PROSPECTS OF CORPORATE FARMING IN PAKISTAN ARE BRIGHT
Aug 6 - 12, 2012
As per United Nations figures, 60% more food will be required to meet the needs of the world's growing population in the next 30 years. Although the world's population has doubled since 1960, food production has more than kept up. But pressures are mounting on the land and water resources we need to feed the planet.
In order to provide food efficiently to the growing global population, modern farming techniques and production methods are necessary. Today's consumers demand safe, high-quality food at a low cost. The best way to meet these demands while protecting the environment is through the economies of scale inherent in "corporate farming."
There are divergent views on the issue of corporate farming. Those supporting corporate farming are of the view that corporate farming will help to increase the productivity of the farms as observed in various regions because it is backed & financed by big corporations. It will enhance the use of highly advanced technology and will also develop our farm-market infrastructure and will also increase agricultural products export.
Corporate farming also provides employment opportunities to agriculture graduates and farmers. The present condition of Pakistan's agriculture indicates that the prospects of corporate farming in Pakistan is bright subject to the managerial skills of the companies and their relationship with the local community/small farmers.
Corporate farming helps achieve environmental goals through efficient land use, rigorous environmental controls, and innovations in pollution prevention and technology. The benefits of corporate farming include management systems to ensure compliance with changing regulations, the ability to implement focused land and water conservation programmes, access to state-of-the-art equipment (such as irrigation equipment), and development of innovative technologies that may improve the way agricultural wastes are utilised for future generations.
Globally, the resources in terms of land, water and genetic resources necessary to feed the world in a sustainable way are available - but there are shortages in some regions, particularly in the Near East/North Africa and South Asia.
There is no single solution. But there are a whole host of technical and political options which can be combined.
Technologies include the promotion of sustainable agricultural practices such as integrated plant nutrient systems - which use recycled animal and vegetable waste and other techniques to cut down on fertiliser use, and integrated pest management - using pest-resistant crop varieties and natural pest control methods as well as pesticides.
Key policy measures include a continuous commitment to agricultural research, with a new focus on marginal areas and the needs of the poor.
On the other hand, the opponents of corporate farming are of the view that corporate farming would lead to food insecurity, hunger and poverty and convert the country from net food exporter to food importer.
They said that corporate farming in the country is the worst form of land grabbing, adding, "There is an urgent need to put an end to it because it is the cause of unsustainable farming practices, and use of exotic crop species and other farm inputs that have been harming the fertile soil of the country."
Giving an overview of corporate farming in Pakistan, they said the issue of Corporate Agriculture Farming (CAF) surfaced for the first time during former president Pervez Musharrafís rule. "Policy measures to facilitate CAF on the pretext of attracting much-needed foreign investment in the ailing agriculture sector, transfer of modern farming technology from rich nations to the country and modernisation of the sector were announced without pointing out the negative effects of CAF on agriculture, they added.
It may be noted that the Corporate Farming Ordinance (CFO) was passed in 2001, under which listed corporations could lease land in the country for 99 years, broken into two periods of 50 years and 49 years. Besides, the then government had identified state lands to lease under the controversial CFO.
Moreover, Investment Policy for Corporate Agriculture was also prepared by the government which offered incentives to those investing in CAF in Pakistan. In the policy, the investors have been allowed 100 percent foreign equity, and the agricultural technology to be used for CAF is exempted from custom duty and sales tax on import.
Government of Pakistan has announced to lease lands to foreign entities for corporate farming under the CAF policy.
Government is hoping to get notable amount of revenue and job employment through this policy. Other than that government is also hoping to bring in new technology and best business practices for agriculture in Pakistan in order to boost this crucial sector.
Government of Pakistan has decided to lease or sell at least 1.2 million acres of its fertile lands to two Gulf countries i.e. UAE and Saudi Arabia for corporate farming in order to fulfill the needs of these two countries. No contract with Saudi Arabia has been signed yet whereas according to reports an agreement with a company of UAE has been reached.
According to ministry of investment the federal government through CAF policy is trying to achieve the followings;
1. To seek efficiency of production and increased incomes/revenues by bringing together agricultural production, processing and marketing activities at one place under the management of a corporate entity.
2. To improve agricultural productivity and profitability through the use of latest production technology and adequate expertise particularly for exports.
3. To produce high quality agricultural products due to favorable resource base.
4. To achieve/maintain internationally competitive unit cost of production for all major crops, fruits and vegetables
Government wants to meet these goals with following benefits being offered to investor or MNCs.
