Agriculture

agriculture2From Breadbasket to Soup Line to Breadbasket Again?

At one time Iraq was considered the breadbasket of the Middle East exporting grapes, figs, barely, rice and leading the world in the export of dates. In fact seeds uncovered in geological digs prove that ancient Iraqis were “farming” ten thousand years ago while most of the rest of the world was still hunting and gathering.

Today Iraq imports 80% of its food.

The reasons for Iraq’s reversal in its agricultural capabilities are both natural and manmade.

Iraq has a total surface area of 43.7 million hectares of which only 11 million are suitable for cultivation. Couple that with the fact that 7 million of those arable acres are reliant on irrigation from rivers and wells as opposed to rain and you have a water situation that is vulnerable to upstream usage in Turkey, Iran and Syria.

But probably the greatest contributor to the degradation of a once powerful agricultural industry is a government under Saddam that failed to provide the needed leadership and resources and allowed the entire system to fall into neglect. Food, and its scarcity, became a tool of power. Under Saddam every Iraqi family received a “ration” of food weekly, a ration that could be increased or disappear depending on the family’s standing with the government.

A combination of failed and crumbling irrigation systems and a government who viewed food as a way to control a population led to Iraq’s current unenviable position.

Today’s Immediate Concerns

When a country has to rely on imports for 80% of its food to feed its population it is facing a serious national security issue. Aside from the cost, estimated at $1.9 billion per year, food partners can exert undue influence simply because they are providing the very basics of life.

The central government realizing its vulnerability, addresses agriculture in detail in its National Development Strategy which encourages the privatization of the agriculture sector (currently 75% of farm lands are owned by the government) believing that a market driven economy will provide the technologies and efficiencies that will bring the country back to self-sufficiency.

But like all things political in Iraq, the Ministry of Agriculture’s Approach for the Development of the Agriculture Sector 2007-2010(dated April 2007) favors central planning, rather than market driven, targets for each crop and livestock sub-sector. Old habits die hard, particularly when there are bureaucracies involved.

Then there’s the human side of the equation…the Iraqi farmer. Most farms are small averaging 12 hectares. The farms are leased from the government and there isn’t the sense of ownership or entrepreneurship that exists in farmers from developed nations. Most are little more than subsistence operations but…agriculture is the largest single employer in the country.

It’s not that Iraqi farmers can’t produce; it’s just that they haven’t had the tools or resources to increase production significantly.

But that’s changing.

New Investment Opportunities in Agriculture

With the arrival of an estimated $100 billion in oil revenue the Iraqi government is investing heavily in reconstructing the economy…agriculture included. While the possibility of direct ownership in Iraqi farms is negligible because of laws regarding land ownership, the opportunities to provide all the associated agricultural services are huge.

For example:

  • All things irrigation. Currently farmers are responsible for maintaining irrigation systems on their farm. There is only so much you can do with a shovel and pick. Farmers are in need of wells, center pivot, drip systems, land reclamation technologies and renovation of existing irrigation systems.
  • Agricultural equipment. New or used equipment or repair services for existing equipment are in great demand. From simple planting attachments to harvesters, Iraq’s farmers are in dire need of the tools of the trade.
  • Packaged foods. Iraqi’s have a taste for biscuits, snacks, tomato paste and candy. Packaged food manufacturing on a large scale is nonexistent in Iraq. It’s only a matter of time before they develop a taste for Wheaties, Pringles and other packaged foods popular around the world.
  • Refrigerated Transportation and storage. There is no refrigerated supply chain meaning that domestic perishables have to be sold and consumed locally. Providing the ability to expand the market place through refrigeration can greatly enhances the opportunities for farmers producing perishable goods. Surprisingly, there are inadequate storage silos for feed grains. Beef, goats and lamb comprise the Iraqi meat diet and storage facilities that can even out bad grazing ears can stabilize meat prices.
  • Meat Processing.  With the migration to urban centers there has been a demand for meat processing facilities near population centers. This is a demand driven by the lack of refrigerated transport but doesn’t diminish the opportunities available to meat processing firms.
  • Veterinary medicines. Food security is a major concern and Iraq has no domestic veterinary industry. Of particular concern is the domestic chicken production. Chicken production and processing plants are typically located near urban populations and are susceptible to a variety of animal diseases.

And the list goes on.

This is an area that is vital to Iraq because it affects every Iraqi. Power outages, consumer good shortages, inadequate roadways are all concerns but they don’t hold a candle to the Iraqi dinner table. Having food that is affordable and in reasonable supply is a basic human need and one that has to be met to ensure the stability of a government.

If you have an interest in investing in Iraq’s agricultural future please don’t hesitate to contact us for detailed information.