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Subsidies Have Left Iraqi Farmers Flabby

Coalition officials are trying to wean growers from government assistance and convince them to place more faith in market forces.

June 16, 2003|Warren Vieth | Times Staff Writer

KHUKRIYA, Iraq — It's tough-love time for Iraq's 600,000 farmers.

Sitting cross-legged on a straw mat inside a mud farmhouse, Harteef Ardawi ticks off the things he needs to make his farming operation a success. There's seed for wheat, corn, vegetables and sunflowers. Then he'll need cut-rate fertilizer, pesticides and herbicides. And perhaps most important: a guaranteed price for his harvest.

Risk isn't on the list. "We would prefer that the government run such a project," Ardawi says.

Allied authorities have something else in mind.

In rural communities across Iraq, representatives of the U.S.-led coalition and the Iraqi Agriculture Ministry are trying to convince wary farmers they should expect less government support and place more faith in market forces.

"Literally everywhere we've turned, we find state intervention," said Lee Schatz, a senior U.S. Agriculture Department official who is helping shape agricultural policy in postwar Iraq. "The reason you planted summer crops is because you got on your subsidized tractor, you started it up with subsidized fuel, and you sprayed your subsidized insecticide so you could get your government-supported final payment."

In the initial phase of Iraq's reconstruction, attention has been focused on the coalition's efforts to restore the oil industry, and get people back to work. But authorities say an equally urgent mission is to revive and restructure agriculture in Iraq, where an estimated 30% of the economy is based on farming, livestock production and the businesses that support them.

It is no small task. From the vast wheat and barley fields of the north to the small vegetable plots and date palm groves of the south, farming in Iraq lost its competitive edge under a regime that alternately coddled it with lavish subsidies and neglected it in times of need.

"The big question is what the central government decides they want to do for agriculture, because agriculture here probably wouldn't stand up against the Western world," said former Australian Wheat Board Chairman Trevor Flugge, another senior reconstruction advisor in Iraq. "Some of the broad-acre wheat might be competitive, and certainly some of the vegetables and perishables. But a lot of stuff wouldn't make it."

Flugge and other advisors believe Iraq's agricultural output can be increased substantially, perhaps doubled, with the introduction of modern farming practices. But some potential changes could prove controversial. Western agriculture officials have talked about the potential benefits of building feedlots for Iraqi sheep and using genetically modified seed to increase grain yields. Coalition officials say they will only make suggestions and will leave it up to Iraqis to decide what is best.

The Western world hasn't always been the Iraqi farmer's best friend, even when its intentions were good.

The United Nations put so much flour in the food baskets distributed to 60% of Iraqi households that some people began selling a portion of their monthly allotments to peddlers, saturating the market and prompting some wheat farmers to plant animal feed and other crops instead.

Generous subsidies provided to farmers in the United States and Europe and the competitive practices of big food processors have contributed to surpluses that push prices below the true cost of production in sun-parched, water-starved Iraq, experts say.

Sajed Dabbagh, a wholesale food importer in Baghdad, said one of his big-volume products is Tyson chicken legs, shipped to the Middle East at bargain-basement prices because Americans prefer white meat to dark. "Chicken legs from America are cheaper than Iraqi chicken," he said.

Coalition officials also acknowledge that Iraq isn't the only place where farming is subsidized. According to the Organization for Economic Cooperation and Development, farm subsidies by its 30 member nations increased to $318 billion last year, up $13 billion.

"We have to be sure not to be too moralistic when we talk about subsidies," said Peter McPherson, the Treasury Department's top official in Iraq.

Perhaps more important, reforms that would make Iraqi farmers more competitive could prove devastating to rural communities.

"Take one of these silos," Flugge said. "They could be privatized, and probably do quite well. The trouble is, they could probably be run with no more than five to 10 people. At the moment, they've probably got 50 to 100 people. And in the rural areas, there's no other work."

In the short term, the coalition is trying to keep farmers on sound footing by using about $150 million confiscated from Saddam Hussein's regime to buy this year's winter wheat and barley harvest, which is in full swing in parts of central and northern Iraq. The United States is paying about $105 a ton, or $2.86 a bushel. Last year, Hussein's government paid farmers $80 to $90 a ton, U.S. officials said.

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