When the government officials, public institutions and state-owned assets are all for sale, what’s six million acres of farmland between friends? Is this a wise move? Find out…
There are two parallel agendas driving two kinds of land grabbers. The first track is food security. A number of countries which rely on food imports and are worried about tightening markets, while they do have cash to throw around, are seeking to outsource their domestic food production by gaining control of farms in other countries.
They see this as an innovative long-term strategy to feed their people at a good price and with far greater security than hitherto. Saudi Arabia, Japan, China, India, Korea, Libya and Egypt all fall into this basket. High-level officials from many of these nations have been on the road since March 2008 in a diplomatic treasure hunt for fertile farmland in places like Uganda, Brazil, Cambodia, Sudan and Pakistan. Given the continuing Darfur crisis, where the World Food Program is trying to feed 5.6 million refugees, it might seem crazy that foreign governments are buying up farmland in Sudan to produce and export food for their own citizens. Ditto in Cambodia, where 100,000 families, or half a million people, currently lack food. Yet this is what is happening today. Convinced that farming opportunities are limited and the market can’t be relied upon, “food insecure” governments are shopping for land elsewhere to produce their own food. At the other end, those governments being courted for the use of their countries’ farmland are generally welcoming these offers of fresh foreign investment.
The second track is financial returns. Given the current financial meltdown, all sorts of players in the finance and food industries – the investment houses that manage workers’ pensions, private equity funds looking for a fast turnover, hedge funds driven off the now collapsed derivatives market, grain traders seeking new strategies for growth are turning to land, for both food and fuel production, as a new source of profit. To get a return, investors need to raise the productive capacities of the land and sometimes even get their hands dirty actually running a farm.
Experts say the agriculture investments could be a win-win situation. The Gulf gains food security, while poorer developing countries benefit from added jobs and improved technology. But there are concerns, too. The head of the UN Food and Agriculture Organization, Jacques Diouf, has warned that foreign land acquisition and long-term leasing schemes, if done poorly, risk creating a neocolonial pact” and “unacceptable work conditions for agricultural workers.”
Even so, some countries are seeking out investment. The food security land grab is the one that most people have been hearing about, with newspapers reporting that Saudi Arabia and China are out buying farmland all over the world, from Somalia to Kazakhstan. But there are many more countries involved. A closer look reveals an impressive list of food security land grabbers: China, India, Japan, Malaysia and South Korea in Asia; Egypt and Libya in Africa; and Bahrain, Jordan, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates in the Middle East.
The situation of these countries varies a great deal, of course. China is remarkably self-sufficient in food. But it has a huge population, its agricultural lands have been disappearing to industrial development, its water supplies are under serious stress and the Communist Party has a long-term future to think of, it should surprise no one that food security is high on the Chinese government’s agenda. And with more than US$1.8 trillion in foreign exchange reserves, China has deep pockets from which to invest in its own food security abroad. As many farmers’ leaders and activists in south-east Asia know, Beijing has been gradually outsourcing part of its food production since well before the global food crisis broke out in 2007. Through China’s new geopolitical diplomacy, and the government’s aggressive “Go Abroad” outward investment strategy, some 30 agricultural cooperation deals have been sealed in recent years to give Chinese firms access to “friendly country” farmland in exchange for Chinese technologies, training and infrastructure development funds. Chinese companies leasing or buying up land, setting up large farms, flying in farmers, scientists and extension workers, and getting down to the work of crop production.
Most of China’s offshore farming is dedicated to the cultivation of rice, soya beans and maize, along with bio-fuel crops like sugar cane, cassava or sorghum. The rice produced abroad invariably means hybrid rice, grown from imported Chinese seeds, and Chinese farmers and scientists are enthusiastically teaching Africans and others to grow rice “the Chinese way.” However, local farm workers are hired to work the Chinese farms.
The Gulf States – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates – face a totally different reality.
