July 18 - 24, 20

The government of Pakistan is attracting foreign investments for its underdeveloped agriculture sector that embraces immense potential and lucrative avenues for the foreign investors. However, despite proposal of significant incentives to the foreign investors e.g. 100 per cent foreign capital share in and 100 per cent repatriation of profits from all fields, there prevails sluggishness in the external inflows of funds. As a matter of fact, no significant investments in the agriculture sector have been recorded following the announcements of friendly policies by the government.

Negative perception in the local population about the foreign investments in agriculture sector that employs nearly 45 per cent of labour force in the country remains a main factor behind lacklustre response of the investors to the otherwise attractive investment policies. For last four years, foreign investments in other sectors have not been at the satisfactory level either. July-May of last financial year saw a 29.7 per cent decline in the foreign private direct investments.

Agriculture sector plays an important role in the economy of Pakistan, accounting for more than 21 per cent share in the gross domestic product (GDP) and contributing over 60 per cent to foreign exchange generated from the national exports annually. Why foreign investments are needed? Main reasons are the inability, incapacity (financial), and unwillingness of local community as well as the funds-strapped government to develop the sector on the modern line to improve the agriculture outputs and thereby averting food insecurity.

Pakistan despite being an agriculture economy is blighted with the anathema of food imports spending billions of dollars annually on the imports of wheat, sugar, palm oil, soybean oil, pulses, tea, spices, dry milk, etc.

Critics fear that large-scale plantations by the foreign investors threaten the survival of small-scale peasants that constitute the major portion of agriculture labour force not only in Pakistan but also in world over. Driven by commercial motives, they would be least bothered of exporting low price foods for the poor consumers, as is being mistakenly believed, they argued. Export-led agriculture and the production not of food but commodities are actually the motives of the foreign investors grabbing large tracts in the agriculture developing economies, said Olivier de Schutter, a UN representative, at an international conference on "global land grabbing" held at the Institute of Development Studies in April this year. Deals of over 80 million hectares in Africa, Asia, Latin America and the former Soviet Union were revealed at the conference. Social implications in form of marginalisation of small famers and environmental costs because of biofuels' production came under the discussions wherein top agriculture researchers participated.

Pakistan's agriculture sector is lying in between the devil and deep sea. Water scarcity, low-crop yields and post-harvest loses are the issues confronting the sector. Better farm techniques can improve the agriculture outputs. Unfair means of and inequitable development by the foreign investors can be restrained by balancing of rights and obligations between local communities and foreign investors, experts said. Spot-on international regulatory mechanism, government acknowledgement of landholding rights, transparency of deals, and accountability of government and investors would ensure "that local food security and responsible land deals can coexist", some researchers at the conference said.

Land is not the only agriculture resource, but there are also other avenues of investments. For example, Pakistan's irrigation is in dire need of face lifting. The country has large tracts of cultivable lands non-irrigated. Low-riparian and tail end areas lack fresh water supply due to insufficient canals. Modern irrigation technologies can offset the impact of water scarcity.

There are lot of investment opportunities existing in horticulture, olive planting, oilseed, tea, herbs, cold storages, warehousing equipments, etc. Take an example of horticulture that has more than 10 per cent share in agriculture GDP. If proper funding is channelized to the development and rehabilitations of transport infrastructure and post harvest management, over 25 per cent of fruits and vegetables that are lost somewhere in rundown supply chain can be saved right away for local consumptions and exports. The country produces 14 million tons of fruits and vegetables per annum. Of that, hardly four per cent is sent out of the country. Upgrading of grading, packing, and cold chain system will enhance the export quality of crops and increasing yields stabilise prices in local markets.

Board of investment has envisaged horticulture clusters at different places nationwide. Feasibility of multimillion dollars Balochistan-Sindh cluster has been prepared. Cold stores, pack houses, and one refer yard is planned in cool chain system to be established at Karachi.

In addition, the government offered agriculture land on both purchase and lease arrangements. State land can be leased for 50 years extendable for another 40 years. Lands earmarked for corporate agriculture farming are exempted from transfer duty. Many other incentives of tax exemptions are offered to promote corporate agriculture farming.

There are perhaps equal numbers of pros and cons of foreign investments in the agriculture sector. Actually, land acquisition under vague deals is disturbing the pro-poor people. African region is in the forefront of auctioneers of agriculture lands worldwide. Most of the concerns raised by the critics of corporate farming seem to be based on assumptions. International treaties and strict regulations can precede each agreement between foreign enterprise and a host government to avoid future conflict of interest. Fine prints should be made public to ensure transparency however. Government's readiness to be accountable to public can turn away the likelihood of anti-public foreign deals. Investments are badly needed to face lift the agriculture sector in Pakistan. That said local prosperity and first of all rural developments are not possible without huge capital inflows and technology transfer.