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Cablegate: Ninewa:Drought of Rain and Credit Give Little Hope

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R 110720Z MAY 08 ZDS
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 7282
INFO RUCNRAQ/IRAQ COLLECTIVE
RUEKJCS/DIA WASHDC
RUEHRC/USDA FAS WASHDC
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UNCLAS BAGHDAD 001462

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C O R R E C T E D COPY CAPTION

E.O. 12958: N/A
TAGS: ECON EAGR SENV EAID PGOV IZ
SUBJECT: NINEWA:DROUGHT OF RAIN AND CREDIT GIVE LITTLE HOPE
FOR FALL PLANTING SEASON

This is a Ninewa Provincial Reconstruction Team (PRT)
message.

Summary
-------

1. (SBU) Farmers and agriculture officials across Ninewa told
the PRT in April that agriculture in this drought-affected
northern Iraqi province is a "disaster." Following the
fourth straight year of below-average rainfall - the worst in
recent memory for the province's farmers - Ninewa's mainstay
wheat and barley crops have been deemed a "failure." Whereas
wheat stalks should already be covered with "heads of gold"
at this point in the season, fields across Ninewa are instead
barren. While Ninewa's 75,000 farm families are used to dry
conditions, successive years of drought, roll-over of unpaid
loans and lack of GOI support since 2003 have left them
unable to secure the credit needed to buy seed for this
September's planting season. Ninewa's farmers advocate a
one-year, non-bank seed credit program to get them through
this fall's planting season.

Farmers Abandoning This Year's Crop
-----------------------------------

2. (SBU) In a circuit of regular meetings, the PRT in April
reevaluated the state of provincial agriculture with the same
western Ninewa farmers it had met during the 2007 fall
planting season. At that time, the farmers had been
optimistic that fledgling private and Agricultural Bank
sources of credit and seed would allow them to exploit decent
rainfall. However, this year's rains were both late and a
fraction of the farmers' needs. In the last two months, many
farmers abandoned the stunted grain shoots in their fields.
To cut their losses, the farmers plowed the shoots back into
the ground - a sign of their desperation over the failed crop
- to help preserve at least some soil fertility.

3. (SBU) Even in the eastern Ninewa, which received
relatively more rainfall and has better access to power and
irrigation, provincial agriculture officials said this year's
grain crop will be one of the worst years in memory. Farmers
with access to irrigation have focused their energy on
higher-value per area vegetable crops that can benefit from
the concentrated irrigation efficiency demanded by the
province's limited supply of power to its irrigation pumps.

GOI Support Insufficient
------------------------

4. (SBU) The province has received no response to its
requests for Ministry of Agriculture assistance for
genetically improved seeds and fertilizer. While the
Ministry of Agriculture in Ninewa has in the past supplied
seeds, fertilizer and fuel, farmers complain they have never
received sufficient amounts for their farms. Farmers
typically receive non-genetically improved seed from GOI
silos. That seed has a lower resistance to disease and
insects, yielding a crop that is 30 percent less than would
be possible with genetically improved varieties. With both
fuel and fertilizer, for which the GOI is the only supplier,
farmers say they never get more than half of what they need
for their lands. Meanwhile, private importers of seeds,
fertilizer and fuel do not exist. Only with sheep have the
province's farmers received significant government support,
with the Provincial Council and Director General of
agriculture jointly supplying fodder this spring.

Credit Drought as Bad as Rain Drought
-------------------------------------

5. (SBU) Most of the province's 75,000 farmers were unable to
get any credit assistance for the last planting season. The
3,500 who did get loans from the Agricultural Bank for seed
and fertilizer expect not to repay those loans because of
this year's crop failure. Repayment of such loans is a
prerequisite for borrowing for the purchase of farm inputs
for the 2008 fall planting season. Bankers feel burned by
the 90 percent of unpaid farm loans in the province, many
dating back to before 2003, and have said they will extend no
more credit until old loans are repaid.

6. (SBU) Local representatives of the Agricultural Bank said
they have heard about the $100 million in Ministry of
Agriculture funds dedicated to farmers nationwide, but said
they expect little will come to Ninewa. Meanwhile, farmers
said that even if the funds do come, their $3,000 to $5,000
amounts would be too small to be useful.

Seeds and Sales Through Silos Could Help
----------------------------------------

7. (SBU) Ninewa farmers' main need for credit is to purchase
seed. Given the insufficient GOI lending programs and lack
of private credit opportunities mentioned above, many farmers
across Ninewa told the PRT they may not be able to plant this
fall. One idea they advocate, though, would eliminate the
need for bank credit: free genetically improved seed
distributions from GOI silos in the fall to be repaid next
spring with guaranteed harvest sales to the silos. The
system would eliminate the need for farm credit, which
farmers use overwhelmingly for seed purchases. Also, as a
one-year program, it would allow farmers to produce a crop
that feeds the entire local economy, repay old loans, and
stockpile resources and cash to re-enter the commercial
credit market next year. The universal constant of
corruption would exist in this program, as in any other
entitlement, but farmers argued that at least this program
would provide them a means to circumvent the institutional
issues listed above that threaten to shut them out of farming
entirely.

Comment: GOI Assistance Needed in Some Form
-------------------------------------------

8. (SBU) Following four years of drought and amid a closed
credit market, Ninewa's farmers are already looking with
desperation beyond this year's failed crops. The farmers
need the most basic of farm inputs - seeds - to operate this
fall but they have neither the credit nor their own funds to
buy those seeds. An idea like extending GOI-purchased seeds
directly to farmers who would repay their debt to the
government through harvests is a possible solution. Together
with increased fuel and fertilizer supplies - through either
increased domestic production or imports - a seed
distribution plan linked to guaranteed GOI crop purchases may
get Ninewa's farmers through the next season.
CROCKER

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