While supplying to the area was already proving viable, senior management in the dairy co-operative expected the market would further improve when there was an end to the violence and political strife.
Fonterra's Dubai-based developing markets manager Tamer El Ashmawy said volumes of Anchor-branded jar cheese exported to Iraq had grown at a compound annual rate of 115% and Anchor milk powder to Somalia by 51% since 2006.
While these were from a low starting base - Fonterra declined to supply the actual figures, citing commercial sensitivity - Mr El Ashmawy said the rate of growth was surprising.
Both products were supplied from Fonterra's Saudi Arabia-based SNZMP factory.
The company bought the factory earlier this year, an investment Mr El Ashmawy said made it possible to develop those markets.
Product was trucked to Iraq, a four-hour road journey, and shipped to Somalia.
However, returning empty containers from Somalia was an issue for Fonterra, as shipping lines did not like waiting in the strife-torn country.
Business in both Iraq and Somalia was based on cash paid in advance and Fonterra staff were forbidden to visit either country because of the potential risks.
Mr El Ashmawy said he used distributor networks and any meetings were held in a third country or at Fonterra's Dubai regional office.
"The success we're having exceeds these challenges because we're making history," he said.
Jar cheese was a popular regional delicacy, but Fonterra intended increasing the range of cheeses sold in Iraq as its brands became established and it created consumer loyalty.
It also sold milk powder on the local Iraqi market and not to the United States military or Iraqi Government aid programmes.
A combination of boycotts and trade embargoes meant the Iraqi market had not been developed, but Mr El Ashmawy said being a consistent supplier of quality products would create loyal customers.
"It's not a $100 million business, but it's about sowing the seeds and building business in the coming years," he said.
• Agribusiness editor Neal Wallace travelled to the Middle East with the assistance of Fonterra.
