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SYRIA: Bread subsidies under threat as drought hits wheat production

30 Jun 2008 11:22:21 GMT
Source: IRIN

DAMASCUS, 30 June 2008 (IRIN) - Basil the baker is not a happy bread maker.

"Everything is more difficult to afford now, and it will get worse," he said, amid the dough and ovens of his bakery in the middle class district of Shalan in Damascus.

The availability of cheap food has been a cornerstone Syrian domestic economic policy.

However, there are growing doubts among ordinary people and analysts as to how much longer the country can remain relatively insulated from the global food crisis which has sparked riots in over 30 countries, including Egypt, where a similar authoritarian socialist government is in place.

The government exerts significant control over food prices through its control of the marketing, import and export of agricultural produce, but the agricultural sector has been partially liberalised, and food prices have risen 20 percent in the last six months, according to the World Food Programme (WFP).

Impact of fuel subsidy cuts

Pressure on food prices increased when fuel subsidies were cut at the beginning of May, causing the price of petrol to triple overnight.

Dwindling oil revenues and a gaping fiscal deficit forced the government to embark on a programme of cutting fuel subsidies, which currently consume around 15 percent of gross domestic product (GDP).

"The subsidy cut came at the worst time for the Syrian citizen," Safi Sunjaa, an economist with the Syrian Economic Centre, told IRIN.

The government is seeking to mitigate some of the worst effects of the subsidy cut. In May, public sector salaries and pensions, which average US$130 per month across two million workers and retirees, were raised 25 percent. The government is also issuing heating oil coupons to families and providing compensation for increased energy costs to key components in the food supply chain, like bakers.

Such measures have been patchily effective, say economists, although most do not benefit Syria's 1.5 million Iraqi refugees - the UN Refugee Agency (UNHCR) estimates that 150,000 refugees will be registering for the next WFP food distribution, an increase of 22,000 since March.

For Syrian citizens, things are difficult, but not at crisis point.

"People have strategies to deal with price rises at this level - they sell commodities, reduce consumption, take on an extra job; they cope," said Muhammad Wardeh, an independent consultant in rural and agricultural development.

Normally self-sufficient in wheat

A large part of the safety net consists of the availability of subsidised bread, to which Finance Minister Muhammad al-Hussein committed himself in April, calling the price of bread a "red line".

As the price of other staples, such as rice, has soared, poorer people have increased their consumption of the subsidised "standard" bread, sold for a fixed price at government bakeries.

International wheat prices have risen 83 percent in the last year, ensuring that domestic supply is critical. "Until today, Syria hasn't suffered from the food crisis because it is self-sufficient in wheat," said Safi Sunjaa.

Drought hits wheat

Self-sufficiency in wheat, however, is under threat as a result of severe drought over the past two years in the primary wheat-producing regions of northeastern Syria.

"Syria is suffering a lot, especially this year," said Haitham al-Ashkar, deputy research director of the National Agricultural Policy Centre (NAPC), a think-tank affiliated to the Ministry of Agriculture. "It is obvious from reports that these weather conditions will continue."

This year's wheat harvest is estimated at about 2.5 million tonnes, down 1.5 million (nearly 40 percent) on last year.

This is the lowest yield since the droughts of the late 1980s, when Syria became a net importer of wheat.

Local environmentalists see an increasingly regular drought cycle.

"The drought is part of climate change," said Samir Safadi, chairman of Syria's first environmental non-governmental organisation (NGO), the Syrian Environment Organisation. He dismissed the idea that this year's drought is just part of the usual cycle. "The drought cycle used to be every 55 years, then every 27, then 13, then 7-8 [years]."

Domestic consumption of wheat is around four million tonnes a year, which means that the government will have to draw on its reserves, and eventually begin importing, to ensure supplies of cheap flour for bread.

No-one knows exactly how much wheat the government has in reserve, but rural consultant Wardeh estimates it is around five million tonnes: "Unless there is an improvement in irrigation, in two or three years we will have a major crisis."

According to the Ministry of Agriculture, however, there are no plans to increase the number of irrigated wheat fields, currently around 50 percent of the total. "The first constraint with expanding irrigation is the availability of water," said al-Ashkar. The focus instead is on using technology to improve productivity.

Animal feed hit by drought

Barley was even more severely affected than wheat by this year's drought, with some economists estimating a 90 percent crop failure. This has had huge repercussions for the livestock sector, which uses barley for 60 percent of its animal feed. Many small-scale livestock farmers have been forced out of production. The NAPC is currently looking at ways to develop alternative animal fodder, such as straw treated with nutrients.

In the short-term, the government's immediate challenge is to increase its supply of essential grains, either by procuring more of the domestic crop or by importing, whilst seeking to address its budget deficit, which doubled to 10 percent of GDP in 2007.

A Ministry of Economy representative pledged: "The government will continue to supply basic foods at a controlled price."

One international expert, who wished to remain anonymous, told IRIN that although he expected the government to do "whatever it takes" to ensure the supply of affordable food, he anticipated food subsidies becoming "more targeted" as the government struggles to balance these increasingly conflicting challenges.

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