The agriculture sector in the Kurdistan Region has seen considerable change in recent years, and therefore has the potential to play a prominent role in supporting the growth of the local economy. As such, the KRG has prioritized the development of its agriculture industry to encourage greater foreign investment. The KRG’s Ministry of Planning (MOP) and UNDP joint report noted that the Kurdistan Region boasts a combined 1.5 million hectares of irrigated lands, a diversified population of livestock, and strong environmental and natural conditions that have allowed for the development of a variety of agricultural products. Despite the fact that the agriculture sector comprises only 10% of Kurdistan’s economy, there are strong indicators that the industry will play a prominent role in shaping the future of the Region.

For many years, the Region was known as the “Bread Basket of Iraq”. A great variety of grains and vegetables have traditionally been grown in Kurdistan, with wheat and barley among the most common. However, as a result of the policies of the previous regime in Baghdad, agriculture in the Kurdistan Region saw only limited growth for nearly 20 years. Decades of conflict left many agricultural areas negatively impacted, with formerly fertile areas now standing inaccessible or unproductive. The prolonged violence also took its toll on the demographics of the Region as well, with the anti-Kurdish policies implemented by the previous regime forcibly moving a large proportion of the rural population to urban areas. With limited physical infrastructure and a reduced population, farming in these areas declined significantly.

Although the farmers operating in the Kurdistan Region have significant experience, they have been limited in terms of their implementation of modern techniques. The MOP recognizes the severity of this issue, and has already begun devising methods to implement change: “We need to build up our educational extension services to provide training on new agricultural practices or improvements on techniques and methods that could increase efficiencies and production. In addition, we need to help farmers learn to use new technologies for ensuring the health of their crops and livestock and for improving their productivity.”

In 2003, approximately 35% of the population of the Kurdistan Region relied on agriculture as their source of livelihood. However, by 2012, that percentage had dropped to 9%. Moreover, according to figures provided by the Kurdistan Region Statistics Office (KRSO), only 7.1% of the Region’s active workforce is employed in the agriculture sector. In terms of the individual governorates, Slemani (8.4%) has the highest rates of agricultural employment, followed by Duhok (7.6%) and Erbil (5.3%). In addition, agricultural employment is low for both men (6.8%) and women (8.9%).

The Ministry of Agriculture and Water Resources (MOAWR) has established the long-term goals of food security and self-sufficiency, and has identified the ambitious target of becoming a major producer and exporter of wheat, vegetables, fruit, meat, dairy, and poultry to the MENA region and beyond. In addition, the MOP has implemented a three-pronged plan for the future of the sector: promote food security for the people of the Kurdistan Region, economic prosperity for its farmers, and prosperity through the export of new agriculture and food products.

According to Fathi al-Mudaris, an Advisor at the Ministry of Trade and Industry (MOTI), “Our development plan also prioritizes new, strategic projects that will help to establish food security. These projects mainly relate to the construction of new wheat and barley silos.” At the moment, the storage capacity of the Kurdistan Region for these two crops is about 280,000 tons. However, the MOTI has concrete plans to increase that capacity to 1 million tons within the next three years. Projects such as these could help promote further local development, paving the way for the possibility of export in the near future.

Priority area for investment

The KRG sees the improvement of the agriculture industry as critical for the development of the Region’s economy. Thus, the KRG has prioritized foreign investment in certain areas to facilitate greater growth and development. In accordance with these goals, the MOP has proposed an aggressive investment policy for the sector. It calls for the KRG to allot $1.2 billion to finance development of the industry over the next 7 years (with the vast majority of those funds being utilized by 2017). Such investment would allow for the implementation of approximately 1,200 new projects, as well as 37 new plans and case studies. Roughly 85% of these programs would be initiated between 2013 and 2017.

