Required Report - public distribution

**Date:** 2/15/2004

**GAIN Report Number:** SY4001

SY4001

**Syria**

**Grain and Feed**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Asif J. Chaudhry

U.S. Embassy

**Prepared by:**

Jaber Dalati

**Report Highlights:**

The 2003 wheat crop is estimated to be good crop because of good
rainfall. Wheat stocks hit a record and are forecast to decrease after
the GOS decided to boost exports of wheat at world market prices,
significantly below the local purchase prices from the farmers. The
barley crop is estimated to be good, about 1.1 million tons. The private
sector is importing significant quantities of barley and the GOS is
exporting surplus quantities of barley. Corn imports are increasing and
may hit a record due to the developing glucose and starch industry.
Egypt has become the major rice supplier to Syria

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Damascus \[SY1\]

\[SY\]

###### Table of Contents

[Wheat 3](#wheat)

[Production 3](#production)

[Consumption 3](#consumption)

[Trade 4](#trade)

[Stocks 5](#stocks)

[Policy 5](#policy)

[Marketing 5](#marketing)

[Barley 6](#barley)

[Production 6](#production-1)

[Consumption 6](#consumption-1)

[Trade 7](#trade-1)

[Stocks 7](#stocks-1)

[Marketing 8](#marketing-1)

[Corn 8](#corn)

[Production 8](#production-2)

[Consumption 8](#consumption-2)

[Trade 9](#trade-2)

[Marketing 9](#marketing-2)

[Rice, Milled 10](#rice-milled)

[Production 10](#production-3)

[Consumption 10](#consumption-3)

[Trade 11](#trade-3)

[Marketing 11](#marketing-3)

#   {#section .unnumbered}

# Wheat

## Production

\-![](media/image2.wmf)

Wheat production was very good due to ample rainfall during the growing
season. The crop could have been larger, except for a cold spell
followed by a heat spell during the grain formation stage. The soil
moisture content was very good during the grain filling stage. The
General Establishment for Cereal Processing and Trade (HOBOOB) estimates
the crop at 4.5 -- 4.7 million MT. Harvested areas were reported by the
Ministry of Agriculture and Agrarian Reform at 1.7 million hectares.
HOBOOB bought 3.6 million MT from the farmers, 4 percent below purchases
from the previous crop. For the 2004/2005 crop, rains through January
2004 were very good in general. The final crop size will be determined
not by the planted areas (1.7 million hectares according to the Ministry
of Agriculture), but by the rainfall that will enable the grains to fill
up in March through early May and by the weather conditions that will
prevail during the last part of the growing season. Based on similar
rainfall years, post's preliminary estimate of 4.7 million MT may be
reasonable.

## Consumption

Wheat is mainly used for milling into flour for bread production.
Smaller quantities are used for bulgur production and poor quality wheat
is used for animal feeding. Approximately 250,000 MT of wheat are
expected to be used for planting the next season's crop. Bread
consumption is increasing at about three percent, in line with the
increase in Syria's population growth. Available milling capacity
greatly exceeds the milling requirement for the country.

## Trade

![](media/image3.wmf)

![](media/image4.wmf)

Due to the change in policy of keeping a huge stock level to avoid
losses in exports at international market prices significantly below the
prices paid to the Syrian farmers, Syrian wheat exports exceeded the
traditional level of about 500,000 MT per year in CY 2003 and will
increase further in 2004, mainly to North African countries. In October
2003, Syria contracted with Egypt to barter 200,000 MT of wheat for
Egyptian rice as well as other commodities in late 2003 through early
2004. Syria also exported 200,000 MT of wheat to Iraq in CY 2003 and has
two other contracts, 200,000 MT each to be executed in 2004. HOBOOB also
contracted to export 300,000 MT to Algeria as well as other smaller
quantities to Tunisia, Yemen, France, Germany, and Italy. As a result,
HOBOOB exports are expected to exceed 1.3 million tons from the
2003/2004 crop. HOBOOB is trying to reduce it stocks to a reasonable
level to reduce post-harvest losses and storage costs.

On the other hand, the private sector imports some quantities of wheat,
usually from France and Turkey, due to the relatively cheaper
international wheat prices as compared to the local wheat prices. Syria
also imports limited quantities of flour, usually from Denmark and
Australia.

It should be noted that trade data are published very late and on
calendar year basis only. Thus, trade matrix tables in this report are
based on calendar year basis.

