vegetables, dates, cotton; cattle, sheep, poultry.
Agriculture: 5.2% of GDP and 21.6% of the labor force.
Internet: Code: .iq; 6.381 million users.
Source: CIA World Factbook