x Abu Dhabi, UAEWednesday 17 January 2018

Iraq food costs soar due to Syria crisis

Arab Spring economies: Food prices in Iraq have surged after borders with Syria, the country's main trading partner, closed on July 19.

Iraq, once known as the breadbasket of the Middle East, was a key exporter of wheat and barley in the 1980s. Ali Abbas / EPA
Iraq, once known as the breadbasket of the Middle East, was a key exporter of wheat and barley in the 1980s. Ali Abbas / EPA

The price of food is rising rapidly in Iraq after borders with Syria, its main agricultural trade partner, were closed amid escalating violence.

A kilo of tomatoes that cost 750 Iraqi dinars (Dh2.36) in June now costs about 1,000 dinars. A kilo of lemons that used to cost 1000 dinars, now sells between 1,250 dinars and 1,500 dinars, residents of Baghdad are saying.

"There's a huge difference in the price of food, it feels like everything has gone up," said Shaymaa Talabani, 20, who regularly shops at the Al Rashid trade centre, one of the two main fresh-produce open markets in Baghdad.

"I can really feel the hole in my wallet during my weekly shopping."

"The increase in [the price of] fruits and vegetables is due to Iraq's closure of the border with Syria as the crisis worsened, fighting between rebels and Assad forces right on the border with us and refugees fled to our side," said Mahma Khalil, from the economic committee of the Iraqi parliament. "We are in a difficult situation because most of our food is imported from Syria."

Iraq's consumer prices rose 7 per cent last month compared with the same period a year ago and have increased by as much as 2.8 per cent compared with the previous month. The majority of the increase was driven by a surge in food prices, according to the country's planning ministry.

Iraq's borders with Syria were shut on July 19 and reopened four days later but Syrian goods are still delayed on the way to Iraq.

"The initial spike in Iraq's food prices was a result of the congestion and delay transporting food from Syria to Iraq and checkpoints thereafter," said Kareem Al Tamimi, the official spokesperson at Iraq's ministry of agriculture.

"There is some stockpile of national produce but merchants who saw this opportunity took advantage of the situation and opted to buy imported goods to keep prices high."

Iraq's government has made a concerted effort to support and encourage food security in the country. "The Iraqi government is looking beyond its traditional neighbours and considering offering greater access for food imports from countries such as Turkey and Jordan," Mr Khalil said.

"There has to be coordinated effort to support and improve food security in the country," he said. "The Iraqi government is currently looking beyond its neighbours across the border and considering offering greater access for imports from countries such as Turkey and Jordan."

Iraq, once known as the breadbasket of the Middle East, was a key exporter of wheat and barley in the 1980s. Open markets were common as farmers would bring their produce to the centre of provinces and shoppers bargained over kilos of produce day and night.

Devastated by almost a decade of war, billions of dollars are spent each year on importing staple products, a liberalisation policy effort that has also caused the demise of the country's local agricultural sector and its farmers and many open markets.

Few are still in business, operating only sporadically during the day.

Syria is Iraq's second-biggest trading partner after Turkey, with bilateral trade totalling US$5 billion (Dh18.36bn) last year. But disruptions of supply in Syrian merchandise due to instability and the country's security crisis, combined with difficulties in settling payments due to sanctions on the country, has hit prices and forced merchants to look elsewhere to meet demand in the Iraqi market, said Mudher Saleh, the deputy governor at the central bank of Iraq.

Iraq also imports food from Iran where trade has gradually declined amid a drought in the country and sanctions. Some Iraqi merchants are also unwilling to trade with Iran in the face of the US and European sanctions and as its currency plummets. .