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Iraq hungary for beans
June 25, 2003

Iraq hungry for beans

Iraq used to be third largest market for U.S. dry bean export;
holds potential to major buyer in future

The third largest market for U.S. dry bean exports in 1997 was Iraq. Now, this previously large market is back. This time, it appears that Iraq will be in first place among the destinations for U.S. dry bean exports during June-December 2003.

Announcements for P.L. 480 sales approved for Iraq in the May 13, 2003 issue of Bean Market News included: 5,000 tons of Great Northern beans, 3,000 tons of dark red kidney beans, 5,000 tons of chickpeas, 5,000 tons of blackeyes, and 10,500 tons of lentils. Some other sales of U.S. beans and lentils to Iraq are underway through other programs. World Food Program announced plans in April to provide 30,000 tons of edible beans and lentils for Iraq.

When the billions of dollars of Iraqi petroleum export money held in escrow by the United Nations become available to some beginning Iraqi private traders, additional sales of a wide range of beans, lentils, peas, and various pulse products should emerge. There is a strong demand for canned beans in Iraq, although many families have traditionally purchased the dry beans through the ration card system at low prices.

Some officials of the previous regime complained that the Iraqi Government lost money on importing beans from China for sale at low fixed prices in the shops selling through the ration card system. However, it must be remembered that petroleum export revenues for Iraq in recent years were in the range of $1,000 per capita. Saddam Hussein used only about a tenth of the petroleum income for the food subsidy system, which was part of the oil for food and medicine program administered by the UN.

The tremendous pent-up demand for pulses and some other food items in Iraq may cause larger imports in 2003 than some analysts had expected. For U.S. exports, pulses have led the way with quick response to the demand in Iraq. Much larger imports into Iraq of a long list of food items are likely to emerge in the coming months.

Iraq needs to import about 100,000 to 125,000 tons of dry beans in 2003 to help consumers get close to the per capita supplies they seek. Also, Iraq has a strong demand for imported lentils, chickpeas, and peas. Turkey had been a large supplier of Iraq's imports of lentils and chickpeas during the 1980's and early 1990's. However, as the value of Iraq's currency fell, Turkish traders shifted their exports to other countries where payments were more prompt and less complicated.
Iraqi pulse imports in 2002 included China's delivery of more kidney beans. China exported 21,440 tons of beans directly to Iraq in 2002, which included deliveries in burlap bags at the port of Umm Qasr. The reopening of this port has helped to allow delivery of imported beans into Iraq at a much lower cost than shipment through ports in Jordan or Turkey.

U.S. exports of dry beans to Iraq declined from the peak of 31,951 tons in 1997 to 16,054 tons in 1998. Then political events meant no direct exports of U.S. beans to Iraq in 1999-02. While the political setting seems to be considered a reason Iraq had not bought any beans or U.S. hard red winter wheat in the last four years, it had not prevented Iraqi purchases of U.S. rice and corn. As a customer for 81,000 tons of U.S. corn during 2000/01, Iraq is one of the leading renewed markets for U.S. corn exports in the Middle East. The UN requests for approval of food sales to Iraq were nearly always approved by officials in the U.S. Treasury department.

Some of the gap left by a lack of U.S. dry beans entering Iraq in the time between late 1998 and the spring of 2003, was filled as a result of direct purchases by Iraq from China. Yet, the quantity delivered by China was less than what had been coming from the United States. China's kidney beans may have provided part of the demand for dry beans in the Baghdad and Basra areas. There may not have been a sufficient supply for the imported Chinese beans to provide for the shops in northern Iraq. That is why traders in Mosul and the three Kurdish provinces needed to buy beans from Turkey and Syria.

The transit traders for beans in Turkey apparently sold some beans imported from the United States and China to customers in Iraq. Yet, the quantity may have been only about 5,000 tons in 1999 and 7,000 tons in 2000. By 2002, few U.S. beans were being purchased by Turkish traders for delivery to Iraq, apparently because of the complex currency situation.

Dry weather in 1999 and again in 2000 crippled yields for pulse crops in Iraq. Relatively good rainfall for the 2002 season helped farmers to have higher yields for pulses, and prospects for the current season are good. Yet, it must be remembered that Iraq imported about two-thirds of its supply of pulses during the recent decade.

Iraq's pulse production averaged about 25,000 tons annually during the early 1990's, and may have reached 40,000 tons in 2002. More broad beans for harvest as a green vegetable may be planted in Iraq in 2003.

-Parker is a former USDA market analyst.



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