Iraq

Agricultural value chain study in Iraq – Dates, grapes, tomatoes and wheat - 2021 [EN/AR/KU]

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EXECUTIVE SUMMARY

The Iraqi agriculture sector employs roughly 20 percent of the country’s workforce and is the second largest contributor to the gross domestic product (GDP) after the oil sector, accounting for 5 percent of the GDP. Thus, agriculture development is critical to allow Iraq to achieve their vision of a more diversified economy, in addition to generating employment and boosting private sector engagement. Approximately 22 percent (9.5 million ha) of Iraq is suitable for agriculture production, yet only about 5 million ha are currently cultivated. Crop production is the major source of income for the majority of farmers (about 75 percent), while the rest depend on livestock or mixed crop and livestock production systems. Small-scale farming systems dominate the sector and are typically characterized by traditional methods and minimal capital investments, resulting in low productivity. There is also limited social capital and positive outcomes from group interactions, causing poor integration along the supply chain.

Iraq has transitioned from a being a smallholder-driven, food-producing country that can cover its needs to becoming a major food importer. Several decades of sanctions, violent conflict, ineffective government policies, extreme weather events, water scarcity and competition from cheap imports, disrupting value chains and distorting linkages between producers and markets. Furthermore, the so-called Islamic State of Iraq and the Levant (ISIL) crisis that began in 2014 spurred displacement of entire communities, limited access to inputs and markets and resulted in the targeted destruction of agricultural infrastructure by armed groups. The Ministry of Agriculture (MoA) estimates that Iraq lost approximately 40 percent of its agricultural production in the wake of the ISIL crisis, and the sector has yet to fully recover.

To address the challenges facing agriculture and improve farmers’ outcomes, a study has been conducted for wheat, tomato, date and grape value chains. The four commodities were selected based on their (i) potential market growth and unmet demand; (ii) level of support available from public, private, and non-governmental actors; (iii) environmental impact; and (iv) contribution to food security and food sovereignty. Wheat and tomatoes have been analysed across all three agro-ecological zones (i.e. the north, centre, and south), while grapes focused only the north and centre and dates in the centre and south. The study adopted a mixed-methods approach with a secondary data review (SDR) and primary data collection period, that consisted of individual interviews (IIs), Focus group discussions (FGDs) with farmers and Key informant interviews (KIIs) with actors and experts along each value chain. The analysis identified market linkages, bottlenecks and priority needs and interventions, allowing decision makers to make informed choices to improve the long-term competitiveness of Iraq’s agricultural sector.

Primary data collection faced numerous challenges, including increased political tensions, military threats and the COVID-19 pandemic. Important crop producing areas were not accessible for a long period, even before the pandemic, making it difficult to organize meetings with key informants. Thus, some interviews were conducted remotely and secondary data filled any gaps.

The wheat value chain is characterized by high involvement of the Ministries of Agriculture and Trade to ensure domestic wheat needs are met. Wheat is the dominant cereal, particularly in the northern governorates, and is classified as a strategic crop for the country’s food security as domestic production is primarily fed into the Public Distribution System (PDS), a food basket distributed to all Iraqis. The majority of wheat production (70 percent of the cultivated area) occurs on irrigated land, yielding 75 percent of the total national production, while 25 percent is cultivated on rainfed areas (30 percent of cultivated area). As a winter crop, wheat is sown between October-November and harvested between March-April. The government supports “ideal farmers” by providing inputs and purchasing harvested wheat grain at a premium price (above the regular market price). Government-purchased wheat is milled by companies with government contracts, although these mills do not function efficiently. Despite efforts to support domestic production, wheat flour is still Iraq’s second-highest import and, due to its higher quality than domestic wheat, is normally bound for private bakeries and other processors.

The tomato value chain is affected by the lack of physical infrastructure and weak enabling environment. Government support is lacking, although MoA extension services promote greenhouse production and provide support to control nematodes. A certain level of investment is evident as interviewed farmers reported purchasing greenhouses, wells and irrigation systems; however, tomato farming is still mostly a family business and access to financial services is limited. Farmers lack knowledge about Good Agricultural Practices (GAPs), negatively affecting both yield and quality. Post-harvest management, such as sorting and grading, is practically absent and the lack of proper packaging, cold chain infrastructure, storage facilities and processing plants increases losses, issues that also apply to other perishable commodities. Beyond losses, the lack of a cold chain forces farmers to sell immediately, negatively impacting prices and limiting the season of locally available product. In the peak season, 10 kg of local tomatoes costs IQD 1 000, while a one kg of Iranian tomatoes is sold in the off-season for the same price.