As nations built in the desert, they have scarce soil and water with which to grow crops or raise livestock. But they do possess enormous amounts of oil and money, which gives them powerful leverage to rely on foreign countries for their food. The current food crisis has hit the Gulf States exceptionally hard. Because they depend on food from abroad (especially from Europe) and their currencies are pegged to the US dollar, the simultaneous rise in food prices on the world market and the fall in the US dollar have meant that they have imported a lot of “extra inflation.” Their food import bill has ballooned in the last five years from US$8bn to US$20bn. When the food crisis exploded, and rice supplies from Asia were cut off, Gulf leaders made fast calculations and came to hard conclusions. The Saudis decided that, given impending water shortages, it would make sense to stop producing wheat, their main food item, by 2016 and, instead, to grow and ship it over from elsewhere, provided that the whole process was firmly under their own control. The United Arab Emirates, 80 percent of whose population is migrant workers, most of them rice eaters from Asia, panicked. Under the aegis of the Gulf Cooperation Council (GCC), they banded together with Bahrain and the other Gulf nations to formulate a collective strategy of outsourcing food production. Their idea is to secure deals, particularly in sister Islamic countries, by which they will supply capital and oil contracts in exchange for guarantees that their corporations will have access to farmland and be able to export the produce back home. The most heavily targeted states are, by far, Sudan and Pakistan. The seriousness of the Gulf States’ drive should not be underestimated.
Between March and August 2008, individual GCC countries or industrial consortia leased under contract millions of hectares of farmland. Leaders of the GCC are planning to finalize official policy on this.
Japan and South Korea, for instance, are two rich countries whose governments have opted to rely on imports rather than self-sufficiency to feed their people. Both get around 60 percent of their food from abroad. Early in 2008, the Korean government announced that it was formulating a national plan to facilitate land acquisitions abroad for Korean food production. Indeed, Korean food corporations are already buying up land in Mongolia and eastern Russia to produce food for export back home.
The new strategy is well under way in Burma, which supplies 1m of the 4m tons of lentils, that India imports each year to supplement its domestic output of 15m tons. Rather than keep buying
from Burma, Indian traders and processors now want to go in and grow the lentils there themselves. It works out cheaper, and they get more control over the entire process. With the government’s support, Indian corporations are getting leases to Burmese farmland to produce the crop for exclusive export to India. The Indian government is providing the Burmese military junta with special new funds to upgrade its port infrastructure, and is aggressively pushing a tailored bilateral free trade and investment agreement to iron out the policy wrinkles between the two states. But it doesn’t stop there. Indian CEOs are also buying up Indonesian palm-oil plantations, and are now boarding planes to Uruguay, Paraguay and Brazil to find land to grow pulses and soya beans for export to India. Meanwhile the nation’s central bank, the Reserve Bank of India, is quickly trying to change India’s laws so that it may issue Indian private companies, with the loans they need to purchase farmland overseas. Such a possibility has never been contemplated before, so the rules don’t exist.
The Gulf States, among other land grabbers, are quite lucid about their intention to (a) secure food supplies through direct ownership or control of foreign farmland, and (b) exclude traders and other middlemen as much as possible in order to cut their food import bills by 20 – 25 percent. Indeed, they have been forced to go to places like Islamabad and Bangkok and ask the governments there to lift their export bans on rice just for their special farms. The underlying contempt that all of this shows for open markets and free trade, so much lauded by Western advisers over the last four decades, is glaring.
Another fundamental issue is that workers, farmers and local communities will inevitably lose access to land for local food production. The very basis on which to build food sovereignty is simply being bartered away. The governments, the investors and the development agencies that are being drawn into these projects will argue that jobs will be created and some food will be left behind. But these don’t replace land and the possibility of working and living off the land. In fact, what should be obvious is that the real problem with the current land grab is not simply the matter of giving foreigners control of domestic farmlands. It’s the restructuring.
