Sanctions and Collateral Damage

By Bob Nottelmann.

Although in the very heart of the Fertile Crescent, defined by its abundant natural resources, Iraq is hardly a breadbasket for western Asia, let alone its own population. Nearly 80% of the country’s food is imported from neighboring countries Turkey, Syria and Iran. Nowhere is it more apparent that an effective and efficient food supply system requires much more than fertile soil and an adequate water supply.

Several factors limit the ability of Iraqi farmers to satisfy consumer demand. And demand is growing. A long history of dictatorial leadership has suppressed the development of the social networks so critical to an efficient food system. Antiquated production systems and limited access to modern, extended season varieties, limits growers to narrow harvest seasons resulting in market gluts and depressed prices. This provides an opening for competing regional markets. Market channels are so limiting, the only winners are wholesale buyers and brokers.

But competition this season was particularly acute. Growers purchased inputs based on projected revenues as a product of historical yields. But by mid-season, international sanctions on neighboring Iran set their teeth into the Iranian economy devaluing the rial to half its January value. Iranian producers, desperate for foreign currency began dumping product into the Iraqi market at prices well below the Iraqi production costs.

The Iraqi agricultural sector, with a history of shocks from the natural to the secular, took another one on the chin this season. Consider Iraqi agriculture collateral damage in the international efforts to curb Iran’s nuclear aspirations.

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