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Going Gaga Over Grain: Pakistan and the International Farms Race
September 17, 2009 By Wilson Center Staff
Written by Michael Kugelman and originally published in Dawn.
Last May, while Pakistan’s military was waging its offensive in Swat, Islamabad officials were simultaneously launching another offensive in the Gulf: a charm offensive to secure investment in Pakistani farmland.
Appearing at “farmland road shows” across the region, the investment ministry representatives depicted Pakistan’s soil as the perfect solution to the Gulf nations’ food insecurity.
Such efforts have paid off for Islamabad (and according to media reports, more shows have been staged in recent days). Pakistan’s farmland is an increasingly popular target for wealthy, food-importing nations who, because of the volatility of world food markets, are taking food security matters into their own hands. These states (and also private investors) aim to buy or lease farmland overseas, grow their own crops and export them back home.
Given their lack of transparency, the details surrounding these investments are sketchy and the facts elusive. In Pakistan, uncertainty reigns over the exact amount of land made available to investors, the quantum of land sold or leased so far, and who is in fact doing the investing.
Still, even without these details, there is strong evidence to suggest that the race for Pakistan’s farmland — if not halted prematurely by farmers’ opposition or investor change-of-hearts — could trigger droves of land deals, acute resource shortages and even political strife.
Islamabad has established an extraordinarily welcoming investment environment that financiers will find hard to resist. The government’s Corporate Agriculture Farming (CAF) policy — spelled out on the Board of Investment’s website — effectively legalizes foreign land acquisitions. It permits state land to be purchased outright or leased for 50 years, and allows investors to determine the size of their acquisitions (with no upper ceiling). These features apply to a broad range of agriculture from crops, fruits and vegetables to forestry and livestock farming.
Land investors flock to countries with strong legal protections. Cambodia’s government has reportedly established a national land concession authorizing public land to be allocated to foreigners — and the country is now experiencing what the BBC describes as an “epidemic of land-grabbing.” Conversely, in India, foreign companies are banned from owning farmland — and considerably fewer investors have come calling.
Pakistan, like Cambodia, provides the legal cover farmland investors look for. However, the CAF goes beyond legal protections. It also offers generous financial incentives such as 100 per cent foreign equity; exemptions on land transfer duties; and customs-duty-free, sales-tax-free agricultural machinery imports.
Legal protection and financial incentives — what more could a foreign land investor in Pakistan want? Security, of course, and Islamabad purports to have this covered as well, through the formation of a 100,000-strong security unit. Pakistan’s government is so serious about concluding land deals that it has offered to deploy a force almost a fifth the size of the army to protect investors’ new holdings.
A rash of foreign land acquisitions in Pakistan would deepen the country’s resource crisis. Pakistan already suffers widespread water shortages, and could be water-scarce by 2020. However, supplies could dry up much sooner if enormous quantities of water are siphoned off to support large-scale, water-intensive agricultural production schemes.
To understand the scale of Pakistan’s water shortages, take a look at Aquastat, the FAO’s water statistics database. Of all the nations most often associated with relinquishing farmland, only one — Kenya — has less water availability per capita than Pakistan’s 1400 cubic meters. In fact, of the nearly 200 countries listed in the database, only 35 have less water than Pakistan — many of them the parched countries of the Gulf that are seeking the water-laden farmland they lack at home.
Indeed, quests for overseas farmland are water hunts as much as they are land hunts. Yet investors are seemingly so seduced by Islamabad’s legal and financial inducements that they disregard the fact that Pakistan’s water supply can barely sustain its own farming, much less that of immense foreign agribusiness projects.
Pakistan’s water and energy shortages could also limit the possible benefits accruing from the deals, including better technology, more employment and higher crop yields. With limited energy to operate upgraded farm machinery, and limited water to irrigate cropland, farming job prospects could suffer and talk of increased yields could become irrelevant.
Land deals could mean not just compromised small-holder livelihoods but also widespread displacement. Not surprisingly, critics argue that big land acquisitions could spark violent responses and mass political unrest. Such predictions may be premature — other than in Madagascar, opposition has been relatively localized — but they are not far-fetched in Pakistan.Here’s why. According to the World Food Program, 77 million Pakistanis are already food-insecure, and many of them live in the country’s most volatile areas. Foreign land holdings could cause a flare-up of this food vulnerability powder keg at the worst possible time. During the height of last year’s global food crisis, Pakistan imposed export bans to keep domestic food prices down.
According to a report by the International Institute for Sustainable Development, the UAE — which hopes to grow rice and wheat in Pakistan — then requested blanket exemptions from these bans.
Islamabad eventually relaxed export restrictions on Basmati rice. So a politically explosive scenario — such as the UAE trucking rice out of a drought-stricken or war-ravaged Pakistan and exporting it back to the Gulf while hungry locals look on — is not at all unrealistic. Throw that investment-protecting security force into the mix, and things could get really ugly.
Furthermore, there are long-standing rifts between Pakistan’s rural poor and its wealthy, landholding elite. Scores of huge land acquisitions — particularly if they displace poor laborers — would exacerbate these class-based cleavages.
Ominously, the Taliban’s actions in Swat reveal a new ability to exploit class divisions by pitting landless farmers against their landlords. Militants may well use farmland acquisitions as a pretext for fomenting a fresh class revolt in Punjab, the fertile, populous province coveted by the Taliban and reportedly ground zero for the farms race in Pakistan. Such a thought is enough to make one wonder if those farmland road shows are really worth the effort.
Michael Kugelman is program associate with the Asia Program at the Woodrow Wilson International Center for Scholars.
Bottom photo: CARE food aid in Pakistan. Courtesy flickr user Feinstein International Center.
Top photo: Gilgit, Pakistan. Courtesy flickr user michaelnewport.
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Written by Michael Kugelman and originally published in 
Here’s why. According to the World Food Program, 
