CORPORATE farming has gained traction in the wake of the Kissan package for the agriculture sector in the last budget, as a growing number of companies are enrolling themselves with the Securities and Exchange Commission of Pakistan.

As many as 185 such companies have been incorporated from Sept 15, 2015 to Sept 27, 2016. Most of them are in seed, fish farming, poultry, livestock and feed businesses. It raises hope for an injection of fresh investment.

The highest number of corporate farming companies — 116 — have been enrolled in Punjab, followed by 43 in Sindh, 16 in Islamabad and 10 in Khyber Pakhtunkhwa; but no company has been registered in Balochistan in the last year.

A senior SECP official, however, said it will be difficult to assess the volume of investment in farming just from increasing registrations. Even so, 70 companies — the largest number — are registered in the seed business followed by over 20 in the livestock and dairy sectors.

In the last budget, the government announced a string of concessions in customs duties and other taxes for dairy, livestock and poultry sectors. The rate of duty was reduced to 2pc from 5pc on import of machinery for these sectors.

As many as 185 such companies have been incorporated from Sept 15, 2015 to Sept 27, 2016. Most of them are in seed, fish farming, poultry, livestock and feed businesses. This raises hope of injection of fresh investment

Similarly, incentives were announced for the promotion of fish farming and duty was exempted on certain feeds. The customs duty on cold chain storage and capital spending in this segment was also removed.

A tax official said the tax concessions are stimulating investment in farming. Few years ago, the government allowed people to invest their undeclared money in livestock as part of an amnesty scheme.

“We have seen a positive outcome gained by the tax concessions in terms of registration of companies”, the tax official said. Yet a major problem for corporate farming investors will be the acquisition of huge landholdings.

A policy for corporate farming was evolved in 2000, and enforced through an ordinance but it remained dormant as no concession was offered to prospective investors.

However, there are a few successful cases, such as large dairy farms, which have benefited from the corporate farming policy.

Afaq Tiwana, an expert on corporate farming says agriculture badly needs capital investment to avoid stagnation. Corporate farming, according to him, can provide the sector with capital, technology and modern management.

He says corporates need large tracts of land for commercial farming, which can be acquired on lease or through a sponsor interested in contract farming. The JDW Group of Jehangir Tareen has 30,000 acres of leased land in Rahimyar Khan. This, he said, has become a model for other farmers to emulate.

The government will now have to promote corporate farming — a corporate business — which can ensure food security, he adds.

It will be easier for corporate farming companies to access bank credit to induct new technologies and invest in machinery and plants. Some companies aim to introduce innovation in the agriculture sector. They include Innovative Farming Technologies (Pvt) Limited and Agrotech (Pvt) Limited.

Published in Dawn, Business & Finance weekly, October 3rd, 2016