UPDATE 2-Iraq's farm sector crumbling as drought bites

BAGHDAD, Oct 23 (Reuters) - A severe drought will force Iraq to import 40 percent more wheat in 2008/09, the agriculture minister said, even as the country struggles to revive a sector crippled by decades of neglect and decay.
"In 2007, average rainfall was just 40 percent of the normal level in Iraq, falling more than half and severely affecting crop production," Agriculture Minister Ali al-Bahadli told Reuters in an interview.
Ministry figures provided to Reuters on Thursday showed that Iraq expects to import 2.8 million tonnes of wheat in 2008/09, up 40 percent from the previous year. Wheat production is expected to drop 27 percent to 1.6 million tonnes.
Bahadli said local wheat output was "still below where we would like it to be" as Iraq feels the effects of a drought in the Middle East and Central Asia, which the U.S. Agriculture Department (USDA) says is one of the worst in recent history.
The USDA expects the region's wheat output to fall by at least 22 percent in 2008/09, and sees Iraq's wheat production dropping to 1.3 million tonnes.
The predictions are more bad news for Iraqi farmers, struggling to cope with a chronic scarcity of water, electricity and fuel while they seek to shake the effects of decades of isolation under former leader Saddam Hussein and five years of war.
In the 1950s through 1970s, Iraq exported dates, wheat and barley. But its irrigation systems have since fallen into disrepair, certain crops and varieties were dictated by government planners and production declined.
Today agriculture in Iraq, once known as the 'fertile crescent,' is the second-largest sector of the economy after oil and the single largest employer. Yet it accounts for just 8 percent of GDP, a distant second to Iraq's giant oil sector.
STAUNCHING THE LOSS
Bahadli said the U.S.-backed government of Prime Minister Nuri al-Maliki had allocated some $200 million to help farmers cope with the drought.
He warned that without effective measures, Iraq's agriculture sector was in danger of deterioration and livestock owners might be forced to sell animals in the country or smuggle them into neighbouring countries for sale there.
But it remains to be seen whether the government will make assistance accessible enough to farmers, many of whom do not own the land they work, and encourage them to plant anew.
"The primarily rain-fed grain regions in northern Iraq were described as an agricultural disaster this year, with wheat production falling 80-98 percent from normal levels," USDA said in a report last month.
Short water supplies are not a new problem for arid Iraq. Officials often complain that water flowing through the Tigris and Euphrates watershed area is reduced due to restrictions from upstream reservoirs in Turkey, Syria and Iran.
Bahadli said Iraq was working to end its reliance on flood irrigation, which can waste precious water and increase soil salinity, by increasing use of drip and spray techniques.
But it will need to rely on imports for the foreseeable future. Iraq, a major buyer of U.S. wheat since 2003, has begun to branch out in its purchases, raising questions of whether it will keep its spot among top U.S. customers.
Bahadli said Iraq had also set aside $132 million to buy, initially, 200,000 tonnes of barley to be used for animal feed and other purposes. Barley production is expected to drop by 60 percent in the 2008/09 season to 0.42 million tonnes, according to a U.S. report in May.
Guardian