Iraq food prices analysis
Source: Food and Agriculture Organization of the United Nations (FAO)
Date: 13 Aug 2009
Executive summary
Food prices in the local Iraqi markets have risen at a steeper rate than global food prices. Iraqi food prices doubled between 2004 and 2008, while global food prices rose by 73%. The steeper rise in domestic prices was influenced by the rise in international food prices and an 800% rise in domestic fuel and light prices during the same period. It is possible that a future decrease in fuel costs would not lead to a proportionate decline in food prices.
The rise in food prices has contributed to the increase in the Iraqi poverty rate. The resulting changes in spending and acquisition patterns have had a negative impact on nutrition. The number of Iraqis living in "extreme poverty" rose from 15% to 18% between 2005 and 2007. In general, acquisition of most major food items decreased during this period, due to the inability of the population to maintain previous levels of acquisition.
The substitution of increasingly expensive red and white meat with beans and lentils led to a 20% drop in overall protein acquisition between 2005 and 2007.
The highly subsidized distribution of largely imported food through the Public Distribution System (PDS) places a particular strain on the fiscal budget. The rise in the government's food import bill dwarfs the rise in revenue from marginal food exports and is a drain on foreign currency reserves. The sharp drop in oil revenues means that the large food import bill will continue to place pressure on the fiscal budget. While the Iraqi government has made efforts to raise the value of the Iraqi Dinar against the US dollar in order to make food imports cheaper, this will also make Iraqi food exports less competitive.
The PDS is only able to delay the impact of global price rises on the general population for up to twelve months for commodities distributed through the PDS. For those commodities not distributed through the PDS, the impact is almost immediate.
This has major policy implications for reform of the PDS, which needs to be targeted in order to relieve the strain on the fiscal budget, while also ensuring that food assistance is provided for Iraq's most vulnerable. Reducing the supply of low-cost food to the retail market would make agricultural trade more accessible to the private sector.
The food price rises resulting from the reduction in supply would need to be counteracted by more sustainable economic measures to protect Iraq's poorest consumers and farmers.
Here's the 10 page PDF on it:
http://www.reliefweb.int/rw/rwb.nsf/db900sid/EGUA-7UVQUZ/$File/full_report.pdf
Source: Food and Agriculture Organization of the United Nations (FAO)
Date: 13 Aug 2009
Executive summary
Food prices in the local Iraqi markets have risen at a steeper rate than global food prices. Iraqi food prices doubled between 2004 and 2008, while global food prices rose by 73%. The steeper rise in domestic prices was influenced by the rise in international food prices and an 800% rise in domestic fuel and light prices during the same period. It is possible that a future decrease in fuel costs would not lead to a proportionate decline in food prices.
The rise in food prices has contributed to the increase in the Iraqi poverty rate. The resulting changes in spending and acquisition patterns have had a negative impact on nutrition. The number of Iraqis living in "extreme poverty" rose from 15% to 18% between 2005 and 2007. In general, acquisition of most major food items decreased during this period, due to the inability of the population to maintain previous levels of acquisition.
The substitution of increasingly expensive red and white meat with beans and lentils led to a 20% drop in overall protein acquisition between 2005 and 2007.
The highly subsidized distribution of largely imported food through the Public Distribution System (PDS) places a particular strain on the fiscal budget. The rise in the government's food import bill dwarfs the rise in revenue from marginal food exports and is a drain on foreign currency reserves. The sharp drop in oil revenues means that the large food import bill will continue to place pressure on the fiscal budget. While the Iraqi government has made efforts to raise the value of the Iraqi Dinar against the US dollar in order to make food imports cheaper, this will also make Iraqi food exports less competitive.
The PDS is only able to delay the impact of global price rises on the general population for up to twelve months for commodities distributed through the PDS. For those commodities not distributed through the PDS, the impact is almost immediate.
This has major policy implications for reform of the PDS, which needs to be targeted in order to relieve the strain on the fiscal budget, while also ensuring that food assistance is provided for Iraq's most vulnerable. Reducing the supply of low-cost food to the retail market would make agricultural trade more accessible to the private sector.
The food price rises resulting from the reduction in supply would need to be counteracted by more sustainable economic measures to protect Iraq's poorest consumers and farmers.
Here's the 10 page PDF on it:
http://www.reliefweb.int/rw/rwb.nsf/db900sid/EGUA-7UVQUZ/$File/full_report.pdf