Agriculture plays a major role in the economy of Syria, a country with a farming history dating back thousands of years, although its importance is decreasing as other sectors grow. For many years, state control has been the dominant factor, although there have been moves to liberalize the grains market more recently. However, sharp swings in production have made life difficult for the nascent private sector.
This year, grain production has partly recovered from severe drought. The International Grains Council (IGC) puts Syria’s total grain production at 4.6 million tonnes in 2009, compared with 2.5 million in 2008. Wheat production is put at 3.8 million tonnes, up from 2.1 million, while the barley crop is put at 700,000 tonnes, up from 200,000.
According to the IGC, the increased crop in 2009 will mean a sharp fall in grain imports. The IGC expects Syria to import 400,000 tonnes of wheat in 2009-10, compared with 1.5 million the year before. It is also expected to import 1.8 million tonnes of maize (corn), up from 1.7 million a year ago and 1.3 million tonnes of barley, down from 1.7 million.
However, the U.S. Department of Agriculture (USDA) offered a much different assessment in a report on the state of the crop published in May, which made it clear that Syria is still not doing well. "Despite regional drought, total wheat production is expected to increase roughly 44% over last year, though Syria will harvest the second smallest crop of the past decade," it said. "The disappointing 2009-10 wheat harvest could lead d to significant additional grain imports in the 2009-10 marketing year. Syria drew down emergency grain reserves in 2008-09 because of the drought-devastated crop."
Syria’s grain exports are listed by the IGC at zero, but in 2006-2007 it managed to send 1.1 million tonnes of wheat abroad. The figure for 2007-2008 was 200,000 tonnes.
"During 2008-09, Syria moved from a net exporter to a net importer of wheat due to drought and limited purchases from the local crop," a USDA attaché report explained earlier this year. "Russia and Ukraine were the main suppliers of wheat. Barley imports, also mainly from Russia and Ukraine, hit a record due to the drought."
It blamed the low production of wheat in 2008-09 on a long frost and a shortage of rain during the growing season. "Consumption is growing due to the increase in population as well as the continued presence of over one million Iraqis in Syria," it said "Imports were very high and mainly originated from Russia and the Ukraine."
Nizar Kayali, operations manager at Union Mills, which is based in the northern city of Aleppo, described how the effects of weather on the poor crop had hit the industry. "We had two years of drought," he told World Grain. "We did have eight million tonnes in storage, but a lot of it was sold off. At a certain point there wasn’t enough. After the last crop, the government forced farmers to sell all their grain to it."
The Syrian government’s General Establishment for Cereal Processing and Trade (HOBOOB) has, according to the attaché, a target to maintain sufficient stock for a year’s consumption, but the small crop meant a sharp drawdown in stocks. Short supply had been helped by the gift of 500,000 tonnes of wheat to Syria from the United Arab Emirates.
The attaché forecast maize imports of 2 million tonnes in 2009-10. "The U.S. is expected to remain the dominant corn supplier," the report said. "Rice imports are forecast to grow in line with demand growth as a result of expanding population."
Tight supplies have forced the private mills to look to imported supplies. "All the wheat being milled at the moment by the private millers is Russian and Ukrainian," said Kayali.
An improved crop has enabled the government to buy more grain. "This year’s crop is pretty good, and the government has been able to purchase 2.9 million tonnes of wheat — durum and soft," he said. "The government did import some Russian wheat."
At the same time, the Syrian milling industry has faced intense competition, forcing it out of international markets, particularly Iraq, which has been a big customer for flour. "At one point I was exporting 400 tonnes a day," said Kayali. "Two months ago, it was 250 tonnes a week. In the past two months, I haven’t done any exporting."
"The Turks have the advantage," he said. "Our wheat is taxed at the rate of 7% on soft wheat. We are not competitive."
Turkish millers also have a better raw material. "The Turks use their own wheat, which is much better for French bread. They used a mix of local wheat with Russian wheat and German wheat."
The situation has left Union Mills way under capacity, he said. "You’re talking capacity of 4000 tonnes a day with consumption at 1,200 tonnes a day," he said.
FRAGMENTED MILLING SECTOR
Although Union Mills is a big player, Syria’s milling industry is characterized by a large number of small mills, many of them village-based and handling no more than a few tonnes a day. According to the Statistical Abstract published by the Central Bureau of Statistics, Syria had 804 mills in 2007.
Public sector milling is run by the General Company for Mills (GCM), a subsidiary of the General Establishment for Cereal Processing and Trade. At one time, it handled wheat, barley, lentils and chickpeas. It has now stopped dealing with barley and its role in trade in chickpeas and lentils is small.
The GCM has around 20 mills connected to concrete silos, although some of them are not yet in operation because the milling equipment has not been installed. According to the Central Bureau for Statistics, these public sector mills produced around 1.9 million tonnes of flour in 2007. Their total capacity is put at around 2.5 million tonnes a year. The flour they produce is primarily used for the production of the heavily subsidized Arab-type flat bread.
Modern large-scale milling in Syria had its origins in the 1990s, when the government decided to allow it in order to make up a shortfall in government milling capacity. At the time, Syria was finding itself obliged to send wheat for milling to neighboring Lebanon. The private sector took the chance to build modern mills, some of which achieve a capacity of 500 to 750 tonnes a day. There are now more than 32 of these mills. The GCM contracts with them for whatever is needed to supply the balance of the country’s requirements for wheat flour, while some of them also produced higher quality flour for the pastry and sweet sector. Some, like Union Mills, also buy imported wheat to mill and export to neighboring countries. There are also a few specialist mills that have been established by pasta manufacturers.
Syria has now reached a situation where milling capacity far exceeds demand. Few private sector mills work at full capacity.
HOBOOB also controls the General Company for Cereal Silos, which is responsible for the maintenance and operation of grain storage facilities. Under a government decision taken in 2003, it was required to cede the operation of two animal feed manufacturing plants and its seed processing and supplying organization to separate bodies.
It also controls the Public Company for Automated Bakeries, described by the Ministry of Economy and Trade web site as "the vein of life." According to the ministry, in 2006 the company had 122 bakeries across the country.
Chris Lyddon is World Grain’s European editor. He may be contacted at:email@example.com.