Association Perspectives

Iraq: A Past And Future Market for U.S. Wheat

By Alan Tracy, President
U.S. Wheat Associates

Recently, the U.S. government shipped 56,500 metric tons of wheat to the Iraqi people, with perhaps 150,000 tons more to be shipped as needed in the next couple of weeks. It isn’t just any wheat, it is hard red winter wheat, a versatile class that makes some of the best bread in the world. It is an American wheat that Iraq used to buy, in vast quantities, before war and politics interrupted the long-time relationships between Iraqi wheat users and American wheat producers. It is a wheat that their bread-loving culture had before and deserves to have again.

The humanitarian assistance side of the Iraqi equation is terribly complicated right now. But it’s complicated because so many people from so many countries and organizations want to be involved, and that is some little piece of good news for Iraq.

Beyond the desire to help, however, a monopoly wheat exporter who shall remain nameless—oh, OK, you twisted my arm, it’s the Australian Wheat Board—is quoted in the press almost daily, voicing fears that they are going to lose the wheat contract they have with Sad-dam’s regime. To be fair, folks at the AWB are not the only ones with mercantilism on their minds during this most dangerous time: some analysts and reporters in the U.S. are playing the “what if” game about the future commercial wheat market, even while the bombs were hitting Baghdad.

But it is silly to fight over a market that isn’t a “market” yet. When there is an Iraqi entity with money to buy wheat and a working telephone, then we can worry about it. In the meantime, we need to take first things first, and the first thing is to ensure that every Iraqi citizen has the food, water and medical supplies they need to make it through this awful time. The U.S., Australia, and many others are working by themselves or through the United Nations towards that goal. The American wheat producers are proud that our wheat will be used for such an important purpose in the midst of such dire circumstances.

Second, the Iraqis need their lives back after this war. With the help of the people of the world, they need to rebuild whatever has been destroyed, and they need to repair—and hopefully improve—social and economic fabrics that support their communities and their country. Part of that economic recovery, we hope, will be a free and vibrant market economy, led by people with vision and knowledge.

Third, when that happens, the Iraqi people will have the right and the responsibility to determine for themselves what kinds of wheat they want to purchase, and from which destination. This war is, after all, a war fought for Iraqi freedom.

U.S. Wheat Associates, as the export market development organization representing 20 wheat producing states, will pick up where we left off at the first Gulf War. Prior to that, U.S. exporters shipped nearly a million tons of wheat each year to Iraq, garnering up to 40% of the market in some years.

During the 1980’s, through eight long years of war between Iraq and Iran, Iraq was a high priority market for USW efforts. We had to work hard, because dealing with the U.S. free market system was difficult for Iraq when compared to the government-to-government deal making arrangements they had with the Canadian Wheat Board and the Australian Wheat Board. With the support and backing of the U.S. Department of Agriculture, USW awarded scholarships to Iraqi millers and bakers for technical education in the states. We invited key grain inspection officials and wheat purchasing agents to attend training courses in the U.S. We provided experts and consultants to help the Iraqis computerize their grain inventory system. And we sponsored buying teams who came to the U.S. to learn more about our different wheats, our crop qualities and our admittedly complicated marketing system.

By 1989/90, the allocation of USW market development funds for Iraq was three times more than funding for activities in Egypt, the region’s largest wheat importer. In 1990/91, political strains and eventual war temporarily halted USW market development efforts. Some U.S. hard red winter wheat went to Iraq for a couple of years in the mid- 1990’s, until May, 1998, when Iraq’s regime said it would refuse to grant contracts to companies in America. That was an abrupt end to a wheat marketing year that saw exports of 817,400 metric tons of U.S. wheat to Iraq.

Once the war is over, U.S. Wheat Associates hopes to renew our friendships with the Iraqi millers, bakers, and buyers, and we hope to pick up where we left off in offering all the assistance they may need. And we hope that an open and competitive marketplace will develop, where economics and specific end use needs—rather than political considerations—will determine what type of wheat is bought 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.

Until those markets are able to operate and grow in Iraq, our hopes for a future of peace and prosperity for the Iraqi people guide the ships carrying U.S. wheat donations.

U.S. Wheat Associates is the wheat industry’s export market development organization, working in over 100 countries to promote the use of American wheat on behalf of America’s wheat growers. USW is funded in part by the wheat checkoff in North Dakota, South Dakota, Montana, and Minnesota, as well as other wheat-producing states that are members of USW.