A bumper harvest and a hefty grain surplus in Iraq, typically one of the Middle East’s biggest wheat importers, has left the government with the prospect of a net loss of nearly half a billion dollars, according to Reuters calculations.
The 1.5 million metric ton wheat surplus, helped by better-than-expected rains but above all by government subsidies, is excellent news for farmers.
For the government, however, which pays them more than double the global market price to encourage cultivation of the food staple in often arid conditions, the price is high.
According to the calculations, based on official figures and conversations with more than 10 government officials, farmers, mill owners, analysts and exporters, the government will have made a loss of $458.37 million, once it has paid the farmers and assuming it manages to sell the excess to private millers in Iraq at an agreed price.
Critics say it needs to better balance the challenges of motivating farmers and limited financial and other resources.
“This is poor planning,” said Adel Al Mokhtar, former adviser to the Iraqi parliament’s agriculture committee. “Why do we produce more than we need, which also leads to wasting water?” he asked.
To meet the needs of its subsidy programme, the government needs between 4.5 and 5 million tons annually.
Historically, Iraq, as part of the Fertile Crescent from the Mediterranean to the Gulf is where farming developed more than 10,000 years ago.
In recent years, Iraqi agriculture has suffered from a lack of rainfall linked to climate change, less water flowing through its two main rivers, the Tigris and the Euphrates, and decades of conflict that have interfered with cultivation.
The United Nations puts Iraq among the five most vulnerable countries to climate change globally, making food security a priority for the government.
But the country, the second largest producer in the Organization of the Petroleum Exporting Countries (OPEC) is also facing a reduced budget in 2025 after lower oil prices.
“If oil prices start coming down the government has first to pay salaries of public service employees so how much will be left to subsidise the agriculture sector, that’s the question nobody knows the answer to,” Harry Istepanian, an independent energy and water expert in Washington and a senior fellow at the Iraq Energy Institute, said.
