Iraq to pay high price for bumper wheat harvest

Iraq is facing a significant challenge as its government is on the verge of incurring a net loss of approximately half a billion dollars due to a bumper wheat harvest and a substantial grain surplus. This surplus, arising from favorable rainfall and extensive government subsidies aimed at encouraging farmers in arid conditions, has resulted in a substantial oversupply of 1.5 million metric tons. Despite the financial strain caused by paying farmers and storing the surplus grain, the government is committed to keeping the grain within the country to support local mills, a decision that may lead to millers demanding lower selling prices as they can acquire the grain more cheaply on the global market. This situation highlights the complexities of balancing agricultural incentives with financial constraints and climate challenges, particularly in a country like Iraq, which faces severe food security issues due to climate change, conflict, and declining oil prices, further pressuring its already tight budget.

DUBAI/NAJAF, Iraq, Oct 10 (Reuters) - A bumper harvest and a huge grain surplus in Iraq, normally one of the Middle East’s biggest wheat importers, have left the government facing a net loss of nearly half a billion dollars, according to Reuters calculations. The 1.5 million metric tonne surplus of wheat, helped by better-than-expected rains but mostly by government subsidies, is good news for farmers. But for the government, which pays them more than double the global market price to encourage them to grow the staple in often arid conditions, the price is high. According to the calculations, based on official figures and conversations with more than a dozen government officials, farmers, mill owners, analysts and exporters, the government will have lost $458.37 million after paying farmers and assuming it can sell the surplus to private mills in Iraq at an agreed price. Critics say there needs to be a better balance between the challenges of motivating farmers and limited ...