Specialty Dairy Products
Specialty Dairy Products
Business Model Description
Establish tech-intensive dairy farming plants, utilizing technologies such as rotary parlour systems that improve cow comfort, or modernize existing dairy processing plants with state-of the art handling, storage and processing equipment, energy-efficient refrigeration, and merchandise management system (MMS). The product range includes sterilized quality milk, curd (from the Mosul buffalo milk), cream (including the Iraqi specialty Al-Qimar), and yoghurt for B2G (such as through national school feeding programs), B2B (notably with retailers) and B2C trade. Investments could be made in national investment zones and Mosul, Ninevah. Retail sector may invest in dairy farming and production to overcome issues associated with the fragmented value chain.
Expected Impact
Improve value added from dairy value chain, contributing to economic diversification, reconstruction efforts and decent work opportunities in conflict-affected areas in Iraq.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Iraq: Northwestern Iraq and Anbar
- Iraq: Kurdistan Region of Iraq
Sector Classification
Food and Beverage
Development need
The climate change-induced weather extremes, droughts, decreasing soil fertility, and increased prevalence of sand and dust storms hinder agricultural production in Iraq. Around 65% of wheat and 90% of rice consumption are met with imports. Iraq would require an additional financing of about USD 41 billion, between 2022-2030, for achieving the SDG 2, Zero Hunger (1, 2, 3).
Policy priority
The National Development Plan (NDP) 2018-2022 aims to achieve sustainable food security, and secure annual demand for water for sustainable uses, including agricultural purposes, in the fields. It sets the objective of increasing the GDP contribution of the sector to more than 5%, achieving a sector growth rate of 8.4% during the NDP period (5).
Gender inequalities and marginalization issues
In Iraq, the poorest 20% of the population has about 10.5 persons, and the poor is disproportionately impacted by the food inflation. Benefits from the use of public goods for agricultural production such as irrigation canals are not equally distributed, as in long canal structures, amid limited water availability, upstream farms could only access adequate amount of water (7, 8).
Investment opportunities introduction
The government invested about one billion dollars during the years 2018-2022, by focusing on supporting production inputs (fertilizers and seeds), final production (subsidizing the prices of cereal crops), as well as attempts to develop irrigation methods that respond to water scarcity (10).
Key bottlenecks introduction
Decades of conflicts and sanctions had a major impact on food production in Iraq. Unstable prices, low water supplies, and lack of security contributed to the inhibited growth of the agricultural sector (6).
Food and Agriculture
Development need
The agricultural land in Iraq is underutilized, as only around 22% of land suitable for agriculture is cultivated. The agriculture production is characterized by prevalence of old farming techniques such as flood irrigation, poor management of post-harvest activities and inadequate large-scale farms. Exacerbated pressure on water supply in Iraq affects irrigation systems (3, 4).
Policy priority
In its Vision 2030, Iraq highlights the need to focus on supporting the producers of crops which are connected to food security, modernize the agricultural sector's infrastructure, adopt technological uses in irrigation and reclamation as well as secure strategic reserves of the staple crops (6).
Gender inequalities and marginalization issues
Women make up 53% of the agricultural workforce but are typically responsible for dairy production, while men are responsible for meat production. The increasing use of technology has resulted in lower participation of women in agriculture. However, there is an emphasis on the potential role of educated women in a capital-intensive agricultural system (4).
Investment opportunities introduction
Increasing productivity and efficiency, expanding market channels, promoting value addition and processing, encouraging sustainable farming practices, strengthening capacity of local actors, exploring agricultural tourism, and enhancing access to finance and credit for smallholders and agribusinesses (9).
Key bottlenecks introduction
Limited access to finance and credit facilities, weak market linkages and information asymmetry, limited access to inputs and technology, poor infrastructure and services, and political instability are the main deterrents to a conducive business environment in Iraq’s agriculture sector, undermining food security and the sectoral growth and development (11).
Agricultural Products
Pipeline Opportunity
Specialty Dairy Products
Establish tech-intensive dairy farming plants, utilizing technologies such as rotary parlour systems that improve cow comfort, or modernize existing dairy processing plants with state-of the art handling, storage and processing equipment, energy-efficient refrigeration, and merchandise management system (MMS). The product range includes sterilized quality milk, curd (from the Mosul buffalo milk), cream (including the Iraqi specialty Al-Qimar), and yoghurt for B2G (such as through national school feeding programs), B2B (notably with retailers) and B2C trade. Investments could be made in national investment zones and Mosul, Ninevah. Retail sector may invest in dairy farming and production to overcome issues associated with the fragmented value chain.