## Stocks

Wheat stocks are mainly kept by HOBOOB which currently holds stocks (as
a national reserve) around 4 MMT, exceeding Syria's annual milling
requirement. The level has been increasing since the late 1980s when it
was very low. Since then, the stock level has continued to increase
because Syria's wheat crop exceeded the local requirement for a number
of years. The stocks should be lowered to reduce post harvest losses and
reduce storage costs. This appears to be achieved through increasing
wheat exports sharply starting in 2003. It may take a few years to
reduce the stocks level to normal level. A stock level of one-year
consumption requirement will be maintained in the future to eliminate
the need for imports in case of a bad crop year. These stocks are kept
in concrete silos, metal silos, as well as stored in open storage
facilities.

## Policy

The decision to reduce stocks has been finally made. This will increase
the cost paid by HOBOOB to export wheat at international prices, about
30 percent below the price HOBOOB is paying the farmers. The decision to
export soft wheat is also a change in policy since Syria used to export
durum wheat only in the past. The presence of sufficient quantities of
soft wheat has lead to this decision.

Customs duties on wheat imports are set at 1 percent. An import permit
from the Ministry of Economy and Trade is required. This is obtained
after the approval of the Ministry of Agriculture and Agrarian Reform.

Syria will continue to rely on local wheat production and export any
surplus quantities after keeping a national reserve for about one year.
Permitting imports of small quantities of wheat and flour for further
processing is expected to continue in the future. According to post
sources, the GOS plans to expand its concrete silo storage capacity by
about 1 MMT during the coming five years. The GOS expects that these
silos will be utilized to replace storage of wheat in jute bags in open
storage facilities and will reduce damage to the stored grain from
insects, rodents, and fungi. Concrete silos are owned and managed by the
General Company for Silos, under the Ministry of Trade and are mainly
used for storing wheat. Very small quantities of barley and corn are
stored in concrete silos. The private sector is not permitted to
establish silos. Feed mills and soybean crushing facilities, established
under the Investment Law, are permitted to establish metal silos for
their use.

## Marketing

Syria is self-sufficient in wheat production. Wheat and wheat flour
imports by the private sector will be limited to relatively small
quantities for pasta or for milling and export of the produced flour.

# Barley

## Production

![](media/image5.wmf)

Barley production is 97-99 percent rainfed. The 2003 barley crop is
estimated at 1.1 million metric tons produced from 1.4 million hectares.
Syria usually produces black barley, but recently has started to plant
white barley. HOBOOB bought 136,500 MT of barley from the local crop, 41
percent of the previous year's purchases.

## Consumption

Barley is mainly used to feed ruminant animals, including sheep and
cattle. It can be used on very limited scale in the feed ration for
poultry layers. Sheep are the major consumers of barley in Syria. The
demand fluctuates from one year to another depending on the availability
of grass for sheep grazing. Demand increases during drought periods and
during the winter months due to the lack of grass at that time.

## Trade

![](media/image6.wmf)

![](media/image7.wmf)

The private sector imported large quantities of barley in 2003, mainly
from Europe due to cheaper prices in the international market as
compared to the local barley that HOBOOB is buying for 7,000 Syrian
pounds (about USD 136) per metric ton. According to press reports, Syria
contracted to export large quantities of barley to Jordan, Cyprus,
Egypt, Algeria, and Germany in 2003.

Customs duties on barley imports are set at 1 percent. An import permit
from the Ministry of Economy and Trade is required, which can be
obtained after receiving approval from the Ministry of Agriculture and
Agrarian Reform.

## Stocks

HOBOOB usually keeps strategic stocks sufficient for the winter months
when there is no grass for sheep to feed on, and surplus stocks are
usually exported to Jordan, the main market for Syrian barley. With
record exports in 2003, barley stocks held by HOBOOB must have been
larger than previously estimated. However, with record exports in 2003,
they are expected to go back to a reasonable level. This will reduce
post harvest losses and storage costs for HOBOOB.

## Marketing 

Syrian importers rely on European sources for barley, mainly France,
Ukraine, Russia, and Turkey. This is mainly due to the prevailing cheap
price as well as low freight cost for small quantities (about 5,000 MT
per shipment) from such origins. Price considerations have prevented
Syrian importers from importing barley from the United States.

# Corn

## Production 

![](media/image8.wmf)

Corn production is stable and is estimated at 125,000 MT produced from
50,000 hectares in 2003/2004. Most of the planted corn is hybrid
short‑season corn planted after wheat in irrigated areas. Locally
produced corn has a very high moisture content, sometimes close to 30
percent and has to be dehydrated to bring the moisture content down to
14 percent before the corn can be stored. The procurement price for 14
percent moisture corn is set at 7,000 Syrian pounds, about USD 136, per
MT, above the current international corn prices on FOB basis. The
General Organization for Fodder (GOF) purchased about 60,000 MT from the
local 2003/2004 crop. The 2004/2005 crop is forecast at the same level.