For these lands will be transformed from small holdings or forests, whatever they may be, into large industrial estates connected to large far-off markets. Farmers will never be real farmers again, job or no job. This will probably be the biggest consequence.
Pakistan opens more farmland to foreigners
Pakistan dramatically increased the amount of farmland open to foreign investors to 6 million acres, but will require outsiders to share half of their crop with local growers, Pakistan’s investment minister told Reuters (May 17,2009). Crop sharing will defuse tensions with local farmers fearful of being crowded out by wealthy foreigners as Pakistan opens existing farmland to outsiders for sale or long-term lease, said Waqar Ahmed Khan, Federal Minister of Investments.
Gulf Arab countries reliant on food imports have ramped up efforts over the last year to buy land in developing nations ranging from Pakistan to the Philippines and Ethiopia. “We expect the investors in farmland to give the local farmers 50 percent of the land’s yield, in addition transferring the technology which will help increase the output of the land by three times,” Khan said during a trip to the United Arab Emirates (UAE) to rally investor support. “We have to apply these regulations to support the interests of the local farmers, otherwise we will be facing objections from the farmers, and we need to keep them happy,” he added.
Farmers’ concerns have led the southwestern Pakistan province of Balochistan to block direct deals between private investors based in the UAE and farmers, Nasir Khosa, general chief-secretary of Balochistan’s provincial government, said in April 2009.
The United Nation’s Human Right Council has expressed concern over the sale of farmland and called for a code of conduct. “We will do everything to protect farmers’ interests,” said Khan.
Last month, Khan said the country had a million acres of farmland to offer to investors. “Recently, we have been able to identify around 6 million acres of farmland in various parts of the country which can be leased out on long-term basis or sold,” he said.
Six million acres is the equivalent of 2.43 million hectares. During Pakistan’s Gulf farmland sale road show, a lot of interest came from UAE investors, especially in acquiring farmland to produce animal feed and rearing livestock, said Amjad Nazir, the joint secretary at Pakistan’s Ministry of Food and Agriculture.
“All week we had meetings with investors from both the private and the public sector and I think very soon we will be sending delegations to study the opportunities here,” said Nazir. Emirates Investment Group, a private-sector investment company based in Sharjah, the third-largest emirate of the UAE, said last month it was in the process of acquiring farmland in Pakistan to export more food to the Gulf region. Last year, private Abu Dhabi-based investment firm Al Qudra said it had plans to start agriculture projects in Pakistan.
To attract the foreign investors, the government would guarantee full exemption from duties and other levies for all equipment imported for farm land projects. In India foreign companies are banned from acquiring farm land but allowed to operate on rented property.
Efforts to sell farmlands began in year 2000 but so far have met significant opposition. For example, an official of Pakistan’s Ministry of Food and Agriculture said in July 2000, “We are working to finalize a policy for introducing corporate agriculture in the country where large farm holdings will be allowed to companies which would seek listing in the stock exchange.” Under the proposal, foreign companies were to be granted a 30-year lease on government-owned land that could be extended for another 20 years. However, food rights campaigners expressed the fear that profit-driven agribusiness transnational companies (TNCs) would use Pakistan as a base for exporting cash crops which would replace staple cereals on the country’s farms.
Huma Fakhar, a market research and trade consultant, said Pakistan is a logical choice for Gulf investments. Fakhar said an investor from Abu Dhabi, whom she declined to name, last year, bought about 16,000 hectares, or 40,000 acres, of farmland in the Pakistani province of Balochistan. Two UAE firms, Emirates Investments Group and Abraaj Capital, have also expressed interest in investing directly in Pakistani agriculture. A few months earlier, some locals from the Makran area expressed their frustration with Arab investors who, were not honoring terms agreed at time of the sale of farm land to the companies. They said that they (local) were promised employment on farms but they (investors) did not fulfill the promise. Instead of cultivating the food crop with the involvement of locals, the contractor subcontracted land to someone else who planted fodder with the help of contract labor brought from areas outside the province.