Business Case
Market Size and Environment
> USD 1 billion
In Iraq, local production of the dairy products meets only 10% of the domestic demand (12).
In 2022, the untapped export opportunity from new dairy products in Iraq accounted for a potential value of USD 2.4 billion (13).
Indicative Return
> 25%
Modernization of dairy value chain with the production of specialty products at scale is expected to generate more than 25% ROI (14).
Investment Timeframe
Medium Term (5–10 years)
Investing in dairy products is expected to generate positive returns after five years, given the capital-intensive nature of the investment and associated costs of securing hygiene standards and conducting livestock surveys (15).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - High Level of Competition
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Iraq’s severe economic fragility is exacerbated by water loss which accounted to 60% in 2021, impacting the loss of agricultural heritage, for instance, in rice production, notably Amber rice variety of Al-Najaf. Continuous supply of traditional dairy products faces the similar threat (33, 34).
Local dairy production has insufficient cooling capacities and lacks hygienic handling facilities for milk. Additionally, the machinery is outdated, so power supply shortage exacerbates refrigeration issue (12).
Iraq's livestock population significantly decreased as a result of imposed embargo on animal feed and vaccines. In 1964, the animal population was over 13 million animal units, while in 2008, only 12 million animal units were recorded (12).
Gender & Marginalisation
Conflict and increase in feed and input prices disrupted the once nation-scale agricultural supplies from Al-Anbar, Ninevah, and Salah ad-Din governorates (12).
Women make up 53% of the agricultural workforce in dairy production, so technological development in the sector significantly reduce job opportunities (4).
Food inflation disproportionally affects the poor, internally displaced persons, returnees. In Iraq, the poorest 20% of the population typically have large families, averaging around 10.5 people per family. Additionally, shared resources such as irrigation canals are distributed unevenly (7, 8).
Expected Development Outcome
Manufacturing investments such as tech-intensive specialty dairy production may streamline post-conflict reconstruction in conflict-affected governorates, including Ninevah that had strong agro-business production capabilities prior to the conflict, having side benefits on the agricultural heritage.
Specialty dairy products produced in state-of-the-art facilities with rotary parlour systems, improved storage and processing equipment contribute to animal welfare as well as manufacturing capacity in Iraq.
Specialty dairy products with high-technology facilities help meet the hygienic and refrigeration standards, as well as reduce the impact of power supply shortages on machinery.
Gender & Marginalisation
Specialty dairy products improve the access of poorer communities to the domestically produced milk and dairy via public distribution system.
Tech-intensive dairy farms can contribute to the increased employment of educated women (4).
Primary SDGs addressed
2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)
2.3.2 Average income of small-scale food producers, by sex and indigenous status
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
In 2020, there were approximately 920,000 food-insecure Iraqis (17).
In 2020, the average monthly income for farmers in Basra surveyed by the Norwegian Refugee Council (NRC) was only IQD 280,000 or USD 191 (18).
About 5 million ha are currently used for agricultural production (20).
In its Vision 2030, Iraq aims to achieve 0% of food unsecured population by 2030 (6).
N/A
Iraq has approximately 9.5 million ha of suitable for agriculture production (20).
9.2.1 Manufacturing value added as a proportion of GDP and per capita
In 2021, Iraq had a 0.055 score in the share of manufacturing value added in GDP index (compared to world average of 0.306) (32).
The National Development Plan, 2018-2022 sets the highest sector targeted growth rate to manufacturing (10.5%) (5).
16.1.2 Conflict-related deaths per 100,000 population, by sex, age and cause
299 in 2019 and 113 in 2020 (31).
SDG 16 is one of the five priority SDGs of the Government of Iraq. Reducing violence requires mainly non-financial interventions, but as a post-conflict society Iraq is expected to require USD 30 billion for achieving SDG 16 (1).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Outcome Risks
Poor management of animal waste can have detrimental effects on the environment, leading to the release of significant amounts of methane.
Investments in agricultural activities in Iraq may aggravate the expansion of informal economy unless workers are formally registered.
Impact Risks
If farmers struggle to sell their outputs directly to large chain supermarkets due to high requirements and standards of such stores, the impact of the IOA on local producers will be limited (22).
Insufficient food safety and quality control across the value chain may harm animal and human health, limiting the impact of the IOA.
Impact Classification
What
Specialty dairy products increases the availability of domestically produced dairy products, improve production quality, replacing imported goods and boosting economy.
Who
Livestock farmers, consumers, youth and women, as well as agricultural companies benefit from new economic opportunities in the dairy production sector.
Risk
Inability of farmers to gain access to large chain supermarkets as well as insufficient food safety and quality control across the value chain can decrease the impact of the business model.
