Countries that introduced land reforms to unleash corporate and cooperative farming potential based on the latest technologies ushered in an agricultural revolution.

With the transformation in the mode of production, not only the yield per acre of crops went up at an unprecedented pace, but a huge middle class emerged, widening prosperity in the countryside.

High economic growth in regional countries such as China, India and Bangladesh (BD) can be explained by timely land reforms. (Radical land reforms were carried out in BD in the early 1950s when it was a part of Pakistan).

The mild land reforms during former President Mohammad Ayub Khan’s tenure and in its first phase introduced by former prime minister Zulfikar Ali Bhutto, the landed aristocracy managed to protect the size of its landholdings substantially.

Pakistan can potentially bring around 22m acres under cultivation through corporate farming

Lands resumed by the state and allotted to small farmers, many of whom had no funds and no financing facility to bring them under plough, were bought by big landowners. The more radical second phase of Bhutto’s reforms was set aside during former military ruler Zia-ul-Haq’s rule.

Agriculture suffered from very low productivity due to the virtual absence of corporate farming. The sector’s growth during the last decade has been a paltry 1.7 per cent.

To quote an expert, Pakistan has the potential to double agricultural production, which could not only ensure food security but also add to agri-exports. Currently, Pakistan’s import of agri-products stands at more than $10 billion per annum.

Entrepreneur Bashir Jan Mohammed of the Westbury Group, who has been in the fast-growing edible oil industry for more than half a century, says local, indigenous oil production is very small (around 0.50 million tonnes) to cater to the demand of 250m people estimated at 4.50m tonnes.

Thus, the country has to rely on the import of edible oils and oilseeds to cater to the total consumption, which is a huge strain on the foreign exchange bill.

Critics say the corporate farming legislations that invite investment and regulate farm operations are heavily focused on big investors, squeezing small farmers

To feed the ever-growing population and achieve the desired GDP growth of 7pc-8pc, more than 4pc-5pc, consistent annual growth is needed in the agriculture sector, according to farming experts and trade bodies.

Even in this given neglected state, to quote the apex trade body, the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), the direct and indirect contribution of agriculture within the domestic economy was estimated at around 45pc. As a result of some increase in farm production, food exports grew 49.84pc in the first half of FY24 to $3.48bn from $2.32bn in the same period last year, according to Pakistan Bureau of Statistics data.

The surge in food exports was attributed to the unprecedented rupee depreciation, persistent disruptions in the supply chain and higher prices in the international market.

Now, the caretaker government has renewed efforts to boost corporate farming, which has so far remained a marginal activity. Of the 27,746 new companies registered by the Securities and Exchange Commission of Pakistan during FY23, corporate agriculture farming firms were a mere 732.

To facilitate corporate farming, the caretaker government is mulling the introduction of the Agriculture Development Authority Act, which has been welcomed by business leaders, according to FPCCI President Atif Ikram. Pakistan can potentially bring around 22m acres under cultivation through corporate farming.

Critics say the corporate farming legislations that invite investment and regulate farm operations are heavily focused on big investors. They fear that small-time farmers will go out of business, unable to compete with big corporations.

Concerns are also often expressed over the sale of huge swathes of land to large domestic and foreign corporations and the operation of cooperative farming on water supply, soil quality and pollution.

Apart from an appropriate regulatory framework, the solution lies in encouraging cooperative farming for small farmers, which has not been successful in the economic model adopted since the inception of Pakistan.

While retaining his legal title of land as a share value in a cooperative, a farmer with a small holding can also share his profits proportionately. Thus, cooperatives can achieve economies of scale to compete with big corporates.

In yet another move towards corporate farming, the Sindh government has entered into a joint venture agreement with an army-backed company to give it over 52,000 acres of barren land in six districts for 20 years.

The project is one of the initiatives under the umbrella of the Special Investment Initiative Facilitation Council (SIFC). The company will have to arrange for water resources through alternate modes rather than relying solely on irrigation channels.

While sharing 40pc of its profits with the Sindh government on an annual basis, the company shall spend another 40pc on local projects such as infrastructure, irrigation channels, solar-powered water supply, schools, and hospitals.

The rest 20pc of the company’s net profit is to be earmarked for research and development in the local area. The agreement with Sindh follows a successful pilot project in Punjab, while the SIFC scheme will be extended to all the provinces.

Published in Dawn, The Business and Finance Weekly, January 29th, 2024

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Impetus for corporate farming

19 1
29.01.2024

Countries that introduced land reforms to unleash corporate and cooperative farming potential based on the latest technologies ushered in an agricultural revolution.

With the transformation in the mode of production, not only the yield per acre of crops went up at an unprecedented pace, but a huge middle class emerged, widening prosperity in the countryside.

High economic growth in regional countries such as China, India and Bangladesh (BD) can be explained by timely land reforms. (Radical land reforms were carried out in BD in the early 1950s when it was a part of Pakistan).

The mild land reforms during former President Mohammad Ayub Khan’s tenure and in its first phase introduced by former prime minister Zulfikar Ali Bhutto, the landed aristocracy managed to protect the size of its landholdings substantially.

Pakistan can potentially bring around 22m acres under cultivation through corporate farming

Lands resumed by the state and allotted to small farmers, many of whom had no funds and no financing facility to bring them under plough, were bought by big landowners. The more radical second phase of Bhutto’s reforms was set aside during former military ruler Zia-ul-Haq’s rule.

Agriculture suffered from very low productivity due to the virtual absence of corporate farming. The sector’s growth during the last decade has been a paltry 1.7 per cent.

To........

© Dawn Business


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