Bumper Wheat Harvest in Iraq Brings Financial Dilemma

By Sarah El Safty and Muayad Kenany
DUBAI/NAJAF, Iraq (Reuters) – A bumper wheat harvest in Iraq has resulted in a surplus of 1.5 million metric tons, leading to an expected government loss of nearly $458 million due to high farmer subsidies.

The surplus is attributed to better-than-expected rainfall and significant government financial support, allowing farmers to increase their production sustainably. However, the government pays more than double the global market price to encourage cultivation, which is financially burdensome.

Critics point out the need for better planning and management of farmer incentives against economic constraints. Iraq necessitates between 4.5 to 5 million tons of wheat annually to satisfy its subsidy program.

Historically a significant agricultural region, Iraq has faced challenges in farming due to climate change, reduced river flows, and ongoing conflicts that hinder agricultural development. The UN recognizes Iraq as one of the most vulnerable countries to climate change, making food security a priority.

With impending reduced oil revenues, concerns rise regarding how much the government can allocate for agricultural subsidies. Iraq's grain board acknowledges the limitations of storage facilities and prefers to keep surplus grain domestically to support local millers, despite having the option to export.

Farmers report improvements in their livelihoods due to timely payments from the government and additional support for crop production. The government also supports other crops, such as rice, with variable pricing based on quality.

However, millers might exert pressure on the government for lower wheat prices considering import possibilities. As for farmers, there's uncertainty about price adjustments for the coming agricultural season, which they fear could lead to reduced wheat production due to less lucrative payouts.

($1 = 1,309.0000 Iraqi dinars)