Syria Taps World Wheat Market as Stocks Run Down

Posted by Michelle Howard March 30, 2015

Weeks after Syria said it had no need for wheat imports, the government plans to import 150,000 tonnes and has introduced ways to conserve grain stocks in signs of the growing strain on food supplies from conflict in the country.

Despite millions of Syrians fleeing the fighting to neighbouring countries with 220,000 people estimated to have been killed, Syrian President Bashar al-Assad's government is grappling with ensuring there is enough grain for all.

Trade sources say Damascus faced challenges importing sufficient stocks as payment problems and fighting have deterred many international firms from trading.

Before the war, Syria kept annual strategic stocks of around 3 million tonnes of wheat. The state-run General Establishment for Cereal Processing and Trade (Hoboob) has declined to give a figure for how much is left.

Hoboob confirmed to Reuters it was seeking 150,000 tonnes of wheat in an import tender that will close on April 13.

The announcement came three weeks after the minister of internal trade and consumer protection Hassan Safiya said an improved wheat harvest in 2015 would translate into self-sufficiency.

"We need to import to bolster our strategic stocks and have started with this tender to test the market," a Hoboob source told Reuters.

Hoboob said the government was currently relying on its 2014 local harvest and drawing on its strategic reserves to keep its bread subsidy programme going.

"We will evaluate how much we need to import when we start procuring the 2015 crop," the Hoboob source said.

In an attempt to save money on bread subsidies, the government also changed the amount flour it uses in bread earlier this month, which some ordinary Syrians say has meant lower quality loafs.

This follows a move in January by the state to raise the price of bread by 40 percent. A bundle of bread weighing more than 1 kg now sells for 35 Syrian lira (16 cents).

"Bread subsidies have frequently been described by officials as a 'red line' by Syrian regime officials and the decision to redraw the line highlights that the regime is struggling," Torbjorn Soltvedt of risk consultancy Verisk Maplecroft said.

"The price hike has the potential to reduce support for the regime which has actively used the supply of bread to shore up support in areas under its control."

The government, which has survived four years of crisis, says the impact of the bread prices rise has been absorbed by a new monthly allowance of 4,000 Syrian liras for all recipients of state salaries, including civil servants and retirees.

The change in the flour extraction rate means more bran from the wheat is used, giving the bread a darker colour. The government says this is healthier, but some Syrians complain that bread quality has been compromised.

"This is bread first of all is healthy and secondly it alleviates part of the burden of supplies on the government," a Syrian official said.

Hoboob said in October Syria had enough wheat to satisfy consumption until mid-2015 from previous imports and its local harvest, but that imports of 1 million tonnes were necessary to boost its strategic reserve.

Syria's wheat harvest stood at around 1.8 million tonnes in 2014, the worst in 25 years due to security and drought.

Of that total, Hoboob only managed to procure over half a million tonnes of wheat from Syrian farmers. Over 300,000 tonnes of that is in wheat silos in Hasaka, on the border with Islamic State held areas in Iraq.

Initial estimates from agronomists and other experts put the 2015 crop on course for 2.5 million to 2.8 million tonnes.

Industry sources say Syrian importers are only managing to bring in small cargoes of wheat and other cereals, which are shipped from Egyptian ports to Tartous and Latakia. Food cargoes have also been routed through Lebanon, which also remain small.

A ship industry source active in Syria's food trade said shipments remained small with a maximum cargo size of 15,000 to 20,000 tonnes compared with cargo loads of over 60,000 tonnes imported in previous years when conditions were more stable. Freight orders seen by Reuters confirmed the smaller loads.