To facilitate further investment, the BOI has established alluring incentives, including the provision of land plots for subsidized lease. Statistics indicate that between August 2006 and August 2013, 23 agricultural projects (4% of all projects) were licensed for a total of $677 million (2.2% of all investment). To accommodate these projects, approximately 13 million square meters of land were allocated by the KRG. The average land size granted per license varies significantly depending on the location of the project. Agricultural projects based in Erbil received the largest amounts of land (339,426 sqm per license), with Slemani (92,250 sqm per license) and Duhok (6,405sqm per license) earning smaller proportions. However, the licenses in Duhok received the greatest allocation of investment capital, with over $400 million going to the governorate’s three projects.

48% of the projects licensed by the BOI so far (which total about $325 million in investment capital) relate to the growing of crops. It is anticipated that these projects will help to further develop the sector and increase self-sufficiency rates in certain critical fields. 52% of all licensed projects (which total approximately $352 million in investment capital) relate to animal farming, specifically the production of eggs and poultry products. Four BOI-licensed projects alone produce an annual output of approximately 17.5 million chickens to be sold on the local market. Although these investment figures represent steps in the right direction, further progress is needed.

Strategic Opportunities

In terms of current production, Kurdistan has reestablished itself as a strong local producer of tomatoes, eggplant, cucumbers, onions, watermelon, peppers, and many other fruits and vegetables. Officials at the MOAWR report that the Region has achieved at least 75% self-sufficiency in terms of its production of cucumbers, onions, and potatoes, and has made strong gains in terms of reestablishing itself as a strong local producer of tomatoes, peppers, watermelons, and eggplants. However, large-scale investment is needed to bring about the dramatic change that the sector requires.

The total number of livestock in the Kurdistan Region is around 4 million. However, MOAWR figures indicate that the Region was only able to locally produce 22% of its estimated need of red meat, which was calculated at 100,000 tons. Similarly, in 2011, the Region produced only 1,430 tons of fish, constituting only 21% of the estimated need of 6,700 tons. Thus, significant development is needed in terms of local production of red meat and fish. Poultry production has fared significantly better, with the Region’s farmers producing 55,000 tons of chicken (56% of total need) and 430 million eggs (67% of total calculated demand).

Cultivatable Land (in hectares)

LandTotal AreaTotal Cultivatable Land
Slemani1,514,120626,280
Duhok931,398301,542
Erbil1,042,808291,999
Total3,488,3261,219,821
Percentage100%34.97%

Crop production is the main source of livelihood for many rural families, with wheat and barley serving as the two main crops under cultivation. Wheat fields in the Kurdistan Region occupy approximately 567,625 hectares and produce an estimated 500,000 tons each year. Barley fields constitute over 10,800 hectares and produce roughly 43,870 tons annually. As a result of these large yields, opportunities for wheat production are limited. However, because both wheat and barley are winter crops, there are definite opportunities to utilize their sizeable land allotments for summer crops. Perhaps most notably, the Region achieved only 11% self-sufficiency in terms of oat production and 8% self-sufficiency in terms of corn production. These two crops represent critical areas of need, and offer potential investors strong opportunities for success. In addition, more recently, rice has developed into a preferred crop, and has displaced bread as the basic staple of the Kurdish people. Kurdish famers have also begun to pursue tobacco as a new agricultural cash crop.

Financial Constraints

Funding remains a thorn in the side of those parties seeking to further develop agriculture in Kurdistan, particularly since the Region continues to rely on a significant amount of imported food products. Indeed, some estimates have placed figures for this consumption in the neighborhood of $20-22 billion for the whole of Iraq. Therefore, funds that could be better spent on investment projects are instead spent on imports to satisfy increasing demand.

