Cablegate: Prt Tikrit: Farmers Struggling in Iraq,S

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RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #4620/01 3531336
ZNR UUUUU ZZH
R 191336Z DEC 06
FM AMEMBASSY BAGHDAD
TO RUCNRAQ/IRAQ COLLECTIVE
RUEHC/SECSTATE WASHDC 8587
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 02 BAGHDAD 004620

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON EAGR IZ IR
SUBJECT: PRT TIKRIT: FARMERS STRUGGLING IN IRAQ,S
BREADBASKET

1. (U) This is a PRT Tikrit, Salah ad Din cable.

2. (SBU) SUMMARY. The growth of the agricultural sector is
essential in Salah ad Din, a rural province in the Sunni
heartland largely lacking many of the natural resources of
its neighbors. Farmers in Salah ad Din face a number of
significant challenges: high prices and unavailability of
inputs, reduced access to markets to sell their goods, and an
often unresponsive central bureaucracy -- Sunni farmers
strongly believe the area is purposefully neglected by the
Ministry of Agriculture in Baghdad. Increasing basic
agricultural production is the most direct means of
increasing general prosperity and a necessary precondition
for future agribusiness development. Enhanced GOI support to
attain this will likely be crucial to establishing sustained
economic growth in the Sunni heartland. END SUMMARY.

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Untapped Potential
------------------

3. (SBU) Agriculture is the foundation of the economy of
Salah ad Din (SaD), a rural province in the Sunni heartland
north of Baghdad. Improving access to basic inputs and
secure markets for farmers could provide significant benefits
for SaD - increased employment, a more diverse business
climate through the development of agribusiness, and it is
hoped, decreasing support for insurgent activity. Increasing
yields would also help to achieve a precondition (along with
improved security) to attracting foreign and domestic
agribusiness investment. But market dynamics are probably
not sufficient to ensure short-term success - the GOI may
need to actively subsidize and encourage local farmers
through initiatives focusing on basic needs.

4. (SBU) Khalaf Hamad, Director General of Agriculture for
SaD, told PRT representatives on November 8 that vast tracts
of arable land today in SaD are unused. Of 2.6 million
arable acres in the province, only 348 thousand acres, or 13
percent, are presently farmed - due in part to insufficient
irrigation. Hamad provided the following data regarding the
acreage of the principal crops of SaD:

-- Citrus, 170,909 acres
-- Corn, 94,401 acres
-- Barley, 32,701 acres
-- Sunflower, 29,616 acres

In addition, tomatoes, cucumbers, eggplant, potatoes, sesame,
and watermelon are also produced in lesser quantities.

5. (SBU) Considered an affront by many residents, SaD imports
nearly all of its processed food from Iran, Syria, and
Turkey. Local leaders often suggest agribusiness concepts
such as reopening the tomato paste processing plant in Balad
or the construction of a citrus jam factory in Tikrit.
However, many of the prerequisites for substantial industrial
development - cold storage, improved security, reliable
distribution - do not yet exist. Most importantly, local
agricultural yields may need to be strengthened before
large-scale agribusiness initiatives would meet with success.

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Inputs More Expensive, Less Market Access
-----------------------------------------

6. (SBU) The high price and unavailability of fuel,
equipment, fertilizer, pesticides, and other inputs
constrains agricultural production in SaD. According to
Kareem Kurdi and Ayad Daham, leaders of the provincial
planters union, higher operational costs leave many farmers
unable to purchase necessary equipment or hire additional
employees. Kurdi provided IPAO several examples:

----Cost of a tractor in 2003 - 6 million ID (4,000 USD)
----Cost of a tractor in 2006 - 30 million ID (20,000 USD)

----Cost of onion seed in 2003 - 30 thousand ID (20 USD) per
kilogram
----Cost of onion seed in 2006 - 60 thousand ID (40 USD) per
kilogram

7. (SBU) Frequent shortages of diesel fuel result in
dependence upon black market sources which typically charge a
rate at least three times higher than the official price.
The Ministry of Agriculture (MoA) provides each farmer with
220 liters per month of diesel fuel; however, this total is
only sufficient for about one day of operation on a
medium-sized farm. In addition, Daham expressed concern that

BAGHDAD 00004620 002 OF 002

a rival farmers union, created by the MoA, was diverting
diesel intended for farmers to be sold on the black market.

8. (SBU) Iraq suffers from an acute shortage of fertilizer.
While the situation was partially alleviated by the
restarting of production at the Bayji Fertilizer Plant on
November 21 after it had been dormant for two years, only
approximately 15 percent of needed fertilizer was distributed
in 2005, with a similar result expected for 2006. At its
present reduced capacity, Bayji will produce an additional 12
percent of national demand. SaD farmers consistently name
the shortage of fertilizer as the biggest impediment to
increasing crop yields and obtaining overall growth. The
deficiency drives up the black market price and forces most
farmers to rely upon lower quality Iranian imports.

9. (SBU) The deteriorating security situation has also taken
its toll. Many SaD farmers who previously transported their
goods to profitable markets in Baghdad or Mosul are now
unable to do so. In interviews, SaD farmers often express
their belief that the MoA ensures Shia access to Sunni
markets but not the reverse.

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Poor Irrigation
---------------

10. (SBU) Although approximately one-half of all Iraqi arable
land is irrigated; in many areas of SaD canals transmit
minimal amounts of water due to blockage. In an interview on
November 13, the Director General for Water Resources in SaD
told PRT members that canal clearing is a top federal
priority, but is currently delayed by the security situation.
However, on November 14, Kurdi and Daham told IPAO that
local farmers offered to provide complete security - but the
Ministry of Water Resources (MoWR) had refused their offer.
In addition, all CF and PRT canal clearing proposals
submitted to the MoWR have been rejected.

------------------------------------
Confidence Low in Central Government
------------------------------------

11. (SBU) Kurdi and Daham also strongly conveyed to IPAO
their view of the MoA as an anti-Sunni bureaucracy
unresponsive to the needs of the farmers of SaD. Many
examples were cited, including failures to make good promised
deliveries of fertilizers, pesticides and other products.
During a November 30 meeting, Tikrit farmer and city council
member Matham Al-Qaim described the MoA as incompetent and
unresponsive. Al-Qaim and community leaders from Samarra
expressed that the negligence was deliberate and left only
one option - subsidizing farming inputs and products through
provincial and local government. Programs of this type would
be difficult to support locally due to the inability of
provincial and municipal governments to raise revenue.
However, it illustrates the general dissatisfaction with the
Sadrist-controlled MoA in SaD and the awareness of the
importance of agricultural development here.

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Comment
-------

12. (SBU) Practical and timely GOI policies which provide
farmers greater access to basic inputs such as fuel,
fertilizer, seed, and water and ensure that they have a
market for their products will be critical for the short-term
economic recovery and political stabilization of Salah ad Din
and other agricultural provinces. While an important
long-term strategy, market-based agribusiness is not an
immediate panacea given the current circumstances. END
COMMENT.

13. (U) For additional reporting from PRT Tikrit, Salah ad
Din, please see our SIPRNET Reporting Blog:
http://www.intelink.sgov.gov/wiki/Tikrit.
KHALILZAD

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