FDI in agriculture sector

United World Investment  Report, 2009
Planned farmland sale to Saudis?
Pakistan gets worried! From tenancy facing to contract farming?   Is this the trend for the future?

SAA proposed lease of 500,000 or more acres of land in Pakistan to Saudi Arabia for agricultural use has raised fears of adverse consequences for the country’s scarce water resources and its food security, aside from possible implications for national sovereignty.

The transaction-in-the-making was first reported  from Dubai. Agriculture Secretary Tauqir Ahmed Faiq told Reuters that the Pakistan government was in talks with the Saudis on the issue. A process was on, he said, to identify leasable land in all four provinces of the country, and a Saudi team is to visit Pakistan soon for negotiations.

Saudi Arabia wants the land to grow grain and vegetables, which it will take back to the kingdom, hoping in this way to strengthen its own food security. With a projected food import bill of $15 billion this year, outsourcing food production is one way for Saudi to keep its food bills down.

The proposal to invest in Pakistan seems to have come after an announcement by the Pakistan government in April offering foreign investors one million acres of land for lease or sale.

Investment Minister Waqar Ahmed Khan said in April the government would also spend $2 billion to raise a security force of 100,000 men for the protection of the leased lands and the people who would work on it. He also spoke about tax exemptions for the import of machinery to work these lands.  But despite the much-vaunted “brotherly” relations between the two countries and the influence the Saudis wield in Pakistan, questions are being raised about the wisdom of such a move.

Water deficit
“We are already a water-stressed, water-deficit country. We even have a problem with India for getting our share of river waters. Committing land to anyone, especially for large-scale agriculture, means you will have to commit water. How can we commit any more water when our existing water is already committed 120 per cent?” asked Rabia Sultan, a south Punjab landholder and an office-bearer in the Farmers’ Association of Pakistan. “We are not Turkey that we can think of importing water,” she said.

Instead of leasing out large tracts of land to Saudi, the Pakistan government would do better to improve national agricultural yield and export the surplus to those who need it, said Ms. Sultan, who holds 400 acres of land in Muzaffargarh, 100 kms from Multan .

As a “hands-on” farmer, said Ms. Sultan, she was “worried that this plan will affect the water that is committed to my lands.”

The absence of details about the scheme has fuelled the fears. It is not clear yet if the proposal involves a lease, and if so, for how long, or if it would be an outright sale.
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Ayesha Siddiqa, a strategic and political analyst, said if the idea was to get individual landowners to lease to investors, the scheme would open the door to large-scale corporate farming, in the process marginalising the small farmers. It would also increase tensions between the feudal wealthy and the rural landless, and push much-needed land reforms further down the country’s political agenda.

It also remains unclear yet if the government proposes to lease the land that it owns — most of it arid, and uncultivable without the injection of huge amounts of capital for treatment of brackish ground water — or if it would encourage private landowners to enter into agreements with the investors.

“Big landowners who are now renting out their land to small farmers will throw them out and put it up to the highest foreign bidder,” said Ms Siddiqa, predicting that small landholders with 5-10 acres would be bought out, and “landlessness and rural poverty will increase.” With hundreds of thousands landless aspiring to own even a small square of land, big land acquisitions by foreign investors, pointed out Ms Siddiqa, would lead to political unrest.

The owner of 300 acres of farmland in the famed mango-growing area of Bahawalpur herself, Ms Siddiqa also raised concerns about the “cartelisation of agriculture” in which a few big landowners with political influence would join hands with foreign investors.

A food security index ranking Pakistan as the 11th most food insecure nation triggered more fears. The government contested the ranking and hastened to assure that it had enough stocks to feed everybody. The deaths of 20 women and children in a stampede for free atta in Karachi some days ago led to the accusation that instead of making food more accessible to the poor of this country, the government was putting its land up for sale to foreigners.

“You will have a situation where the cartels will be deciding the country’s agricultural policy, deciding what should be grown and how much, in ways that will affect Pakistan’s food security in the years to come,” she said.  The issue of food security was centre-stage in recent weeks in Pakistan, as people reeled under sugar and wheat flour (atta) shortages during the entire month of Ramzan, artificially triggered by unscrupulous hoarders. The resultant high prices put the two basic commodities literally out of reach for many during the festive season. “This is the time we should be thinking of cooperative farming to help our own people,” said Ms Sultan, mentioning the Amul project in India, “instead of inviting in corporate farming investors.”

Another concern is for national sovereignty. Already, there is discontent that large tracts of land in the Cholistan desert in southern Punjab have been virtually made over to some Gulf rulers who use it for hunting shoots every winter and have built virtual palaces in the area. Ms Sultan said the entire scheme was a throwback to the time of the British colonialists who milked the sub-continent for its resources.

In an influential article in Dawn, I.A. Rehman, the eminent political commentator and human rights activist, urged the government to go no further with the “outlandish” farmland leasing project without consulting the people of the country through its legitimately elected Parliament.

Warning it could give the foreign investors undue influence in how Pakistan is run, Mr. Rehman said it may even strain relations with Saudi Arabia. He reminded the government that according to official theory in Pakistan, the government itself was a lessee as all land belonged to God under the Islamic faith, or to the state. “Both restrict the government’s power to lease/sell land.”

He was opposed to the idea when it was floated some years ago, but, he said, “no longer.”

We have neither the capital nor the technical know-how to use this resource. So if a foreign investor is prepared to inject both, why not? I think we will stand to gain.”

Corporate farming would generate employment for local populations, and Pakistan would learn from the technical know-how that the investors bring, said Mr. Aziz, even if the investors took away all the produce from the land.

The project does not entirely lack supporters. There are those who feel that if the plan is to lease the vast swathes of uncultivable land owned by the government, it may bring benefits to Pakistan.
“Take Cholistan. Under the desert is a huge resource of water that is brackish, and investment can change the face of that region,” said Chaudhary Anwar Aziz, a former Food ‘Minister.

“There will definitely be a spill-over effect for Pakistan,” he said. But the question is bound to arise: does the government have any business offering even wasteland to a foreign power? “Landless peasants have the first right on any land that is at the government’s disposal,” wrote Mr. Rehman.

The government plan to raise a special security force to protect investors’ lands has also raised suspicions. “If the Cholistan desert is what the investors are after, why should the government offer to raise a special security force to protect land that no Pakistani wants?” asked Ms Siddiqa.

The government must immediately reveal all the details of the proposal, she said, so that “the stakeholders, the people of Pakistan, can see for themselves what this deal is all about.”

Source : Agriculture & Industry Survey[/hidepost]

  • azhar hussain sheikh

    hi gentalman, realy i need your help,MY Dream is to be have farming like the other country in world.i have 400 kanal land where water,electricity,and we can make fish farm dam also.this land is barani area Fateh Jang. i want to make fish farm,dairy,goat farming,and vegitable farming. i want to know the government of pakistan will help me in work or financially and other country will make a buy back project with me or not.give me detail if you have and also sugest me plz
    thanks