• 100% foreign equity allowed (only in CAF on case to case basis)
• Minimum $ 0.3 foreign equity investment
• Remittance of 100% capital, profits, dividends allowed
• Only such local and foreign companies will be entitled to Corporate Agriculture Farming that are incorporated in Pakistan under the Companies Ordinance, 1984.
• No upper ceiling on land holding. The size of the proposed corporate farm may be left to be determined by the prospective investor.
• State land can be purchased, or leased for 50 years through open auction, extendable for another 49 years
• All banks and financial institutions will earmark separate credit share for Corporate Agriculture Farming (CAF)
• Labor laws may not be presently applicable to Corporate Agriculture Companies. Due to special circumstances of the agriculture sector however appropriate labor laws be developed for this sector within five year.
• Agriculture Income Tax regime applicable in provinces, on income from agriculture, would be applicable to Corporate
Agriculture Farming 
While implementing (Corporate Agriculture Farming) CAF policy, government must also keep in mind long term plans fo agriculture development in Pakistan one such plan is Vision 2030.
According to CAF policy document, government is clearly deviating from its own long term plan set for 2030 in agriculture sector which states, "Comprehensive and wide ranging strategies have recently been initiated to mobilize small farmers. These include an intensive participatory outreach approach to make available key inputs such as credit, certified seed, training, small-farm equipment, veterinary coverage for livestock, milk collection, and establishment of a revolving fund for financing operations by the local communities through legally constituted Village Organizations (VOs). Such VOs will be the backbone of our agriculture production. These will develop into corporate entities and a conduit for transfer of technology. Together with Farmer Field Schools (FFS), the VOs will help reduce the vast productivity gap between progressive farmers and resource poor small farmers."
This document clearly presents idea of enhancing the output of small farmers by establishing small organization and bringing it to the level of progressive or large scale farmers. Current CAF policy is a clear deviation from the route set for achieving agriculture targets in year 2030 when Pakistan will be a nation of more than 250 million people.
Million of families in Pakistan depend on agriculture and their cultivable land. Once gates opened for foreign investors and MNCs to grab as much land as possible using price manipulation of goods it will be very difficult for local farmers to find any ground to grow their crops and survive. In presence of this clause investor can simply render local farmers landless by offering to much price to them but this will counter productive for these farmers and for Pakistan as these farmers will have no near by land to buy and cultivate neither they can come to cities and urban centers to start entrepreneurship in absence of any such skills. Communities and hence Pakistan will end up with more jobless people to feed.
Pakistan will get few million dollars from this deal whereas investor is allowed to take 100% capital, profits, and dividends every year leaving nothing in Pakistani banks, hence not contributing a single penny in Pakistan's foreign reserve assets.
Pakistan will shoot in the foot if it allows such liberalization of capital in times when economic situation is not stable and national economics are depended on IMF and other international donors. Pakistan already is facing a shortage of water for irrigation and daily consumption. Per capita water share is decreasing due to clumsy behavior of successive governments in this regard. Some time disputes over water between the provinces (particularly between Sindh and Punjab) are resolved by making compromises and concessions by one province to other. In presence of this grime situation of water availability how government will able to grantee water supply to these huge farmlands?
Water is a major reason behind the low yield in between the years in many districts. As Pakistani rivers depends upon climate very heavily and water availability keeps on vary within each season it will be very difficult to provide a constant amount of water to these corporate farms and if done it will deprive small farmer from water for their family farms.
When our own 75 percent households are landless and poverty is rampant, why we are leasing land to rich Arab countries? While on the other hand India is grabbing land in African countries to meet its food security needs. Best way to push for an agriculture based economy in Pakistan is to do land reforms which remained an unfinished agenda of many governments since last many decades. Land distribution in past has remained a mere political stunt by ruling parties in Islamabad. It is time to change this clumsy attitude and do land reforms on a fast pace.
Nevertheless, financially small farmer cannot withstand challenges of corporate farming alone in market place as well.
Government must also take this into consideration that prices offered by MNCs in market can be lower than those offered by small farmers. So a lower and upper limit of price for all items produced under CAF must be fixed to protect small farmers in local food market.
Official sources said there is a huge potential for local and foreign investment in the agriculture related industries in
Pakistan. Agriculture is crucially important for our national economy and any industry related to this sector would be encouraged and facilitated to work and flourish, the sources added.
The sources said there is even a greater emphasis on agriculture sector with the passage of time. "We have increased the support price of wheat that has resulted into surplus wheat and encouragement for the farmers. The farmers are now willing to reinvest in their crops to get even better results which has eventually increased the demand for fertilisers and other inputs," the sources added.