Pros and cons of corporate farming Federal minister of investment Waqar Ahmad Khan outlining his plan said that in our country 28 million acres of land is barren, with the help of foreign investors, we can convert the millions of barren acres into cultivated land, which will provide the job opportunity to thousands of people as well as increase the country’s GDP. He further said that the government would provide exemption from taxes and different levies to the foreign investors, that the government would install 100,000 strong security forces to ensure secure environment at farm land. He said that in the new investment policy, foreign investors interested in Pakistani farmland have bound 50 percent partnership with Pakistani farmers.
He said that the agricultural productivity can get a major boost if sufficient companies are facilitated to start business by injecting capital and introducing modern management and technologies.
Our people have displayed great potential in adapting to smart business practices, he further added.
“As food prices skyrocketed over the last two years, countries and state-sponsored companies were quietly snapping up land around the world,” says Abdul Khaliq in an article titled ‘Pakistan offers one million acres of agriculture land to Arab monarchs, Corporate farming to lock up scarce water resources in Agribelts.’ “Few noticed when South Korea began investing in farms in Madagascar, or when China, Japan, Libya, Egypt, and Persian Gulf countries acquired farmlands in Laos, Cambodia, Burma, Mozambique, Uganda, Ethiopia, Brazil, Pakistan, Central Asia, and Russia. The purchases weren’t about land, but water. For with the land comes the right to withdraw the water linked to it. And, because this water has no price, the investors can take it over virtually for free. Their lusty rushing to lock up scarce water resources in agricultural belts is nonetheless disturbing,” he asserts further.
“Most conspicuous aspect of this policy is the absence of labor laws; government has assured investors that labor laws will not be applicable to Corporate Agriculture Companies, which is a clear violation of Human and Labor rights. It is also pertinent to mention that there will be no custom duty and sales tax on import of agricultural machinery, equipment, making significant decrease in tax collection. Dividends from corporate agriculture farms are also not subject to tax while remittance of 100 percent capital and profits are allowed. There will be no upper ceiling on land holding. This ‘grand’ package of incentives projects a nefarious proposal by the government of Pakistan to corporate companies for re-colonizing the country,” he completes.
“Emirates Investment Group is in the process of acquiring farmland in Pakistan to export more food to the Gulf region,” said Rehmat ullah Javed, Chairman standing committee of FPCCI on SMEs. “Instead of selling land it would be better to sell its yield to the people in the Gulf Region. Apparently the decision is a continuation of privatization process, similar to selling shares of PTCL, banks and other state enterprises or attracting foreign investment,” he added.”But if it is seen in depth and historical perspective this can have serious repercussions in the future.”
Selling six million acres of farmland does mean in effect that we are inviting multi-national colonists back to our country once again. It can create security risk for the country and the decision to offer farmland to foreigners lacks vision and foresight, especially since the only draw is short-term gains at the cost of selling the homeland. “The decision is a continuation of privatization process similar to selling shares of state-owned institutions to attract direct foreign investments,” said Mian Abu Zar Shad, former Chairman PIAF, “but if seen in depth and historical perspective, selling six million acres of farmland means once again inviting East India Company to our country.”
“It is due to the sale of Kashmir to the Dogra Maharaja that Kashmiris were deprived of freedom,” he continued further, “despite the fact that the State of Jammu and Kashmir had an overwhelming majority of Muslim population in 1846 when the Amritsar Treaty was signed and it had 95 percent Muslim population in 1947 and there was no reason as to why it should not become part of Pakistan. Despite the fact Jammu and Kashmir was closest to the area which was declared Pakistan in 1947, but due to the Maharaja Hari Singh’s dishonest act Kashmiris could not reap the fruits of freedom. Selling of our farmlands is in fact selling of our homeland. It can create security risks for the country,” he explained.
