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Iraq

Analysis of key value chains in the agriculture and food-processing sector in Muqtadiyah, Diyala governorate, funded by Danida

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EXECUTIVE SUMMARY

As Iraq emerges from nearly four years of conflict and displacement, the security context remains unstable in many parts of the country. The COVID-19 outbreak in early 2020 brought fresh challenges, including closed borders, curfews and restrictions on movement. Forecasts predict a negative impact on livelihoods and employment, with the economy expected to contract by 9.7% by the end of the year, and Small and Medium-Sized Enterprises (SMEs) in the agriculture sector reporting reductions in sales and incomes. To tackle some of these challenges and support the recovery of the agricultural sector in Diyala, DRC is developing a program called “Promoting Diyala’s economic recovery through market-based support to agricultural value chains”. This program aims to support targeted local agricultural producers and processing enterprises with small cash grants to enable the replacement and upgrade of productive assets, promote the transfer of skills and knowledge, create business development opportunities, reinvigorate the agricultural market, and create decent jobs in the local area.

This report, analyzing the value chains for tomatoes, dates, pomegranates and dairy cows, will inform the further development of DRC’s program. It is based on a thorough desk review of project documents, publicly available data and related secondary literature. Primary data collection included 85 household surveys (Knowledge, Attitude and Practice KAP surveys), which informed an assessment of social cohesion and protection issues, barriers to participation of women and People with Disabilities (PwD) in agricultural value chains, and consumer preferences. 40 Key Informant Interviews (KII) were also conducted with producers, processors, traders (wholesalers, retailers, etc.) and key experts from government organizations, to understand the challenges, constraints and opportunities of the pomegranate, date, tomato and dairy cow sectors.

The analysis shows that supply in all four of the identified agricultural value chains (dairy, pomegranate, date and tomato) in Diyala is characterized by many smallholder farmers operating small-scale family farms. Farmers in all of the value chains have suffered losses of equipment, damage to their land and facilities, and a downturn in production and income, as a result of the crisis. They all indicated a need for support to help them recover their businesses. Significant knowledge of traditional farming methods exists in the area, which could be built upon through targeted capacity-building programs and training. Relevant topics for training might include farm management, pest control, organic and synthetic fertilizer use, and irrigation techniques.

All of the farmers interviewed mentioned the difficulties associated with obtaining loans, grants or credit. They reported stringent application requirements, the need for guarantors, and high interest rates which make commercial banks inaccessible for most. Likewise, there is a lack of government grants and loans, and farmers were largely unaware of micro-credit organizations working in the area. As such, providing soft loans or small grants to farmers is likely to be a highly beneficial component in any future intervention in the identified value chains.

Demand for local dairy, pomegranate, date and tomato products is quite strong. Furthermore, there is a general perception among consumers and other actors in the value chain, that local Iraqi products are of good quality, and when the price, quality and availability are good, they are generally preferred to imported products. There may be opportunities to improve on locally-made products such as pomegranate and date syrup. Routes from farm to market, either directly to local consumers or through established relationships with traders, wholesalers and vendors, also appear to be quite strong and functioning well. The markets in all four value chains are mainly local, with some products being traded elsewhere in Iraq. Very little currently enters export markets, although for dates in particular, opportunities may exist. Generally, interventions in any of the four value chains should focus on improving the quantity and quality of supply, by working primarily with farmers. Environmental degradation and water scarcity are serious challenges for farmers. A sustainable approach must include the restoration and the enrichment of soil quality in the long term and support with water usage and irrigation.

Many of the challenges facing agriculture in Diyala require government action, notably to eliminate security threats from militias in the area, and to reduce the economic impacts of cheap foreign imports. Advocacy on behalf of local farming communities might encourage government efforts to improve security in agricultural areas, restrict foreign imports and reduce smuggling, and take action on environmental degradation and water scarcity. Farmers in the area have also traditionally relied on the state for support, for instance in the form of government-run storage and distribution facilities, or in the form of subsidies. Creating or supporting farmers associations could help farmers improve their autonomy, bargaining power, representation with government agencies, and provide channels for the exchange of knowledge, information and mutual support.

Support to women working in the value chains might be targeted at small-scale household processors of agricultural products, particularly producers of pomegranate juice and syrup, date syrup and vinegar. This might include forming groups or associations for women processors of agricultural products; offering grants or soft loans for upgrading or buying new processing equipment; offering training; and encouraging the small-scale production of tomato paste to allow women to diversify the range of products they can offer and stimulate demand for local tomatoes.