Rebuilding Iraq’s Agriculture

While it’s frustrating to read about the setbacks in Iraq, it’s fascinating to hear about the successes, as evident in the progress that’s being made in reconstructing Iraq’s agriculture, the most important contributor to this country’s economy next to oil.

What remained after Saddam Hussein was removed from power was, in short, a mess. The Ministry of Agriculture building in Baghdad was blackened and battered, with salvageable office equipment looted and pilfered. Baghdad University’s School of Agriculture lay in similar shape.

In Iraq’s rural areas, modern equipment and adequate farm inputs were scarce, ironic in this oil-rich country. Years of senseless policies put in place by Hussein, merely to punish, led to starvation and economic stagnation. Farmers were forced from their land (or killed) merely because of their ethnicity or party affiliation. Iraq at one time was the world’s leading date fruit exporter.  But under Hussein’s rule, millions of date trees were cut down, snuffing a key domestically-produced foodstuff and export commodity.

A field of grain stretches into the horizon in Iraq.

USDA estimates that on average, agricultural production levels in Iraq – at one time self-sufficient in agriculture – had been declining by 2.6% per year since 1990, with more than 50% of the population affected by food insecurity. And ironically, the Oil-For-Food Program, while essential to the humanitarian situation in Iraq, was a severe disincentive to food production. Over half of Iraq’s total food requirement is imported, and a large portion of the population became dependent upon government-financed food rations for survival.

Still, agriculture remains one of the largest sectors of Iraq’s economy, constituting nearly 30% of its GDP and 20% of all employment. Thus, efforts to promote rural employment, increase farm income and productivity, and restore vital services to the Iraq’s farm sector are critical to the overall stability and revitalization of the country as a whole. As one U.S. official involved in reconstruction points out, there’s less unrest amongst people who have food and jobs. And keeping people in rural areas employed helps stem the migration of people going into urban areas and causing security problems.

During the reconstruction, an estimated $1 billion in ag inputs began to flow back into the countryside.

Today, vast improvements in Iraq’s agricultural infrastructure have been made. Over 100 agricultural input warehouses across the country have been refurbished. Date palm nurseries with thousands of trees have been planted, with the goal of eventually reestablishing Iraq as a date fruit exporter. Fisheries are being restored. Demonstrations and “field days” are being held to introduce farmers to new farming technologies and techniques. Veterinary clinics are being renovated and dipping tanks have been put in place to improve sheep (a major industry here) health and wool.

Baghdad University’s schools of Agriculture and Veterinary Science have been reestablished and have received grants to furnish and equip computer centers and improve research and outreach capabilities.

As well, the Iraqi Ministry of Agriculture has been rebuilt, refurnished, and reestablished. The Ministry has developed short and long-term strategic plans and administrative reorganization. Fundamental management systems have been put in place and a system of checks and balances has been implemented to deter and root out corruption. Under Saddam Hussein in 2002, only $3.5 million was spent on agriculture. The ministry’s budget in 2004 was about $269 million.  A hefty increase to be sure, but in comparison, USDA’s total program funding in 2004 was $74 billion, about $42 billion of which was food stamp and child nutrition programs. On May 5, 2004, Iraq’s Ministry of Agriculture became one of the first government ministries to complete the transition process, returned to Iraqi sovereignty.

One of many ag warehouses nationwide stripped bare of an estimated $500 million in ag inputs during the crisis in Iraq.

USDA and other U.S. agencies, including the U.S. Agency for International Development (USAID), have played a key role in rebuilding Iraq’s agricultural sector. So have other countries: The Australian Government, for example, allocated $40 million to the rehabilitation of Iraq’s agriculture.  U.S. and Australian advisers continue to provide technical and policy advice. The UN has played a role as well.  For example, the UN’s World Food Program established 30 or more bakeries to be operated specifically by women, to bake bread which is made available to very poor women at a reduced cost to help feed their families.

Undoing years of neglect will take time, of course. Land tenure issues need to be resolved.  Information on current and more productive farming practices, as well as better quality standards, need to take root and be adopted. Salinity and drainage – problems in irrigated production areas – need to be resolved. Farm-to-market transportation must be improved, and basic rural utility services such as water, electricity, and telephone need to be established. Developing markets, rural financial services, rehabilitating natural resources will all take time.

It will take time as well to move what has been a state-run agricultural system to more of a commercial system, and from a government that was more of a distribution co-op (what inputs farmers received, from fertilizer to fan belts, previously came through the government) into more of a regulatory body. 

“Decades of state intervention and the economy have marginalized private market-driven initiatives in agriculture. For the past 20-plus years, Iraq’s agricultural sector has effectively been cut off from innovation. The world’s adoption and adaptation and use of high-yield varieties, modern herbicides and pesticides, the full range of improved production practices and new post-harvest technologies have largely bypassed Iraq. But despite that extended mismanagement, this is a country that has the resources, land, water and people, to still have a very successful agricultural sector,” said H. Lee Schatz, in testimony last year before members of Congress on the outlook of agriculture in Iraq (see online at http://agriculture.house.gove/hearings/108/10833.pdf).