“As Emirates Group is looking for an international partner and total land available for sale is six million acres, as such, our enemies can manage to become partners or individual buyers directly or indirectly. History has recorded the biggest blunder of Palestinians when they sold land to Jews and gradually rich Jews took over their homeland and Israel appeared on the world map. The authorities are requested to kindly read the history and see how Israel managed to capture the land of Palestinians and appeared as an independent country on the world map. Palestinians are the victims of their own mistakes and Israeli has become permanent pain in the neck, “he completed.
“The decision to sell six million acres of farmland can prove extremely dangerous in the long run,” said Ibrahim Mughal, Chairman Agri forum Pakistan.
These so-called Mujahideen occupied some area of our tribal region (less than one million acres) and despite the Drone attacks, both USA and Pakistan have failed to get rid of these people who are not only a threat to Pakistan, but for the whole world. By selling six million acres of land we will introduce new type of feudalism and create relative deprivation in the area which can spoil the future of our coming generations, who are already victims of our short-sightedness. Pundit Nehru, the first Prime Minister of India, introduced land reforms in India and feudalism was buried once and for all and total land divided among landless farmers. There are many other options available to us if we want to utilize this land and some of these are: instead of selling the farmland outright, the government can offer to lease it, secondly, the farmland should be offered to domestic investors first. What’s wrong with offering the same incentives and subsidies to local farmers? Thirdly, government may distribute this land among landless farmers and help them to cultivate the same. For the utilization of such land the government should prefer local investors and poor landless farmers and support them in cultivation of land to increase our GDP and per capita income. Finally, government can easily assess the population growth in the country in coming years. Our country would need more and more cultivated area to feed our own population, rather than feeding other nations!”
“Agriculture is the biggest sector of the economy,” said Dr Murtaza Mughal, Pakistan Economy Watch (PEW). “It is under serious threat as gradual sale and lease of large tracts of lands to foreigners is being carried out in a very quick and secretive manner. Millions of farmers will become jobless while thousands of acres of fertile land will become barren because the corporate farms would be given preference in provision of canal water, seed, pesticides, fertilizers and other inputs. The idea of corporate farming has evoked more fears than hopes. Many think that corporate farming will have negative impact on rural livelihood and will transform Pakistan into a more unequal country. Despite opposition, some important persons seem determined to allow foreigners to own an unlimited amount of land in any part of Pakistan,” he said further.
Industrial privatization was carried out to retire the debt. In the process we lost many profitable units and the country was pushed to brink of bankruptcy. Now fertile lands are being privatized in the name of technological advancement and attracting foreign investments. Foreigners have only one thing in mind while investing outside their country, to gain maximum in minimum of time and leave.”Wealthy countries have controlled global trade, now they are eyeing over one trillion dollar agricultural output of underdeveloped countries,” said Dr Murtaza Mughal. “Rich countries have already bought large farms in many countries like Congo, Sudan, Zambia, Myanmar, Laos, Uganda, Cambodia, Mozambique, Madagascar, Ethiopia, Angola, Nigeria, Tanzania, Brazil and Central Asia. They are expanding and attracting unrest and riots. It seems that now it is our turn. Corporate farming will push some cultivators to commit suicide while others may prefer crimes. A good number may develop extremist tendencies that will have a heavy political price.”
“I am surprised at the media — why are they silent on this issue of national importance? The issue must be discussed in the parliament before making any deals with any foreign groups,” he further added.
If the authorities are bent upon corporatizing farmlands then it would be better to lease it so that Pakistan has the right in parliament before implementation.
There are many other options to utilize the land, instead of selling, the government should offer such land on five, ten, or 15 – 30 year lease, secondly, the farmlands should be offered to domestic investors on comparatively easier terms and thirdly the government may distribute this land among landless farmers and help them to cultivate the same.
Ahmed Humayun is Bureau Chief Value TV
This article was originally published in the print edition of Valuemag, July 2009, issue 12
Graphix and layout by Muhammad Asif, Photos by GM Shah