Grapes are one of the most profitable crops in Iraq, with the leaves and fruits harvested for consumption. Although the per capita consumption of the fruit is the lowest in the region (2.5 kg compared to 19.3 kg in the Islamic Republic of Iran, 6.4 in Jordan and 23 in the Republic of Turkey), grapes are some of the most important fresh fruits cultivated, particularly in the north. According to FAO, 5 869 ha of grapes were cultivated in 2018, yielding 95 725 tonnes (approximately 16.3 tonnes per ha). Unfortunately, yield per hectare is declining; over the past five years, production has dropped 11 percent. Grape farmers mainly buy imported inputs from agro-dealers, although the government also provides inputs and new plants to producers. Grapes are either sold to traders and aggregators or directly transported to the market (wholesaler and retail). There are substantial differences between the central and northern regions, particularly in the application of the GAPs and use of inputs. Losses occur all along the value chain, stemming from an inefficient integrated pest management system and poor infrastructure, particularly the lack of cold storage facilities. Similar to tomatoes, the grape value chain offers value-added opportunities through processing to produce a wide array of food and products.

Dates are a major cash and food crop in Iraq. Access to good practices, technologies, and markets are key factors to accelerate the recovery of the date sector that, prior to the Gulf War, was booming and produced three-quarters of the dates consumed globally. Date palm orchards are often inter-cropped with fruit trees, with 300 000 ha permanently cultivated with fruit trees (i.e. olives, grapes, oranges, apples, and other fruits).

Small-scale farming continues to dominate the sector, and these farmers have limited access to financial credit and knowledge required to introduce modern agricultural practices, introduce irrigation and fertilization systems, apply improved pest management approaches and adopt mechanized systems. Acute shortages of skilled labour and increasing minimum wage requirements have incentivized farmers to streamline their production and, if granted access to financial resources, could promote mechanisation. The government is making a concerted effort to rehabilitate the date value chain and support farmers. For example, they are investing in thousands of new, commercial palm trees varieties. Increasing the number of producing palms by planning new plants and replacing mature palms, particularly with economically profitable varieties such as Mejdool and Barhi, will bolster the sector. Beyond production, there is also room to upgrade date packaging and value-added processing. A market-oriented strategy for the sector would boost the rehabilitation of the date processing industry, with the possibility to revitalize exports. Thus, cooperation between farmers, processors, and distributors is required, in addition to government support and facilitation.

As the agriculture and food sector in Iraq recovers, it must adopt sustainable systems and practices to adapt to future insecurities, including political uncertainties, unstable markets and climate change. Iraq must rebuild social capital, agriculture infrastructure, market linkages and extension services in a way that engages all relevant actors and increases resilience. Social capital is defined as a blend of trust, spirit, and capacity of cooperation. Trust is the crucial foundation of social capital. It also constitutes a necessary condition for economic efficiency. A balance between government intervention and the market forces is needed for sustainable development of the sector. State-based incentives and policies have distorted the agricultural value chain, increasing farmer dependency on government assistance and slowing recovery.

A multi-stakeholder stakeholder consultation will be organized as soon as possible to validate the findings and conclusions of the survey and provide concrete recommendations for each of the four value chains. Main stakeholders concerned include the Government of Iraq, donors, Food Security Cluster partners, private sector. All stakeholders, i.e. suppliers, farmers, traders, and processors, should be actively involved in agricultural planning, implementation and monitoring. If all actors are committed to a common vision that prioritizes efficiency, effectiveness, good governance, participation, accountability, and equity, then inclusive and sustainable agriculture development can be achieved. There are several entry points for close coordination and implementation. They include:

• the Ministries of Planning, Agriculture, Health, Environment, and Water Resources and FAO have established a multi-sectoral partnership for planning, implementation and monitoring for agriculture, water, and environment programmes and policies to improve coordination and outcomes for farmers;

• the Food Security and Emergency Livelihoods Humanitarian Clusters – and its members, and in particular the newly established Agricultural Working Group; and

• the Donor Coordination Group on Agriculture and Water – a forum where joint action can be considered supporting priority investment opportunities, closely coordinated with the Government of Iraq.