Dire Syrian harvest forces regime to import

Growing population and three failed harvests force gov't to import for first time in 15 years.

Syria resorted to the international wheat market on Tuesday for the first time in 15 years to compensate for one of its smallest harvests on record.A commodities official told newswire Reuters the harvest would fall to around two million tonnes this year compared with an earlier estimate of three million tonnes and 4.1 million last year. It would be even less than the 2.5 million tonnes produced in 1999.

As a result, the government's cereal division has issued a tender to buy 120,000 tones of soft wheat of any origin.

Drought and unstable weather hit Syria's harvests in the last two years, undermining the country's role as a food and farm commodities player in the Middle East.

Syria touts food security as a major achievement and the agriculture minister told government newspapers this week that Syria's strategic wheat stocks would last until 2010.

But the country's new import needs underline the economic challenges faced by the Baathist government, which has been under sanctions from Washington since 2004 for supporting anti-US groups in the Middle East.

The sanctions, which were expanded this year, do not ban US agricultural exports to Syria.

The tender document specified delivery into Syria's Tartous or Latakia ports on a cost insurance freight basis (CIF) within a month of opening a letter of credit.

Traders said Syria needed to inspire confidence among international suppliers about its procurement process.

"The Syrians have specific regulations that could discourage some from taking part in the tender. There are also questions whether they've solved problems in their silos," a trader said.

"Personally I am not sure I will make an offer unless I am certain there will be no surprises," another international trader said.

A Syrian official said government facilities were ready to receive the new volumes and that bread mix needs will determine if other tenders for soft wheat will be issued.

Syrian domestic consumption of wheat is estimated at 3.2-3.5 million tonnes a year. The government relaxed a few months ago restrictions on importing wheat by the private sector.

Wheat imported through private suppliers still has to be inspected by the government's cereal division, which is also in charge of buying for the state and exporting commodities.

Syria stopped exports of wheat after another weak harvest in 2007 but President Bashar Al-Assad made an exception to export 176,000 tonnes to Egypt in exchange for Egyptian rice and 50,000 tonnes of wheat to both Jordan and Yemen.

The sales to Yemen and Jordan were concluded but the barter deal with Egypt was cancelled, market sources familiar with the deals told Reuters.

Syria also received aid from the Abu Dhabi government of at least 190,000 tonnes of wheat during a visit by Al-Assad to the United Arab Emirates earlier this year. It was part of the Emirates' imports and is expected to be soon diverted to Syria.

The Syrian government also issued a tender on Tuesday to sell 50,000 tonnes of surplus stocks of durum wheat. (Reuters)

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