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Corporate farming and food security

December 29, 2008

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As investment-starved Pakistan puts its 1.1 million acres of agriculture land on the auction block next year, farmers wonder what it would mean for food security and social fabric of the country.

Their fears largely stem from the experiences of those countries where commercialisation of agriculture and food security have not proven to be compatible.

The multinationals, which acquire the farm land, maximise their profits at the cost of food requirements of the host country. Pakistan is now talking to people from Gulf countries and Saudi Arabia for investment in corporate farming . And according to Investment Minister Waqar Ahmad Khan investors would be allowed to take away the entire crop to their countries even if Pakistan suffered food deficit.

The situation is especially dangerous for subsistence farmers, who, failing to compete with capital-intensive corporate farming, are swept aside, often resulting in social chaos.

In Pakistan, weak social and legal structures create more fears than many other countries. Over six million families in the country own 50 million acres: around 94 per cent of its farmers fall in subsistence category – they till less than 12.5 acres. Around 20 million people work in the grossly over-employed agriculture sector. Even if a fraction of farmers is thrown out, there is no sector strong enough to absorb it. It only proves the magnitude of the social vulnerability and the country needs to be careful in treading a risky path.

The legal structure hardly inspires any hope. On the contrary, corporate parties are being offered a range of incentives to ensure legally covered high profits. For example, these firms would get land on 50 years lease, extendable by another 40 years. Of late, there is talk about 100 per cent proprietary rights if the media reports are to be believed. These firms would enjoy tax holiday for 10 years. Juxtapose it with the hue and cry for taxing domestic farmers, and preferential treatment becomes evident.

In addition to that, they would be allowed to import duty-free implements and remit 100 per cent profit and dividends. Currently, another facility is being added to extended-- 100 per cent repatriation of produce to their parent country. That is how Gulf companies are being attracted to invest and take the produce back home.

The official rationale for allowing multinationals in agriculture has been two-pronged: bring investment in the sector and solving food crisis in the country.

By promoting corporate farming, the government seems to have decided that it could neither provide funds to the sector to make it competitive nor it could solve food security crisis on its own. The government regularly provides public money to the speculators of stock markets and also wastes billions of rupees in name of subsidy on fertiliser. Add Rs100 billion subsidy to the Water and Power Development Authority (Wapda), the Pakistan Electric Supply Company (Pepco) and Rs30 billion to the PIA. But the same facility is being denied to farming.. .

The agriculture sector does not need Rs400 billion subsidies. It only requires that more money in six-month loans to get back to its feet. It is a case of wrong priorities rather than paucity of funds.

The Bank of Punjab, set up by a province which produces over 80 per cent of agriculture, could spare only Rs4 billion for farmers and the Punjab government put an amount of Rs200 million in subsidising the loan. The provincial agriculture budget is not even one-tenth of what police gets on an yearly basis.

Only Rs250 billion loan is to be provided for the sector by the banking sector. Even these Rs250 billion are not entirely linked to, or limited to, farming sector alone. They are given to farmers who may use them even for social or industrial purpose.

As far as food security is concerned, how corporate farming, in its emerging shape, would ensure it, is anybody’s guess. The Gulf States want to invest abroad to ensure their own food security. They would bring in money and technology and take the produce home, where would Pakistan’s food security factor in?

Is the government using food security issue as a cover up to grant land rights to some of its foreign friends?

There is a host of questions that arise out of current policy priorities and must be answered before venturing into corporate farming. If the countries, which did not offer these facilities themselves – 100 per cent ownership and produce repatriation to the multinationals, why should Pakistan sustain it? Can Pakistan absorb the production and social shocks?

Why the government has decided to offer such huge incentives to foreigners which the local farmers do not enjoy. If foreigners are allowed to take 100 per cent produce out, how would it solve food crisis in Pakistan?

Half of the land earmarked for multinationals falls in Balochistan, where resentment against foreign elements has already assumed serious violent (liberation) proportion. Can Pakistan afford another pressure on federation? Why has there been no effort to turn these countries into markets for Pakistan and export food items by giving incentives to local farmers?

All these questions need to be answered before allowing foreigners onto Pakistan’s agricultural land and risking a path which others now fear to tread.