By Jerome Radiguer, ITC-SAAVI Senior Advisor Retail Strategy. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.
Building Sustainable and Equitable Food Markets in Iraq through Innovative Retail-Level Interventions
Tackling Market Inefficiencies to Boost the Agricultural sector and Improve Food Access
Iraq's agricultural legacy is steeped in centuries of abundant sunshine, fertile land, and a reliable water supply from the Tigris and Euphrates rivers, earning it the moniker of Araqa, meaning "fertile" or "well-watered" in Arabic.
However, the country's agricultural sector has been in decline in recent decades due to wars, population displacement, and the fight against the Islamic State, resulting in underutilized arable land, low productivity, and inefficiencies in the food distribution chain.
Despite employing almost 20% of the population, Iraqi agricultural production contributes only 3% to GDP. Given the current global tensions and climate change, food supply chain management has become a significant concern. Revitalizing the agricultural sector is imperative for Iraq to reclaim its food sufficiency.
Despite Iraq's potential arable land of 9.5 million hectares (22% of the country's surface), only 5 million hectares are currently in use for cultivation.
The task at hand is of considerable magnitude, requiring implementation of measures at multiple levels of the value chain, which must be holistically coordinated to ensure their sustainability.
A significant challenge facing the agricultural sector is the lack of sustainable investment due to insecurity that has persisted in the country since the 1980s. This has resulted in small farmers with limited financial resources and no access to investment, as well as small retailers not being able to organize themselves into chains or groups of stores. Consequently, these two critical economic actors of the food distribution chain are unable to establish direct commercial relationships with each other.
The middlemen in the food distribution chain hold a powerful grip on farmers, leaving them in a perpetual state of economic survival by purchasing their goods at extremely low prices and maintaining their dependency through micro-credits that finance the purchase of raw materials. Despite farmers' efforts, middlemen capture most of the value without redistributing it, resulting in farmers not receiving the benefits they deserve in terms of quality or quantity.
From a buyer perspective, there is a great disconnect between the market expectations and requirements and current supply. Retailers come to buy from middlemen in their local Alwa. Prices are almost non-negotiable but vary daily according to the season, the abundance or scarcity of products but above all the agreement between the middlemen who set the market prices.
As the price obtained for their goods remains at a minimum level of economic subsistence, farmers lack the incentive to improve their productivity or the quality of their goods. This absence of economic motivation ultimately leaves them with no reason to pursue transformational changes in their production methods.
After years of focusing solely on the supply-side efforts, productivity and quality issues must now be tackled hand in hand with packaging, branding and other demand-side imperatives.
Previous efforts to improve the sector have solely focused on the supply-side. It is imperative to shift focus towards a more holistic approach, which means tackling issues related to productivity and quality, while also giving due attention to demand-side factors such as packaging, branding, and marketing. Accordingly, ITC has identified four crucial steps that prioritize the demand side of the market:
Promote local products: Firstly, efforts will be made to promote Iraqi-origin products by developing a label that highlights the quality of local produce. By collaborating with retailers, the campaign aims to create a new demand for such products, ensuring that customers can easily identify and enjoy the quality of locally produced goods.
Improve fresh produce packaging and logistics: Secondly, in order to address the issue of losses in the supply chain due to inappropriate food packaging, lack of cold storage facilities and refrigerated transport, and numerous administrative checkpoints, ITC proposes an overhaul of the logistics of fresh produce. The introduction of adequate packaging and transportation including refrigerated trucks can increase shelf life and significantly reduce losses, providing stakeholders with higher profit margins while ensuring higher revenues for farmers.
Organize small retailers: Thirdly, ITC recommends the formation of buying groups of retailers in close proximity. By consolidating their quantities, these groups will have the capacity to order directly from farmers, breaking the cycle of dependence on middlemen and increasing their bargaining power with suppliers. This ensures better prices and improved quality of products for customers.
Enhance communication between farmers and retailers: Finally, to adapt to consumer expectations, ITC plans to establish direct communication channels between farmers and retailers to improve the flow of market information. This will allow farmers to receive relevant consumer insights, enabling them to adapt their farming practices and make appropriate investments in production facilities, ultimately making their products more profitable and internationally competitive in the medium term.
To drive inclusive economic growth in Iraq, it is imperative to establish a sustainable food retail system that enables collaboration among a range of stakeholders. This requires investments in key areas such as infrastructure, technology, education, and training programs, as well as support for small and medium-sized enterprises to promote sustainable agricultural practices. ITC is playing a pivotal role in fostering productive collaborations among value chain actors through SAAVI's agribusiness alliances.
These alliances are designed to address challenges related to supply consistency and compliance, and to empower members to develop their own agribusiness development plans. By bringing together key stakeholders, ITC is creating a platform for mutually beneficial partnerships that drive growth and create value across the agribusiness ecosystem. Furthermore, ITC is implementing a range of training approaches that emphasize hands-on experiential learning to enhance the capacity of smallholder farmers and community-based extension services.
By fostering sustainable market-driven agricultural production and business models, these initiatives are driving community-wide impact. With a focus on practical, actionable skills, ITC is empowering farmers and extension services to navigate complex market dynamics and build more resilient, profitable businesses.
By prioritizing the restoration of trust among economic actors, cultivating a sense of pride in local production, and promoting innovation and entrepreneurship in the agricultural sector, Iraq has the potential to reclaim its status as the Middle East's breadbasket and achieve food self-sufficiency sooner than some of its neighboring agricultural powers may have expected.
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