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?

A 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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