Making China-Pakistan agri cooperation politically safe
The long-term (2017-2013) plan of the China Pakistan Economic Corridor (CPEC) places agriculture development in Pakistan as a major area of bilateral cooperation and views development in this sector as a way to reduce poverty in the country.
As a first step, the plan talks about the strengthening of overall agriculture infrastructure, including “biological breeding, improvements to processing, storage and transportation of crops, disease prevention and control, water resources utilization, conservation and production, land development and remediation, ICT-enabled agriculture and marketing of agricultural products.” China will also provide training to agricultural personnel as well as technical exchanges.
It is envisaged that as a result of the above, water-saving agriculture techniques will be put in place, much required in water-constrained areas such as Baluchistan; drip irrigation technology will be made widely available; post-harvest losses will be reduced; production of agriculture inputs particularly pesticides, fertilizer, and machinery will be promoted locally; and production of horticulture products will see a boost.
While these developments are certainly welcome, the farming community in Pakistan is eager for details of China’s plans. In a survey conducted by the Sustainable Development Policy Institute, it was learnt that the farmers want answers to three key questions: a) Have Chinese private enterprises been allowed to operate in agriculture, livestock and food processing sectors? b) Will they produce the same or similar products as are already being produced by local farmers? and c) How will the Chinese procure land and what will be the permissible land size?
It is important to understand the background to these questions. First, the local business community feels that Chinese businesses in agriculture have greater efficiency on account of the more sophisticated technology already available to them. Second, there is a perception that the Chinese will be allowed duty free import of machinery and related inputs under the China-Pakistan Free Trade Agreement, which could further reduce their cost of doing business in Pakistan. And third, Chinese businesses will have the capacity to hire labor away from local farmers at better wages.
To sell agricultural cooperation under CPEC and also remain politically safe, the PTI government may have to provide some safeguards at least during the short and medium term to local farmers who are already facing a host of supply-side constraints.
Dr. Vaqar Ahmed
All in all, local farmer associations such as the Pakistan Kissan Ittehad feel that they will not have a level playing field in competing with their Chinese counterparts. However, they are ready to favor the influx of Chinese businesses in agriculture and livestock if they specifically come in production lines which are not currently active in Pakistan, such as value added agriculture like gourmet organic processed food which in turn could boost Pakistan’s agro exports.
The Federation of Pakistan Chambers of Commerce and Industry also wishes to see some additional conditions before the Chinese are allowed participation in this sector. According to them, land in special economic zones should not be sold with complete property rights transferred to foreigners but instead given on long term lease.
Second, all businesses coming from abroad should have a requirement to enter into a joint venture with a local business group. And third, any Chinese company should first register locally at the Securities and Exchange Commission and then also obtain membership of the local Chamber so that it adheres to local market regulations.
To sell agricultural cooperation under CPEC and also remain politically safe, the PTI government may have to provide some safeguards at least during the short and medium term to local farmers who are already facing a host of supply-side constraints including: high input costs and their timely availability in the local market, difficulties in obtaining credit, distortions in government procurement, water shortages, weak marketing, storage and warehousing infrastructure and less than desired cold storage facilities. The lack of appropriate transportation and storage for temperature sensitive items such as fruits and sea food has resulted in weak exports of these in the recent past.
Unfortunately, while the solutions to the above mentioned are well-known, the implementation of these solutions has become difficult due to slow legislation in the agriculture sector which was supposed to happen after the 18th Amendment which devolved power to the provinces.
The management of laws and policies which govern important agricultural inputs such as water, fertilizer and seed are fragmented across federal and provincial government, a key issue which is often highlighted by those interested in bringing foreign direct investment in agriculture, including from China. Perhaps, Prime Minister Imran Khan could make this a priority item on the agenda of the forthcoming meeting of the Council of Common Interests where leaders from all provinces will be present.
– Dr. Vaqar Ahmed is associated with the Sustainable Development Policy Institute (SDPI).