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The last stands of wheat remain before being harvested by the Sawyer family near Acme, Alta., in September, 2009. (TODD KOROL/REUTERS)
The last stands of wheat remain before being harvested by the Sawyer family near Acme, Alta., in September, 2009. (TODD KOROL/REUTERS)

Food

From the Prairies to Baghdad: Iraq becomes Canada's second biggest wheat buyer Add to ...

Canada sold more wheat to Iraq last year than any other country except the United States, a tantalizing trade relationship that has piqued Ottawa's interest.

Canadian wheat exports to Iraq jumped almost 450 per cent in 2009, when the Middle Eastern country bought 1.4 million metric tonnes of the Canuck grain. By comparison, Canada shipped 1.7 million tonnes of wheat to the U.S., its biggest trading partner.

Last year's sales to Iraq made up almost 10 per cent of Canada's overall wheat exports.

Agriculture Minister Gerry Ritz is now being nudged to cultivate this Iraqi business partnership.

"Iraq is a growing market with a lot of opportunities in the agriculture sector," said internal briefing documents prepared for Mr. Ritz's office last spring and obtained by The Canadian Press under the Access to Information Act.

"There is a need to increase industry awareness of this market. Our main competitor is the United States."

Before last year's increase, Canada shipped 845,694 metric tonnes of wheat to Iraq in 2007 and 259,610 tonnes in 2008.

Canada's 2009 wheat exports to Iraq were worth over $428-million, a 264 per cent rise from the previous year.

After Saudi Arabia, Iraq is Canada's second-largest export market in the Middle East and North Africa.

The briefing notes, prepared at the request of Mr. Ritz's office, indicate that last year's spike in exports received a boost from factors such as Canada's bigger harvest and Iraq's yield drop after a second year of drought.

It didn't hurt that American wheat exports to Iraq plummeted from around 2 million metric tonnes in 2008 to zero last year, a slide the U.S. Department of Agriculture has blamed on market conditions.

The Agriculture Canada briefing documents included USDA reports detailing the Iraqi market.

One of the USDA reports predicts a rebound in American wheat exports to Iraq in 2010 and beyond.

"Significant natural constraints on Iraqi agricultural production potential, strong population growth, and future increases in oil revenue make Iraq a potentially lucrative market," the USDA report says.

A spokesman for Agriculture Canada said trade opportunities with Iraq go beyond wheat, even though it made up 98 per cent of Canadian exports to the country in 2009.

"Iraq relies heavily on imports, so there are significant opportunities in particular for wheat, pulses, canola, soya, wheat flour, and so on," he wrote in an email.

But the Canadian Wheat Board, which sold a majority of the exports to Iraq, attributed last year's spike more to a perfect storm of factors than the emergence of a promising market.

The high Euro helped boost Canadian exports, as did the country's abundance of the medium-grade quality wheat that Iraq was seeking, board spokesman John Lyons said.

"Those aren't factors that are going to be present every year - that was more being able to capitalize on the situation as it arose," Mr. Lyons said.

"It was a pretty dramatic increase in that year, so I can see why it would jump out."

Canada sold 350,404 tonnes of wheat to Iraq in 2000 - when Saddam Hussein was still in power - but exports ceased soon after.

They didn't resume until 2006, three years after the start of the U.S.-led invasion, when they reached 600,000 tonnes.

"Overall demand may be increasing slightly, but our participation in that market really varies year-to-year, really depending on market opportunities," Mr. Lyons said.

"In the future, I think we're probably looking at the same sort of situation with Iraq."

Mr. Lyons indicated that Iraq's volatility doesn't affect whether Canada peddles its wheat there or adjusts its price.

But the briefing notes warn of the need for enhanced safety precautions when dealing with Iraq.

"Security and stability remain the most important issues in Iraq for foreign investments," the documents say.

In Canada, farmers just want to be sure the wheat board is finding new markets - it doesn't matter which ones.

"Really, we're indifferent as to where our wheat goes," said Blair Rutter, director of the Western Canadian Wheat Growers Association, a group that represents producers' interests on policy issues.

"Whoever's the highest-paying and pays their bills, that's what you're looking for."

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