Contribution
Specialty dairy products improve availability and quality of domestically produced dairy products, that is otherwise replaced by imports.
How Much
The IOA contributes to achieving 8.4% growth in the agricultural sector. More than 170,000 jobs could be created by 2030 with a growth rate of 3% in agriculture production (5, 24).
Impact Thesis
Improve value added from dairy value chain, contributing to economic diversification, reconstruction efforts and decent work opportunities in conflict-affected areas in Iraq.
Enabling Environment
Policy Environment
Vision 2030: is a comprehensive sustainable, and green development roadmap. The key areas of focus in agricultural sector are supporting the producers of the crops which are connected to food security, improve the farmers' access to the final goods and supply markets (6).
National Development Plan, 2018-2022: sets an objective to achieve sustainable food security, increasing the agricultural sector share in GDP from 4.5% in 2015 to 5.2% in 2022, achieving growth in the agricultural sector (5).
National Nutrition Strategy 2012–2021: defines a comprehensive framework for improving health and nutrition. The strategy ensures safe food availability and provision of food security for all (23).
Financial Environment
The three-year federal budget (2023-2025) repurposes Agricultural Loan Fund for Farmers and Small Farmers, established in 2009 and attached to the Ministry of Agriculture instead of the Ministry of Finance, facilitating the launch of soft loans to support farmers and small farmers (28).
Fiscal incentives: Investment projects are eligible for tax exemptions up to 15 years, outlined by the Legal Guide to Investment in Iraq by the National Investment Commission (35).
Other incentives: Government of Iraq (GoI) plans to form smart green cities in Mosul, Diwaniyah, and Thi-Qar to ensure food security and support private sector initiatives to build agricultural cities (29).
Regulatory Environment
Law No.2 on the Emergency Support for Food Security and Development, 2022: aims to transfer public funds (USD 17.14 billion) to meet the urgent needs of Iraqis for food security, particularly in staple food supplies, alleviating poverty, and achieving financial stability (25).
Law No. 46 Agricultural Materials Handling, 2012: organizes trade for agricultural materials, import control, sale of agricultural materials; increasing farm income by encouraging the cultivation of seeds and the use of appropriate fertilizer (26).
Animal Health Act No. 32, 2013: establishes to maintain health and safety of animal wealth; develop the livestock sector and upgrade its production, provide a healthful animal food for humans free of pathogens; and encourage investors in the livestock sector in support of the national economy (27).
Marketplace Participants
Private Sector
Farmers Associations, dairy factories in Mosul, Sofy Group, Green Eastland, Al Oweis, Noor Al-Kafeel, Green Iraq, Zakko Group, Vano Group, Al Awrad, Bakhteyare, Debbane Saikali Group, Nawras Tarım Ürünleri Tic. Ltd. Şti.
Government
Ministry of Agriculture, Ministry of Planning, Ministry of Health and Environment, Ministry of Higher Education and Scientific Research, Ministry of Trade, Ministry of Industry and Trade, Kurdistan Regional Government.
Multilaterals
Food and Agriculture Organisation of the United Nations (FAO), International Trade Centre (ITC), United Nations Environment Programme (UNEP), United Nations Development Programme (UNDP), World Food Programme (WFP), World Bank.
Non-Profit
Islamic Relief, Caritas Iraq, Al-Khiamiat, Al-Bayan Center for Planning and Studies.
Public-Private Partnership
Ministry of Education (MoE) is set to take over the School Feeding Programme, which has been provided by the World Food Programme (WFP) since 2013. Firms are contracted as service providers for sourcing, warehousing, and packaging the main food items (38).
Target Locations
Iraq: Northwestern Iraq and Anbar
Iraq: Kurdistan Region of Iraq
References
- (1) Ministry of Planning, Republic of Iraq and UNDP. 2022. Financial Gap Analysis of Agenda 2030 and SDGs in Iraq. Baghdad.
- (2) International Trade Administration. 2021. Iraq – Country Commercial Guide. https://www.trade.gov/country-commercial-guides/iraq-agriculture
- (3) World Bank Group. 2022. Iraq Country Climate and Development Report (CCDR). https://documents1.worldbank.org/curated/en/099005012092241290/pdf/P1776390cfceae0d908ff8073b7e041bea6.pdfand Business Landscape Magazine, Issue 9. 2023. The Urban Violation: The Eradication of Green Spaces in Baghdad. https://www.kapita.iq/content/issue/business-landscape-magazine-issue-9
- (4) FAO. 2021. Agricultural value chain study in Iraq – Dates, grapes, tomatoes and wheat. Bagdad. https://doi.org/10.4060/cb2132en
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