## Consumption

A small portion of the local crop is used for human consumption and is
sold as \"corn on the cob\". Corn is also used for the production of
starch or sown as seed. Most corn, however, is used for animal feed, in
particular for poultry. Poultry production is increasing in general.
However, it fluctuates from season to season due to the lack of proper
slaughter, cooling, packaging, and storage facilities. Consumption of
corn is increasing in Syria, which requires over 1.2 MMT during the
current marketing season, mainly for the poultry sector as well as the
developing starch and glucose industry. This industry is developing
fast. One of the two starch manufacturers has constructed a new plant
and will boost his annual requirement for corn by about 300,000 MT by
mid 2004. This producer is exporting starch and glucose to Jordan on
large scale and is exporting starch to Egypt to be processed further
into glucose at a factory owned by the same family. The starch and
glucose plant owners prefer corn from the United States to Argentinean
corn because it gives a 6 percent higher yield of starch after
processing.

## Trade

![](media/image9.wmf)

According to post sources, imports are expected to reach a record,
exceeding 1 MMT during the MY 2003/2004, mainly from the United States,
Argentina, and Eastern Europe. Small quantities from Bulgaria and
Ukraine are imported in small shiploads of about 5000 MT and have
problems with high moisture content, high breakage, and sometimes insect
problems. Corn imports are forecast to remain high and continue to grow,
because expansion in domestic production is hindered by limited water
resources. Imports in MY 2004/2005 may increase further to exceed 1.2
million MT due to the development of the glucose and starch industry.
This industry is not intended only for the local market but also aims at
neighboring markets in the region. Improved trade relationship with Iraq
will facilitate exports of pelleted feed to Iraq and hence increase the
demand for imported corn, since local production is limited.

Customs duties on corn imports are set at 1 percent. An import permit
from the Ministry of Economy and Trade is required. This is obtained
after the approval of the Ministry of Agriculture and Agrarian Reform.

## Marketing

The United States is the most important supplier of corn to Syria and is
forecast to remain so as long as its prices are competitive with the
other suppliers, Argentina, and Eastern Europe. Eastern European corn
does not constitute much of a threat to U.S. corn exports due to quality
problems. However, if Argentinean corn prices become more competitive
with U.S. corn prices, as was the case for sometime during 2003, then
Argentinean corn could start to replace U.S. corn in the Syrian market.

Corn is the number one export item from the United States to Syria (with
a 70 -- 90 percent market share) and has the best potential for growth
in volume for the American exporters.

# Rice, Milled 

## Production

Rice is not produced in Syria. All the country's requirements are met
through imports.

![](media/image10.wmf)

## Consumption

In Syria, rice consumption is estimated to be increasing in general due
to the increase in population and the rural-urban migration, which
encourages the consumer to shift from bulgur to rice. However,
increasing rice consumption is affected by the low purchasing power of
the average Syrian. Each Syrian is entitled to 0.75 kilogram of rice per
month at 10 SP (19 cents) per kilogram under the GOS ration card system.
Additional quantities can be bought at the free market prices.

##  

## Trade

![](media/image11.wmf)

Since Syria does not plan to produce rice in the future, all rice
requirements have to be imported. The 2002 Syrian Foreign Trade
Statistics reported rice imports at 180,000 MT. Syrian traders estimate
imports of 185,000 and 190,000 MT in CY 2003 and 2004 respectively.
Egypt, Thailand, and to a much less extent Australia, Italy, the United
States, and Spain are the major suppliers.

Syria bartered 100,000 MT of Durum wheat for Egyptian rice and other
commodities in 2003. The total value of the contract is USD 19 million.
Both governments have also agreed to a similar contract involving 24,000
MT of Egyptian rice in 2004.

## Marketing 

In 1997 and 2001, the private sector imported large quantities of rice
(over 20,000 MT per year) from the United States, when prices were
competitive. With rice prices more attractive from other origins, mainly
Egypt whose rice is similar in characteristics to the American medium
grain rice, the Syrian importer is diverting to Egyptian suppliers.
Another reason for the attractiveness of Egyptian rice is the low
freight cost and the ability to ship very small quantities, about 40 ‑
100 MT per shipment, in a very short time. Syrian consumers generally
prefer medium grain rice from the United States, Australia, Italy, and
Egypt to long grain rice from Thailand. However, the limited purchasing
power of the average Syrian may limit rice consumption and may direct
his choice to cheaper sources of rice. As a result, higher quality rice
such as parboiled rice has a limited market in Syria.