* Hoboob purchased wheat outside of tender process
* Payments made through unlocked frozen funds
* Hoboob not using Iranian export credit line
By Maha El Dahan
ABU DHABI, Jan 6 War-torn Syria's state wheat
import deals surged to 2.4 million tonnes in 2013 from 550,000 a
year earlier, the country's General Establishment for Cereal
Processing and Trade (Hoboob) said on Monday.
Syria suffered its worst wheat harvest in nearly three
decades in 2013 as war and sanctions continued to put pressure
on the government to import food.
The imported wheat was mostly of Black Sea origin and deals
were done outside the tender process and paid through unlocked
funds in frozen Syrian international bank accounts, a source at
Hoboob told Reuters.
"Of the total quantity, 1.7 million tonnes arrived in Syria
and the remaining quantity is on its way," the source said.
Hoboob said in October it had struck deals with payment
using frozen funds to import 500,000 tonnes of wheat from France
and the Black Sea over the summer.
Although some traders were skeptical about the 2013 wheat
import figure, others said the jump in imports was in line with
the government's drive to bolster imports given the record-low
"It sounds conceivable to me," one European trader said.
"Syrian agriculture has been hugely disrupted by the
fighting and this will have greatly increased their import
requirements. Importing has also been concentrated in state
hands as private buyers have been kept out of the market by
sanctions," he said.
Estimates collated by Reuters from more than a dozen grain
officials and local traders in July suggested the local harvest
could have been as low as 1.5 million tonnes, less than half the
Sanctions imposed by the European Union, the United States
and other countries on President Bashar al-Assad's government do
not apply to food but the financing freeze has hindered Syria's
ability to seal import deals.
Syria started asking to pay for its food by freeing some of
its frozen assets in international banks in mid-2013 but some
international traders said the payment method was not attractive
as the seller bore the burden of obtaining the necessary
approvals to unlock the funds.
France in September cleared the use of frozen Syrian bank
assets for food under a European Union system that allows such
funds to be used for humanitarian ends.
Paris-based lender Union De Banques Arabes Francaises (UBAF)
confirmed it had approved the release of such funds.
State-owned food buying entities through most of 2013
struggled with import tenders for rice, sugar, flour and wheat,
although deals were struck outside the tender process using
"There are a lot of trading companies in the Middle East and
Black Sea willing to take the risk of dealing with Syria
although the big multinationals are still cautious," another
European trader said.
"If the payment process using the frozen funds becomes more
tried and tested, larger trading houses might come back into the
Syrian grain sector," he said.
Another Syrian state entity, the General Foreign Trade
Organisation (GFTO), has been tendering to buy flour, sugar,
oils, rice and several other commodities through an Iranian
export credit line.
The GFTO tenders require sellers to accept payment through a
credit line agreement between the Commercial Bank of Syria and
the Export Development Bank of Iran.
Traders have said that offers in those tenders are well
above market prices and come mostly from Iranian firms offering
to re-export commodities out of Iran.
Hoboob maintained it was not using the Iranian credit line
agreement in its deals.
"We are not using that arrangement in our contracts at all
because we are still relying on the frozen funds," the Hoboob
Syria enough wheat to last eight months, according to
Hoboob, which traditionally has kept 3 million tonnes
stockpiled, enough for one year's consumption.
Despite the availability of imported wheat, flour mills and
silos have suffered extensive damage in the unrest that has
gripped Syria since 2011, forcing the country that was once
self-sufficient in wheat to also import flour.
The country's prime minister said last week flour imports
were being purchased at a cost of $580 a tonne to meet daily
domestic needs with many of the country's mills out of
(Reporting by Maha El Dahan; Additional reporting by Michael
Hogan in Hamburg; editing by Veronica Brown and Jason Neely)