INVESTMENT DEFICIENT AGRICULTURE SECTOR

THE SECTOR HAS IMMENSE INVESTMENT OPPORTUNITIES

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)
Mar 1 - 7, 2010

Agriculture sector of Pakistan faces numerous problems ranging from growing water deficiency to lack of technological application. Agriculture sector is a rescuer of the economy. The sector contributes near quarter to the national GDP and is a direct source of income for almost half of the workforce of the country. A present contribution of the sector to the economy can be double if investment in it increases. Local and foreign investments can unearth the potential of the sector.

Infrastructure weaknesses, lack of research facilities, high post-cultivation losses due mainly to shortage of silos, lack of value addition, low-level of biodiversity, and inefficient extension services are some of the areas of investments.

Government of Pakistan has opened the sector for investments. Following the successful models of exchange of resources for agriculture developments in agro-based countries, it planned to put on auction cultivable farmlands in its initial move to expedite green revolution in the country. Many of the agriculture resources abundant countries welcome foreign companies to enhance agriculture outputs and to assimilate new technologies for productivity increase. Some countries are expressing consents to lease out farmlands to foreign investors while others are hesitant to partner with foreigners in agriculture sector. Countries are opening up their agriculture sector to foreigners to avail the technological expertise of others, inter alia. Perhaps, it is usual that every novel idea faces resistance in the beginning. Glance over a page of recorded history and one would find the perennial repetition of disappointments of people over unconventional concept. Although, it is ignorance on the part of one person if he overlooks the failure of this idea in human developments in some agriculture economies, it is equally injustice to disregard revolutionary outcomes of synergy of domestic and foreign resources. Simply, one complements others is on what advancement of this world is based.

Some South Asian economies are realising the importance of participation of foreigners in growth of their agriculture sectors. One fine example popped out recently in one of the economies formerly called Asian Tigers. Indonesia, which is a market-based economy with government's control over state resources, swore off the tradition of xenophobia and announced to become world food basket through leasing out farmlands to foreigners. In his recent address Indonesian president invited foreigners for investing in its resource rich agriculture sector. You feed us and we feed the world, he encapsulated the whole things in single phrase.

It does not take time for one to understand that why foreign investors bother to invest money in a field basing their investment decisions on abstruse projections. True, projections underpin the failure and success of any investment decision, but when one talks about agriculture sector probability of both doubles and triples. The interest shown by foreign investors in agriculture lands of Pakistan is driven by prospect of high production that would emanate from virginity of large cultivable lands. Wage arbitrage is another advantage for them as well as for locals. An entrant point in the agriculture sector will expose them to variety of investment deficient avenues.

Gainsaying is the fact that Pakistan can leverage multifarious benefits because of foreign investments in agriculture sector in the form of reduction in unemployment rate, improvement in standard of living, growing adaptability to farm technologies that will replace traditional ways of farming for better, upgrade of extension services, improvement in research facilities, so on and so forth.

Shirking the external control that would be a corollary of monopolization of foreigners over agriculture sector however sounds indifference to national sovereignty and wealth. Is this safe in a condition where people die of hunger and poverty and peasants are trampled under the aristocracy of feudal lords? Wealth can be shared for betterment and sovereignty can alone be sustained through learning.

In simple words, there is a likelihood of economic emancipation of peasants following mobility towards corporate culture, which can more likely be developed by messianic arrivals. Foreign investors have changed the shape of Pakistan's financial and telecom sectors through bringing them at par with international standards. Investments are vital for the declining economy of the country.

Agriculture sector of Pakistan is still dominated by landlords and cartels, which resist opening of the sector to new entrants. Until regulatory framework enforces limits to harnessing of resources, there might take place some negative socioeconomic effects in the long run. Such regulatory framework is necessary to control the ravenous desire of exploitation of resources. Unabated trade liberalization and price determination by market forces even when it must be avoided can be harmful for the welfare.

World leaders put their heads down to ponder over the effects of trade liberalization on welfare of the people of agro-based countries in the long run. They are finding a link between trade and deforestation. Does trade trigger deforestation? In World Trade Report 2010, environmentalists expressed their concerns over the long term impact of trade on deforestation, citing Tanzania, Costa Rica, and Brazil as examples that witnessed growing deforestation following increases in their agriculture produces. The report says as countries enter in international markets prices of their agriculture outputs become equivalent to international prices. In short run, revenue increases but welfare is threatened in the long run. Taking a global view the report justified its concerns well. There is a caveat in the report for agriculture economies, which are far from their optimal and on roads to green revolution. Trade and conservation polices can make the welfare sustainable by setting criteria for investments in agriculture sector.