The agriculture sector as a whole is heavily subsidized by the KRG, with current figures exceeding $250 million. These funds cover crop production ($200 million or 80% of all funds), transportation ($20 million or 8% of all funds), and material acquisition such as seeds, fertilizers, pesticides, and other items utilized in the growth process ($30 million or 12% of all funds). The largest of these subsidies relates to wheat production. For 2011, wheat was subsidized at $300 per ton, with a production target of 500,000 tons; thus, the KRG spent approximately $150 million to subsidize local wheat production. Funds were also set aside for operation and maintenance costs for irrigation services and employee salaries. These figures will only continue to increase as the population of the Region continues to expand and demand increases proportionately. As such, these figures will soon become untenable. Therefore, the KRG has begun to aggressively promote private sector involvement in the agriculture industry.

Although identified as a priority area for investment by the BOI, the agriculture sector has seen only limited interest from both local and foreign companies. The MOP, however, has now identified specific areas in which private sector involvement is critical, including developing cold storage facilities, transportation logistics centers, and facilities for packing agricultural products. For its part, the BOI has placed emphasis on projects that promote sustainable, local production, specifically in areas relating to forestry, horticulture, plant and animal production, poultry products, animal husbandry, irrigation, and research and development. In an effort to expand the local workforce involved in this growth, the BOI has also taken steps to encourage farmers to return to their former homes in rural areas by providing them with subsidies and financial grants.

Agrisoya
Agrisoya
Dukan Dam, Slemani
Dukan Dam, Slemani

Water

60% of the rivers in Kurdistan originate within the Region, while 40% originate in foreign countries. If regulated properly, irrigation in the Region could be complete and effective. Currently, only 11% of the arable land in the Region is sufficiently irrigated.

The Kurdistan Region faces strong challenges regarding the future of its water resources. Standard practices dictate that for every million people, one billion cubic meters of water are needed. With that in mind, the Kurdistan Region could potentially face a significant deficit in the near future. The lack of significant infrastructure further compounds the situation. At present, the Kurdistan Region depends primarily on its groundwater resources. However, there have been only limited hydrological studies for the Region, so reliable estimates regarding remaining supplies are particularly narrow. Most reports confirm that the Region has undergone severe depletion, with some aquifers in the Region indicating reductions by as much as 20-40 meters, thereby increasing soil salinity as well.

To combat this dependence, the MOAWR has utilized its resources to construct a significant number of smaller-scale ponds to serve as retention basins. The construction of a total of approximately 136 such facilities has been targeted for 2013 alone. It is hoped that these water resources could help restore village life, increase the availability of local water, and facilitate modern farming practices. However, current water storage capacity remains insufficient. Therefore, additional investment will be needed to expand these capabilities to match present demand.

Total Estimated Investment in Water and Sanitation Projects (Million USD)

Investment Activity2013-20172018-2020Total (2013-2020)
Erbil$484$669$1.1
Duhok$291$402$694
Slemani$505$697$1.2
Total$1.3 billion$1.7billion$3 billion

Attempts to ration the use of water could also play a vital role in securing the Region’s long-term supply. Studies have demonstrated that an average resident of the Kurdistan Region uses approximately 400 liters of water per day (in some areas, that number is as high as 800 liters). In Europe and the United States, average daily use is around 200 liters per day. The primary explanation for this over usage is that under the current system of taxation, residents of the Kurdistan Region are charged a flat fee for water consumption. This number is not based on actual usage, and therefore does not serve as an effective deterrent against overuse. To combat this issue, the 2014 Master Plan calls for the installation of water consumption meters in Kurdish households to regulate water usage. The MOP strategic plan calls for a similar system to monitor irrigation usage, which is expected to ensure proper pricing and promote modern agriculture practices (which tend to be more water efficient).

Further infrastructure developments are needed to promote diversity in terms of water production. At the moment, there are no water recycling plants in operation and no systems in place for treating wastewater. “In the rest of the world, there are three types of water,” points out Minister Baban. “In the Kurdistan Region, there is only one and it is used for every purpose, including human consumption and irrigation.” A diversified system for treating and recycling water would further prolong Kurdistan’s extant water resources, and could provide more immediate solutions to issues relating to shortages.