Corporate farming and its issues

Corporate Agriculture Farming (CAF) is a fairly broad term that deals with the general practices and effects of a small number of large, global corporations that dominate the food industry. It simply encompasses all activities from production to retail consumption.

Corporate farming or agribusiness is used by the critics of the idea as a term of Third World farmers’ hardships, heavy subsidies of the western governments to their agriculture sectors, genetically modified food and unemployment of the rural labor and everything that is associated with corporate world. Therefore, it reflects the difficulty to sell the idea to the subsistence farmers, civil societies, NGOs active in the field and to the environmentalists. Agriculture is an industry that provides economies of scale to large producers of a small number and depicts their monopolistic characteristics. Corporate farming concentrates food production through adoption of mechanized methods designed to maximize production. It encompasses not only the farm itself but also the entire chain of agri-business from transport, distribution, marketing, advertising and retail sales and even influences the other areas of public policy including research, education through lobbying efforts and thereby protecting their interests. Corporate farming lobbyists have been very successful in molding national public policies of their home governments to their advantage in such a way that has hurt the Third World poor farmers.

Owing to their superior farming methods they narrow down the market share of subsistence farmers since Transnational Companies (TNCs) use mechanised farming which ultimately cause unemployment in the countryside. Extra pressure on the cities as a result of mass migration further aggravate the situation in the already problem ridden urban life.

The benefits of CAF are not as great as they appeared as it involves huge amount of water, energy and chemicals often with little regard to long term adverse effects. Since the narrow focus of industrial agriculture is to increase production and ignoring the environmental impact altogether. Some of them are pumping of water from reservoirs faster than they are being recharged. As a result of excessive use of herbicide and insecticide they are accumulating in ground and surface waters. Chemical organism are damaging micro organism besides bringing adverse affects of rapidly developing resistance among pests. At the same time environmental degradation and pollution are worsened by the waste from livestock and poultry farms. Damage to fisheries form oxygen depleting micro organisms fed by fertilizer runoff. Another adverse impact is the increased health risks borne by agriculture workers and farmers exposed to pesticides as a result new health hazards will further put our public policy institutions under pressure. In a country like Pakistan where water resources are fast depleting and due to political reasons the available resources are not being harnessed to their maximum potential the resistance from farmer community is obvious to crop up.

Pakistan’s government, in order to implement the idea in any of its forms, will have to educate the public particularly farmers, persuade and convince the critics and alley their fears. This means that before initiating CAF we should plan thoroughly keeping in view all related aspects and alleviate the fears of all stakeholders and then adapt to the agricultural, social and economic realities prevailing in Pakistan. This is not a small challenge and should be taken up with the utmost skill and diligence possible.

Owing to their superior farming methods they narrow down the market share of subsistence farmers since Transnational Companies (TNCs) use mechanized farming which ultimately cause unemployment in the countryside.

However, corporate farming is not without its advantages. Corporate farming boosts production and improves the quality of the production. Big transnational companies have the capacity to invest heavily in order to use mechanised farming and the latest technology (e.g. land levelling through laser technology). It also provides for the best fertilizers, pesticides, herbicides and other chemical inputs. It also saves water by employing innovative and economical irrigation techniques. Moreover, it can invest huge amounts of capital to undertake research in the field of food industry. It brings professional management expertise to the sector.

Now we look at the situation as to why CAF is to some extent necessary to be undertaken in Pakistan. Basically among other thrusts of the policy is to bring wasteland under cultivation. The total geographical area of Pakistan is 79.6 million hectares. Of this 9.14 million hectares land is cultivable wasteland. Province-wise break-up of the land is as follows:1. Balouchistan 4.87 million hectares
2. Punjab  1.74 million hectares
3. Sindh      1.45 million hectares
4. Khyber PK  1.08 million hectares

It is believed that the cultivable waste area, which is almost half of the total cultivated area, has the potential to boost the total agricultural production.

Cultivable waste land in Balouchistan is mainly in Kalat, Quetta, Nasirabad and Makran Divisions. In Punjab cultivable waste area is mainly in D.G Khan, Bhawalpur, Rawalpindi and Lahore Divisions. In Sindh, cultivable waste area is located in Hyderabad, Mirpur Khas, Sukkur and Larkana Divisions. In Khyber PK the cultivable waste land is located in D.I.Khan, Hazara and Kohat Divisions. Besides identifying cultivable waste land, fisheries sector, production of mutton through raising of sheep and goats, dairy farming, dehydration of vegetable, off season vegetable production, animal feed mills, fruit juice making plant, and hybrid seed production are among the objectives to commercialise agriculture sector.

The factors that particularly hit our farmers and the whole system are as under:-
Negation of Land Reforms:
Previous land reforms were enacted in different stages.
1.The Land Reform Act of 1959 (Martial Law Regulation 64)
2.The second Land Reform Act of 1972 (Martial Law Regulation 112)
3.The third Land Reform Act of 1977

These laws successively abolished ‘Jagirs’ without compensation and imposed a ceiling on individual land holdings, (40 hectares for irrigated and 890 hectares for the un-irrigated lands). However, due to a number of factors these reforms failed to realise the desired outcome. Nevertheless the experience shows that wherever these reforms were implemented, the outcome was very positive in respect of productivity and employment.

Now that CAF promises abolition of any ceiling to landholdings for corporations, it is feared that big landlords will protect their huge landholdings by registering as companies, or forming partnerships with foreign corporations, at the same time exempting their farm from taxes.

Moreover, critics are aghast at the anomaly that private citizens are barred from unlimited landholding, whereas foreign investors can own as much land as possible. This has led to the outcry, on the part of a section of observers, that our very sovereignty may be compromised.

