Iraq Creates a Strategic Wheat Reserve From Oil Revenue
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According to Iraq’s Ministry of Trade, the country’s Wheat production decreased by 40% this year. Drought and water shortage had an extreme impact on the reduction of Wheat production in Iraq. The Government purchased at least 3.3 million tons of Wheat from the local markets in 2021; meanwhile, in 2022, only 1.9 million tons were available in late June. So, the Government’s latest measures included increasing the price for procuring Wheat from local farmers to 725,000 dinars (US$497) per ton for the upcoming marketing season, versus up to 560,000 dinars in the previous season.
Industry sources project that Iraq’s Wheat production during the current season 2022 will reach 4 million tons after its production for the last season was 4.2 million tons. In 2020, Wheat production for Iraq was 4.6 million tons. The USDA forecasts 2022-23 Wheat production at 3.2 million tons, well below the estimated 5.4 million tons in the 2021-22 crop year.
The United Nations Food and Agricultural Organization expects that Iraq will double its Wheat imports during 2022-2023. The organization said in June 2022 that Iraq’s imports of the Wheat crop are forecast to reach 3 million tons, compared to 2021-2022, in which it imported 1.5 million tons and 2.5 million tons during 2020-2021.
Also, Iraq will not import any amount of barley crop for the current year, as is the case for previous years in which no amount of barley was imported. The organization also projects that the production of the barley crop for the current year 2022 in Iraq will reach 500,000 tons, after it was 300,000 tons in 2021, while its production in 2020 was about 1.2 million tons.
Iraq, a major Grain importer, is taking urgent measures to secure strategic stocks of Wheat and food supplies amid a price surge following Russia’s invasion of Ukraine. In March, Iraq announced to allocate US$100 million to urgently purchase 3 million tons of Wheat from abroad and create a strategic stockpile of 2.5 million tons for six months.
Baghdad intended to contract with Australia and the United States in mid-2022 to import over 1.5 million tons of Wheat. In January, Iraq bought 150,000 tons of Australian Wheat for around US$450 a ton, a fraction of the 2 million tons it will likely purchase this year.
Iraq imports large quantities of Wheat to fill the shortage in the amounts of flour that are distributed within the ration card items. Australia, Canada, and America are Iraq’s most important Wheat exporting countries. As per AgFlow data, Iraq purchased 44,000 tons Wheat in June-July.
In 2020-21, Iraq’s cereal imports, including flour, were around US$0.9 billion, and the imports for 2021-22 are projected to almost triple to reach US$3 billion given the failed barley harvest, reduced Wheat harvest, and the increase of global cereal prices by nearly double.
The surplus Government revenue from oil in 2021 has boosted foreign currency reserves to US$55 billion, up from US$48 billion in 2020, which helped Iraq cover agri-food imports for six months.
Iraq’s New Approaches for Wheat Import
Iraq’s Trade ministry plans to import more Wheat for local flour production to decrease dependence on more expensive imported flour. The country’s state Grain buying agency claimed that the Trade ministry is to adopt “new mechanisms” of Wheat buying.
The ministry did not purchase in its last Wheat tender in August, and the Government sources said it is moving towards making direct purchases. The ministry is not banning all flour imports. The price of a 50-kilogram imported sack of flour is currently between US$31 and US$35. In terms of Wheat flour, Iraq imports it primarily from Turkey (US$444 million), Kuwait (US$3.81 million), Russia (US$1.1 million), the United Arab Emirates (US$0.6 million), and Jordan (US$0.5 million).
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