June 24, 2015
Every day, Iraq inches closer to
hunger. The United Nations estimates that
approximately 4.4 million people across Iraq require food assistance. About 30 percent of Iraqis live
below the national poverty line, and this number is much higher in the poorest
districts. These communities are already struggling with limited resources and
basic foodstuffs, a situation made worse by the growing number of internally
displaced persons (IDPs). The country faces a stark and multifaceted food
security challenge. In the short term, protracted conflict is generating
localized food shortages. In the longer term, inflexible policies and
government illiquidity are leading to decreased domestic food production and
higher import dependency.
In June 2014, with the Islamic
State’s (IS) incursion into Salahuddin, Nineveh, Kirkuk, and Anbar—the
breadbasket governorates comprising Iraq’s cereal belt—the country lost the
majority of its annual wheat and barley harvests from these areas, which combined
contributed over one-third of Iraq’s cereal production. About 1 million tons of wheat
was lost in total. Moreover, of the harvest stored in government silos, much
was expropriated by IS and transferred to Syria, and what the farmers kept was
confiscated, bought at depressed prices, or left to rot.
The increasing number of IDPs, now
estimated at around 3 million, together
with about 250,000 refugees from Syria, has put an extra strain on the food
supply and remaining strategic reserves in Iraq. The government has been unable
to deliver food assistance to the displaced through its Public Distribution
System (PDS) because of inflexible supply chains—preventing, for example,
displaced Iraqis from Salahuddin’s Tikrit from collecting their monthly basket
in Erbil or Baghdad. Government reserves of the main commodities in the PDS’s
food basket are already understocked, and the government has not physically
moved foodstuffs to IDPs’ destinations, where demand has spiked. Cash shortages have also prevented the government from
replacing the physical commodities with cash transfers to those in need.
Because the conflict has disrupted
the harvest and planting cycles, Iraq’s food insecurity is on track to worsen.
Most arable land in central Iraq is either under Islamic State control or is
the site of ongoing military operations. Farmers already living in IS-controlled
areas do not have access to government-subsidized seeds and fertilizers, and
those in disputed areas are blocked from accessing their fields. For instance,
in the mixed Turkmen and Sunni Arab town of Amerli in Salahuddin, after the IS
siege of the community ended in October, pro-government militias subsequently prevented surrounding Arab
villages from returning to their lands.
For those areas where farmers were able
to plant crops, such as in northern Nineveh, farmers are not able to harvest
their crops due to such issues as a lack of machinery or fuel, unexploded mines
in their fields, and inter-ethnic retribution. In October, the Kurdish peshmerga forces pushed the Islamic
State out of the northern Nineveh region, which has a production capacity of
nearly 600,000 tons of wheat and barley, enough
to cover the assistance needs of IDPs in the Kurdistan regions. But in some
areas, including Zumar, farmers cannot harvest their fields because most of the
area’s machinery was stolen by the Islamic State when they seized the city.
Meanwhile, in Sinjar, Yazidi communities burned the wheat fields
of Arab farmers in the area as retribution for collaborating with IS. With
northern Nineveh now under Kurdish control, entire Arab villages have been destroyed
in reprisal and to deter IS re-infiltration.
Policy is another cause of Iraq’s
food insecurity. Iraq’s 2015 budget has not
allocated money for the purchase of grains from IS-controlled areas, partly for
fear of transferring cash into the group’s hands and partly due to political
calculations that are leaving Sunni areas without government support. As a
result, the 2015 harvest—which has already started in Salahuddin, Nineveh, and Anbar—will
have no one to purchase it. For the second year running, this means a resulting
deficit of one million tons of grains (about one-third of Iraq’s typical annual
domestic production, or enough to feed about 4-5 million people). For farmers,
not being paid for their grain production means a loss of income and, in turn,
increased debt. At the community level, this will exacerbate social disunity as
more communities fall into poverty, which makes them more susceptible to
radicalization.
For the government, the continued
loss of grain production means an increased need for imports to satisfy demand
and to close the food supply gap. But amid low global oil prices, and with a
growing part of the oil income being channeled toward war efforts and debt payments,
Iraq will face difficulties in procuring the necessary amount of food for its
people. To address budget deficits, Iraq has increased oil production and the IMF agreed to a loan
of $833 million, with the World Bank voting in July
on another possible $800 million loan. But even with Iraq using its Special
Drawing Rights (SDRs), foreign exchange reserve assets operated by the IMF, the
central government is still suffering from
illiquidity. This is translating into unfavorable payment terms for
international commodity trading, even for lower-quality goods.
Meanwhile, aggravating the
government’s fiscal position, smugglers from Turkey and Iran are selling these
countries’ wheat production to the Iraqi government as Iraqi grain—in order to
benefit from Iraq’s subsidized price of about $600 per ton, which is around
double the global market rate. Not only is this subsidy—intended to support
agriculture and Iraqi farmers—misdirected away from its intended benefactors,
but the cash it uses gets funneled outside to neighboring countries, rather
than staying in circulation within the Iraqi economy.
Local and international humanitarian
and development organizations can fill but a small gap. On the food demand
side, they can give the recently displaced food aid through family parcels for
a limited time, but they cannot replace the PDS and other forms of government
support. And while the international aid agencies aim to procure food locally
as much as possible, such as wheat for the flour in food baskets, they can only
afford to purchase small quantities. On the supply side, the international
organizations can assist farmers with seed and fertilizer distribution, but
only enough for them to maintain subsistence. This agricultural aid cannot be
sustainable, especially as international donor fatigue exacerbates aid
agencies’ budget constraints.
The protracted crisis in Iraq,
coupled with the inflexible policies of the government and its fiscal
challenges, are pushing the country and its population toward food insecurity.
Proactive policy-making and aid are needed to thwart an impending vicious cycle
that starts with hunger and feeds back into the protracted conflict.
This
article is reprinted with permission from Sada. It can be accessed online
at: http://carnegieendowment.org/sada/2015/06/23/how-iraq-is-driving-itself-to-hunger/
Hadi Fathallah is an economist and
policy adviser focusing on food security, energy, trade and political risk. He
is a fellow of the Cornell Institute for Public Affairs and a Global Shaper
with the World Economic Forum. The views expressed in this article do not
necessarily represent those of the institutions he works for or is affiliated
with.