Uncontrolled Produce:
Though productivity will increase but opponents of the idea express their fears about our food security. With a view to maximize profit, they will invest their resources in cash crops and not in food crops. It is nave to expect that they will be catering to the nation’s needs for food commodities.

Small Farmer’s Chances:
The plan also jeopardises the future of our poor rural masses. The corporate farms can flood the market with a single commodity production; the price of the commodity comes down, while the cost of input is on an upward increase. This cost-price squeeze hurts small farmers and entrepreneurs, whereas only giant corporations can make profit.

Foreign Investment:
It is said that this free style production and a pliant government are the real attraction for transnational corporations. In the words of one analyst,

‘Why should they (MNCs) come and invest in remote, poor regions of a country notorious for its shaky law and order and creaky social structure?’ With increasing awareness about environmental degradation and consumer rights in the developed world, multinational companies are out-sourcing production to those parts of the world where people know little about these issues, laws are lax and administration more than willing to let companies circumvent ‘in some case bend’ all rules of the game for their favour, Agriculture is no exception to this rule’ With western concerns rising, prohibitive laws multiplying and ethical questions gaining momentum, it is high time for these companies to look east for safe havens.’

Water Issues:
If we plan to bring an area of 9.14 million hectares under cultivation, half of which is in Baluchistan (4.87), it is natural to ask from where the water to irrigate this vast area will come from. We are already facing acute water shortage for our agriculture sector needs; with the country facing drought like conditions, the provinces are fighting over the issue. This is a very obvious and important question, but still there is no answer from the government side. The opponents point out that if water had been available, this area would have been brought under cultivation long ago.
Is CAF Necessary?
Some experts have fundamentally challenged the efficacy of corporate agriculture farming methods. One such critic, Najma Sadeque has led the attack on CAF by asserting that it is not efficient at all, contrary to the official projections:

A study by the Food and Development Policy Institute of USA (Food  First) and the Transnational Institute of Nederland released at the UN Conference in Maastricht covering both industrialised as well as developing countries demonstrated and reconfirmed that indigenously-farmed small acreages are 200 to 1000 percent more productive than the bigger ones. Small farms and peasants however cannot be successful if governments withhold basic facilities and extend them exclusively to a privileged minority.

She cites the experience of USA, China and erstwhile USSR in chemical monoculture farming which has turned hundreds of thousands of acres of farmlands into infertile desert. She points out that there is a worldwide movement to turn back to chemical- and hybrid-free organically grown foods, and that there is burgeoning $15 billion market for it. India has already launched a National Programme for Organic Production (NPOP). Citing the report of National Commission on Small Farms by US Department of Agriculture (A Time to Act)  she says that there is a growing realisation in US too that there is a strong need to turn away from corporate agriculture and to focus on environmentally sustainable and socially beneficial farming.

Apart from its production methods, she also raises serious questions about the organisation of the CAF, saying that it has an inherent tendency for consolidation and monopolisation. This ultimately pushes the small, local entrepreneurs to the wall. This concentration of market share in a few hands has been observed in USA, where family farm and small farmers have been ruined. This is no good example to follow in Pakistan.

Despite what its critics say there is immense potential in corporate farming in Pakistan. What the critics have highlighted are issues that need to be monitored once this concept of farming is launched.

Summarizing the ill-effects of the corporate experience in Pakistan, she states:

Industrial farming has historically exploited with massive capital investment for short term high profits, which displaced and created few or no jobs for peasants, driving out local small entrepreneurs and factories out of business whose losses added to corporate consolidations. In America, the family farm is almost extinct. Corporate farming in Pakistan will concentrate vast, unlimited acreages in fewer hands, with all the attendant diseconomies of scale applying to chemical monoculture and environmental degradation. The shortage of finite water supply means it will be diverted to where money is. Government may not ignore the fact that all natural resources belong to the people and not even elected governments have the mandate to do as they please. It is a violation of the civil and human rights and should be withdrawn immediately.

Pakistan’s International Commitments:
Pakistan has international commitments to halve poverty by year 2015 (World Food Summit 2002) and is a signatory to the United Nations Convention to Combat Desertification. In its report about the implementation of the UNCCD, April 2002, the Government of Pakistan has promised to distribute three million acres of available land to small farmers. This distribution will be coupled with infrastructure and inputs provision with the objective to combat poverty and desertification. In National Report of Pakistan on the Implementation of UNCCD which was submitted in April 2002 to UNCCD Secretariat, Government of Pakistan reports,

Government has a plan regarding redistribution of assets, especially state-owned land. It can have a major impact on poverty reduction efforts in rural Pakistan. The Government has launched a programme of accelerated distribution of state-owned land to small farmers. The distribution of about three million acres of available land will be fully supported with the provision of infrastructure and all other possible inputs to combat desertification and rural poverty.

The critics of CAF voice their inability to understand how the government is going to carry out its commitments.

Despite what its critics say there is immense potential in corporate farming in Pakistan. What the critics have highlighted are issues that need to be monitored once this concept of farming is launched. Pakistan should learn from the experiences of other countries and devise mechanisms for safeguarding the ill effects of corporate farming. Establishment of economical large farms, using quality inputs, implementing mechanized farming and processing agricultural products are realms only corporate sector can enter. These realms are out of reach of an ordinary farmer however financially strong he is.

Government of Pakistan has recently initiated Corporate Farming in the Agriculture sector of Pakistan.

There has been lot of opinion on this issue. Since this would have profound effect how farming will be done in Pakistan we are bringing the total issue here.