BAGHDAD (Reuters)

Major wheat importer Iraq plans to start an eight-year, $700 million irrigation program this year, part of a plan to increase wheat production by more than 60 percent to 3 million tons.

Popular anger at rising food prices has been an explosive ingredient in the mix of grievances that triggered the fall of leaders in Egypt and Tunisia, and is now putting the heat on authorities in Iraq and other Arab countries.

Iraq’s population of around 30 million consumes at least 4.5 million tons of wheat annually, with much of its imported wheat and rice going towards a huge public food ration program. It produced 1.86 million tons of wheat last year.

Deputy Agriculture Minister Ghazi al-Abboudi said the plan included the installation of irrigation systems across 2 million acres (0.8 million hectares) of land and added 1.875 million acres of wheat would be planted.

“God willing the project will start by the last quarter of this year … (and wheat) production will be at 3 million tonnes (by 2019),” Abboudi told Reuters in an interview, adding the project was also aimed at helping reduce the amount of water used to irrigate Iraq’s lands.
Soft loans

Decades ago, Iraq’s bread basket was a leading producer, but years of war, sanctions and neglect have hit the agriculture sector hard. A chronic water shortage and severe drought in recent years have also hurt production.

Abboudi said the ministry had set aside 40 billion Iraqi dinars ($34 million) to buy 3,000 sprinklers for the project and that it had recently approved a tender to buy around 500 irrigation systems from European and U.S. firms.

Iraq complains that hydroelectric dams and irrigation in Turkey, Iran and Syria have reduced water flow in its main rivers, the Euphrates and the Tigris.

Investment in dilapidated infrastructure like water pumps is vital for the agriculture and oil sectors, as well as a broader reconstruction effort eight years after a U.S.-led invasion.

To encourage investment in the agriculture industry, Iraq’s government had set up a $500 million a year fund from the federal government budget to be given as soft loans, without interest, to farmers and investors, Abboudi said.

“The efforts of the agricultural initiative fund are focused on all crops but the priority is for the strategic crops (wheat and rice),” Abboudi said.

He said 84 billion Iraqi dinars had also been set aside this year to give interest-free soft loans to livestock farmers and investors looking to develop the agriculture industry.

Farming is Iraq’s largest employer, but it trails far behind the all-important oil sector in terms of economic output and very little investment has been put into the industry so far.