Schatz, a senior official in the USDA’s Foreign Ag Service, Washington, D.C., was the first senior advisor to oversee reconstruction of the country’s ag ministry, arriving in Iraq in April, 2003, shortly after the fall of Baghdad.

A field of grain irrigated by center-pivot irrigation in Iraq.

U.S. wheat prospects in Iraq
U.S. trade sanctions against Iraq were lifted on May 27,2003.  Last March, private exporters reported to USDA export sales of 110,000 metric tons of U.S. hard red winter wheat for delivery to Iraq, the first major sale of U.S. wheat to Iraq in years.

Lochiel Edwards, president of the Montana Grain Growers Association, presented testimony at the same Congressional hearing last year, representing the National Association of Wheat Growers and U.S. Wheat Associates.  His testimony focused on what might be done to reestablish American wheat exports in Iraq.

Edwards pointed out that there was a time in the 1970s when the U.S. had 100% market share in Iraq, and that in most years leading up to the 1991 Gulf War, the U.S. maintained about one-third of the total annual Iraqi wheat import market at around 3 million tons a year. 

Some millers and bakers from Iraq took part in short courses at Fargo’s Northern Crops Institute, to educate them about procuring and using U.S. wheat. “By 1989, 1990, we allocated Market Development Funds for Iraq three times higher than the funding activities in Egypt, which is the region’s largest wheat importer. This was done because the potential market in Iraq was growing quickly,” Edwards said.

But this growing market in Iraq was lost with conflict in the 1990s. Iraq turned to other wheat sellers, chief among them Australia, whose wheat board structure made it easy to make purchases, from one state-trading enterprise to another.

Opportunities for U.S. Agricultural Exporters Grains accounted for most sales, but dairy, cotton, planting seeds and soybean meal have also been significant.

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Today with an opening of the market following the end of the Hussein regime, the U.S. wheat industry is working to renew friendships and pick up where we left off,” Edwards testified. “We strongly believe that Iraqis and Americans alike benefit from the development of an open and competitive marketplace, where economies and specific end-use needs rather than political considerations determine what type of wheat is bought and from where. Open markets work when given the chance. They work best when commercial buyers are free to choose their sources of supply and when suppliers compete fairly and transparently.”

Edwards testified that the future for this market is positive, and that Iraqi wheat users and buyers want to learn as much as they can about getting back into the U.S. marketing system. “Iraq buyers have made a lot of progress in understanding wheat quality specifications, and we believe that will only get better as the Iraqis become reacquainted with the U.S. marketing system, and the role of the Federal Grain Inspection Service in providing for official certification of quality at loading.”

Working with Iraqi wheat buyers and users on technical training – like the courses at NCI – are needed to reestablish wheat trade in Iraq, said Edwards.  Credit to make purchases is critical as well. “Providing expeditious approval for visas for approved Iraqis to visit the United States is needed. Funding for market development activities and improvement in Iraq’s port and grain-handling facilities is also a priority,” he testified.

Some might question whether rebuilding Iraq’s capacity to grow wheat will undermine the wheat export potential there. Schatz discounts those notions.

“Regardless of production gains, for the next several years, and I believe much longer, Iraq will rely on imports to meet a large portion of its food needs,” he said, in his testimony on the country’s ag outlook. “We have a potential for greater domestic production in Iraq and continued huge flow of imports. We have them both. Now if we look at just the growth potential in that market for wheat, we see that the per capita wheat consumption in Iraq today is 60% the level of Turkey, 70% the level of Iran, and only 80% the level of Syria. People right next door in the neighborhood, very similar systems. We need to remember that what these people have been receiving for 7 years is a food ration and not what they would choose to purchase for their food use, if they had a growing economy.”

A modern grain silo storage terminal in Iraq.

“In the long run, Iraq will remain a major commercial food market, and a market that will demand higher quality from the importers who are supplying that market,” he continues.  “The Australian advisors and the American advisors have agreed all along we are not afraid of a more productive agriculture sector, as long as there is a better economy in the country, because this is a society that is still going to eat more food.”

Schatz pointed out too that as the Iraqi economy grows, they are going to demand better quality, and that better quality of many foodstuffs will be imported from outside the country. 

“I think their challenge is going to be undoing two generations of being paid for a product that is not a quality product. I mean, we had a lot of resistance a year ago. They just don’t understand why we wouldn’t take wheat that had 20% dockage in it, which is quite an amazing pile of wheat. It is going to take a change in really all the cultural practices.”

“This is a market that when they have some money is going to be a market for just about anything I think we can sell there that gives them a pointed difference,” Schatz says.  “I don’t fear them doing better, as long as that economy grows, and I think it will, because if you have a successful agriculture, you are going to have to have a successful country.”  

Iraq’s Ministry of Agriculture before reconstruction, and after.