Syria needs more wheat, despite healthy harvest

(Photo courtesy Canada Beef Inc.)

Abu Dhabi | Reuters — Syrian farmers enduring a fifth year of civil war have sold less wheat to the state than last year despite a better harvest and higher offer price, leaving a large shortfall to be made up with imports complicated by western sanctions.

President Bashar al-Assad’s government has lost control over many wheat-producing areas in the fighting that grew out of pro-democracy protests but said in February it would avoid imports by buying grain from Syrian farmers across the country.

The aim was both to reassert its authority and secure supplies of the heavily subsidized bread its citizens expect.

With the local procurement season almost over, it has bought just 454,744 tonnes of local wheat, government sources said, compared with 523,000 tonnes collected last year, double that the year before and around 2.5 million tonnes annually before the war.

A price increase to 61 Syrian pounds (37 Canadian cents) a kilo from 45 last year appears to have had little impact. Damascus raised the price of a loaf by 40 per cent in January and residents say it has used less flour per loaf since March to maintain supply of the politically sensitive staple.

Meanwhile many farmers have either sold their crop more cheaply to middlemen who export it to neighbouring Iraq and Turkey or planted other crops.

Where the state has bought wheat, a lot goes astray.

“Long distance transport is dangerous in the country because of the continued fighting so the risk of loss in transit is high,” one European trader said.

Four million people have fled Syria since a government crackdown on protesters led to war in 2011 but around 18 million are estimated to be still in the country, many of them in the government-held west. The state needs between a million and 1.5 million tonnes of wheat to provide those areas with bread, traders and local media reports say.

“It is actually cheaper for the government now to import wheat than transport the Syrian local crop around the country with so many difficulties in trucking,” one Syrian commodities trader said.

But it has had only patchy success in buying wheat internationally because the sanctions imposed on Damascus by the U.S., European Union and Arab League make banking finance more difficult, even though food supplies are exempt.

“It seems more feasible that the government will now opt for imports, which would be easier to work with. Whether they can muster up the financing is a separate question,” a Middle East Commodities trade source familiar with Syria said.

In July, the United Nations Food and Agriculture Organization (FAO) estimated the government would try to buy 600,000 tonnes of wheat internationally this year while private importers would bring in another 200,000 tonnes.

So far the government has sought wheat at least twice in public tenders and attempted a barter deal. The three reported offers involved 450,000 tonnes altogether.

It was not clear whether the deals went through, or whether the FAO was aware of the government’s expected procurement figure for this season when it issued its 600,000 import estimate. It expected 200,000 tonnes in private imports and 180,000 in food assistance, leaving a countrywide shortfall of 800,000 tonnes.

Rebel areas

The western-backed opposition Syrian National Coalition said it had used US$15 million donated by Qatar and other funds to buy 80,000 tonnes of wheat from Idlib, northern Aleppo and Deraa, offering farmers $230 to $240 a tonne, between 40 and 30 cents less than what the state was offering.

“The government is buying from the areas it controls and those opposed to it try to sell to us,” Walid al-Zoubi, the agriculture minister of the interim government of the coalition said. “But it is difficult due to difficulty in transportation.”

The SNC wheat purchases fall far short of what is needed for rebel-held areas of Syria, most of which are in the hands of Syrian Kurds or Islamist Jihadists like Islamic State.

The breadbasket provinces of Raqqa and Deir al-Zor are mostly held by Islamic State, while the rich arable northeastern Hasaka province is largely controlled by an autonomous Kurdish administration. Areas of the province are still a battleground between the Kurdish YPG militia and Islamic State.

Though large parts of the area between Hasaka province and the Assad-controlled west are held by Islamic State, there are still flights between Damascus and the government-controlled airport in the city of Qamishli in Hasaka, where more than 300,000 tonnes of wheat were collected this year.

“The cost of transporting the wheat from Hasaka to Damascus can sometimes raise its price three times above that of imported wheat,” the Syrian commodities trader said.

Islamic State tries to collect and mill grain from areas it controls and last year sent large amounts out of Syria to its newly conquered territory in Iraq.

The government had estimated the country’s wheat crop at three million tonnes for 2015, after less than 1.9 million tonnes last year. The FAO said it would be more like 2.445 million tonnes this year while the SNC gave a two million-tonne estimate. Syria’s pre-war average was 3.5 million tonnes.

In a reflection of the shrinking size of territory under government control, Syria’s General Organization for Cereal Processing and Trade (Hoboob) set up 22 wheat collection centres this year, down from around 31 last year and 140 before the war.

Last year, Hoboob tried to sell Iraq 200,000 tonnes of 2013 wheat it had been unable to move from its Hasaka silos but Islamic State forces then overran Iraq’s Nineveh province and the deal was cancelled.

Maha El Dahan reports for Reuters from Abu Dhabi. Additional reporting for Reuters by Tom Perry in Beirut, Michael Hogan in Hamburg and Jonathan Saul in London.


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