For Baghdad's Factories, the Occupation is a Major Drag on Business

Salim Rasheed has always been proud of his thriving yogurt business until recently. He and his employees are suffering a tough time when militias took over the area around his factory.

"Local people prefer our dairy product because it is of high quality. It is fresh, tastes good and contains no additives, which outweighs the imported one," said Rasheed, manager of al-Bunniya dairy factory in a mixed Sunni and Shiite neighborhood in the Baghdad suburb.

However, volatile security caused by the recent militia upsurge is undoubtedly dragging the factory offering yogurt, cheese and cream products into inconvenient hardships such as delays, blackout and cost rise.

Rising Costs for Private Factories

Joyless, Rasheed complained that "one of our problems is that the roads are still unsafe and that leads to restrict fresh milk deliveries from nearby local farmers, reducing production in our factory."

Both U.S. and Iraqi forces have claimed a relative security gain in general since last year, yet private companies in the war-torn country are facing an ever hard time since violence and sectarian strife are still prevalent more than five years since the U.S.-led invasion.

Dense checkpoints and closed roads throughout Baghdad are widely seen as means to prevent innocent citizens from suicide bombers and roadside bombs, but they also block the liquidity of private business.

Husam Hameed, a 54-year-old accountant working for al-Bunniya frozen foodstuff factory, echoed Rasheed's complaint, saying that "delays and difficulties of transporting products to markets due to dense checkpoints and closed roads throughout Baghdad are annoying."

Power shortages are another problem. Explosions and crossfires between militiamen and Iraqi police cause blackouts from time to time, which hampers the daily production of local companies.

"The lack of power makes it difficult for our two large unreliable generators to keep machines working continually and products refrigerated," said Rasheed.

He said that most companies in Baghdad have installed their own generators providing extra power when governmental supply fails. Consequently, cost for productions soared due to increasing consumption of fuel, precious also to Iraqis since the oil refinery industry is mostly paralyzed.

Hameed said "purchasing fuel from black markets is costly," since the fuel supply is insufficient.

What is more, high wages for a number of guards who protect the company due to volatile security situation contributed to the cost rise, Hameed said.

Less Competitive

Local companies fear their products could no longer be competitive due to the increasing cost, because imported food are generally cheaper than homemade ones.

"Iraqi traders import many kinds of foodstuffs from neighboring countries such as the United Arab Emirates, Saudi Arabia, Syria, Iran, also from countries like China and India to meet local demand," said Amer Awad, a 41-year-old shop owner in Bayaa wholesale market.

"Imported rice, vegetable, oil, sugar, frozen beef, chicken, fish, eggs, etc. are usually cheaper," Awad said, adding that homemade foodstuffs cost too much.

Ali Hussein, 39, a refrigerator truck driver of al-Bunniya frozen foodstuff factory, said the company import raw materials such as beef from abroad.

"The price of imported beef is approximately 3 U.S. dollars per kilo, while local beef is about 7 dollars," he said.

However, what is consoling for Hameed is that his company still holds a certain amount of market share as daily supply for Iraqis is astonishingly insufficient, which helps him overcome current tough times, despite losing price competitiveness.

Rasheed expected the government should deliver power supply support for local factories, which could bring down the prices of products.