January 20, 2003	Monday	Ziqa'ad 16, 1423

The formal announcement and the implementation of the policy package for a half-baked scheme of corporate agriculture farming will be a daunting task for the present political government. In order to commercialise the agriculture sector, the military government has identified specific fields of the national agriculture sector with a view to attracting foreign as well as local investors.

Corporate farming initiative has been in the pipeline for quite some time but the decision could not be taken due to some resistance from within the ruling circles of our successive political governments owing to apprehensions that the move could result undesirable impact on poor and landless farmers.

The military-controlled federal cabinet approved a corporate agriculture farming (CAF) package on June 20th this year. The proposed policy includes a tax holiday of five years for irrigated agriculture, seven years for rain-fed land and ten years for cultivable wasteland. The transfer of land for corporate agricultural farms would also be exempt from duties.

Further, there would not be any import tariff on agricultural machinery (not manufactured locally) for corporate agriculture farming. In addition, there will be no upper ceiling on land holding for registered agricultural companies. However, income of these companies would be taxable. CAF would be declared an industry and would enjoy the credit and other facilities. For this purpose the land for agricultural purpose can be obtained on lease initially up to 50 years, extending for a further period of 49 years.

Ever since the policy of CAF has been made public independent analysts have been raising question that can Pakistan reap advantages of the corporate farming as other countries are achieving? They apprehended that if this sector is also awarded to foreign investors, Pakistan may get devastated its agricultural sector as IPPs devastated the industrial sector by triggering escalation of electricity charges.

They are of the view that if corporate farming is introduced in the backdrop of existing land ownership, the feudals will get them registered corporate companies which will immune them from any possible land reform. It will be worthwhile to note that in the past, there had been three attempts at land reforms by the government in order to curtail the power of feudal lords and land holders, but the government now seems to revert previous land reform efforts by allowing any individual or firm to own as much land as one can.

The overall scenario about the corporate farming however, is uncertain and undefined. There are many other questions like which area is being allocated to these investors? Or local and foreign investors will be combined to acquire land on lease? What will Pakistan get in this practice and what will be its impact on our agricultural sector? It is also feared that small farmers who are 93 per cent of our agriculture sector, having only 37 per cent of land, would be the major sufferers after the implementation of CAF while the big landlords, seven per cent of the farming community, with 63 per cent of the land holding will not be affected by the corporate farming but are likely to reap the benefits.

Pakistan has a total geographical area of 79.6 million hectares. Of this 9.14 million hectares land is culturable waste which is fit for cultivation but was not cropped due to lack of water availability, lack of interest, financial resource constraints, etc. About half of the culturable waste area (4.87 million hectares) is in the province of Balochistan, while there are 1.74 mha culturable land in Punjab, 1.45 mha in Sindh and 1.08 mha in NWFP. The proponents of CAF say that development of this culturable waste area, which is almost half of the cultivated area, has potential to contribute to increase in agricultural production.

Once the culturable waste lands are developed, the proponents of CAF believe, there are bright chances that production of all our crops would be in abundance and could be exported and hence bring a handsome amount in country in foreign exchange. Once corporate farming starts, their expectations are that our total exports would reach $1 billion mark.

Unfortunately these ignorant proponents of CAF fail to understand that to increase our agricultural productivity land is not a limiting factor but it is water. The much publicized CAF scheme has failed, so far as yet, to enunciate as to where from water will come to bring 9.14 mha of additional land under plough. Availability of water is a big question mark on the viability of corporate agriculture farming as our farmers of even a canal command are wrangling on water rights what to talk about provinces.

Pakistan is deficit in food production and Rs90 billion is spent annually on import of wheat, edible oils, pulses, tea and other food products. Pakistan’s agriculture sector suffers from many problems such as one of the lowest productivity per unit in the world. The country’s average wheat yield of 2.0 tones per hectare pales in comparison to that of China, at 3.8 tones, India, at 2.8 tones, or Egypt which produces 4.5 tones per hectare.

No doubt that Pakistan’s economic revival in the short run, can only come from its agriculture sector, because of its comparative advantage of double cropping, availability of water supply through its extensive irrigation network, cheap labour, proximity to food deficient markets with high purchasing power and its performance far below its potential but CAF as is being believed, is not the only option for achieving this task.

By giving the Pakistan farmer, import substitution price, quality seed, credit for unadulterated fertilizer/weedicide, and free movement of the commodity within its borders, Pakistan can attain self-sufficiency in all food commodities.

Pakistan small landholders are facing negative terms of trade for agriculture commodities, rising prices of inputs, and the growing influence of the World Trade Organization. Corporate farming will simply worsen the problems small and landless farmers face, and might even start a process of displacement like during the green revolution.

Being a signatory of the WTO agreements we have to deal with this globalization era cautiously to avoid any further blow. The world has already been divided into corporate and livelihood economies and more than 5 billion people are still associated with community based farming sector instead of professionally organized farming.

It must be borne in mind that our agriculture is characterized by weather dependence, seasonality of crop growth, low level of mechanization and increased dependence on labour, non-standardized region-wise production methods, poor quality of inputs, and mixed nature of farming. Corporatization of our agriculture is not likely to be translated into reality due to many constraints one of which is faulty farm management systems. The main reason for the faults in the system is the absence of organized information and a knowledge base drawn from experience of people.

Farm management experiences in our country are hardly shared. Further, our farming has largely been a family-run, subsistence-type occupation and not a professionally run business. Inter alia, this has contributed to the present state of affairs and has been an impediment to corporation of agriculture.

Apart from the small farmer’s poverty and ignorance another factor which has kept us tied to old methods of cultivation with the consequent poor results, has been the bane of absentee landlordism.

Supporters of the CAF argue that the scheme is being introduced as our small farmers are unable to adapt new technologies and cannot afford the costly inputs required to get optimum yield from new crop varieties. They are of the view that our small farmers do not know even how to use water economically, use quality seed, land-levelling through conventional means, soil testing and the optimum use of fertilizer and pesticides.

These proponents of the CAF who understand our small farmers illiterate and ignorant unfortunately fail to understand that it is not only the mechanization or modern methods of cultivation that can boost our agricultural productivity.

An experiment conducted after floods of 1992 in Punjab must be an eye opener for all such believes, who believe that agricultural revolution in Pakistan can only come from modernization and mechanization through CAF.

In this experiment small farmers having less then 10 hectare land holding were provided all inputs like fertilizer, seed, credit etc., just at right time. The result was that the yield was 300 percent higher then the average national yield which was by virtue of only better management of resources. Results of this experiment implies that if we are able to provide our poor and indigenous farmers required inputs timely, we will not require to put our valuable assets at the mercy of foreigners.

It is required that the present government which is accountable to the people should take decision on corporate agriculture farming after considering all pros and cons as arguments in favour and against corporate farming basically emanate from two conflicting philosophies of development.

One is confined to profit while the other refers to needs. Only profit-driven argument could be disastrous for a country like Pakistan.