Calculations conducted by Reuters revealed that the abundant wheat crop and huge grain surplus in Iraq, one of the largest wheat importers in the Middle East, make the government incur a net loss estimated at about half a billion dollars.
The surplus in the wheat crop, amounting to 1.5 million tons, contributed by better-than-expected rains and, most importantly, government support, is good news for farmers, but for the government the price is high.
The government pays farmers more than double the world market price to encourage the cultivation of staple foods, often under arid conditions.
According to calculations based on official figures and conversations with more than 10 government officials, farmers, mill owners, analysts and exporters, the government will suffer a loss of $458.37 million once it pays the farmers, assuming it manages to sell the surplus to private mills in Iraq at an agreed price.
It is noteworthy that Iraq is one of the largest importers of wheat in the Middle East.
An official Iraqi report – issued last August – stated that wheat production in Iraq recorded an increase of 21% this year, reaching 6.3 million tons, which makes it for the second year in a row to achieve self-sufficiency in this vital crop.
He mentioned Director General of the Iraqi Grains Council Haider Nouri Al-Gharawi – in an interview conducted with Bloomberg last August – said that “unusual heavy rains” and modern irrigation techniques contributed greatly to increasing this year’s crop.
Iraq’s wheat production reached about 5.2 million tons last year. Production in the country depends heavily on rainfall and water flows from the Tigris and Euphrates rivers.
The Iraqi government runs a support program that distributes 4.7 million tons of wheat annually to citizens, and buys local wheat at a price nearly double the world price to encourage local farmers to increase production.
Gharawi pointed out that the surplus wheat this year, amounting to about 1.5 million tons, will be sold to private local mills to turn it into flour.
In recent years, Iraq has imported wheat from the United States, Australia, and Canada to meet its needs, but with the increase in domestic production this year, it appears that the need for imports may decrease significantly.
