Thursday, September 17, 2009

Pakistan's Farmland Controversey

Pakistan is seriously pushing ahead with a plan to sell or lease over 700,000 acres of agricultural land to foreign investors in the face of growing opposition at home. A Saudi delegation is due in the country this month for further talks on a plan to lease an area of land more than twice the size of Hong Kong, a Pakistani official told Reuters this month. Similar reports have surfaced earlier, indicating UAE investors have been quietly buying Pakistani farm land.

In June, news agency Reuters reported that the government of Pakistan had offered 404,700 hectares (ha) of farmland for sale or lease to foreign investors. It is the usual suspects of the Gulf states and South Korea who are the likely targets of the government's drive for investment. Oil rich, food poor states from the Middle East and food deficit prone South Korea have been spurred by the high food prices of 2007 and 2008 to increase their food security by investing in agricultural land abroad.

Also in June 2009, Swedish multi-national food company Tetra Pak announced the signing of an memorandum of understanding with local company Engro Foods to create a dairy hub in the Sahiwal district of the Punjab. The hub will serve 15 villages in the district and aims to promote more efficient production and bring smallholders into the formal dairy market chain.

In July, the Pakistani minister for investment said that the country would be happy to provide land for Korean companies to build food and dairy processing facilities, according to Pakistan Agribusiness Report. Also in July, the chief minister of the Punjab said that there was a large amount of interest in investing in the province's agriculture from Qatar.

It is not just Arab states that are buying up farm land in other nations. China secured the right to grow palm oil for biofuel on 2.8m hectares of Congo, which would be the world’s largest palm-oil plantation. It is negotiating to grow biofuels on 2m hectares in Zambia, a country where Chinese farms are said to produce a quarter of the eggs sold in the capital, Lusaka. According to one estimate, 1m Chinese farm workers will be working in Africa this year, reports the Economist.

In order to assess the situation and develop serious policy recommendations, it is important to have a basic understanding of how Pakistan's agriculture sector operates. Here are some of the important facts about it:

1. Feudal Land Ownership and Farm Productivity: The size of Pakistan's total arable land is about 22 million hectares (1 hectare=2.47 acres), the 15th largest in the world. Most of the best farm land is held by feudal landowners who use poor sharecroppers or illiterate tenant farmers to cultivate their land. As a result of the nation's landowning system, not only are the landholdings in Pakistan much larger than almost all of Pakistan's neighbors (average farm is Pakistan is about 10 acres vs only 4.5 acres in India), but the productivity and crop yields have been neglected by the absentee landlords. In spite of the massive public investments in building the irrigation and support infrastructure for Pakistan's farm sector and expensive incentives such as no taxation of farm income, Pakistan's farm productivity has been lagging, turning Pakistan from a food-surplus nation to a food-deficit nation in the last sixty years.

2. Water Scarcity: With only about 1000 cubic meters per person per year water resources, Pakistan is a water-scarce country. Out of the 169,384 billion cubic meters of water withdrawn since 2000, 96% were has been for agricultural purposes, leaving 2% for domestic and another 2% for industrial use. By far the most water is used for irrigated agriculture. With the world's largest contiguous irrigation system, Pakistan has harnessed the Indus River to transform 35.7 million acres for cultivation in otherwise arid conditions. Yet,the sector contributes less than 20% of the Pakistan's GDP and Pakistan remains a food-deficit nation. Rather than flood irrigation used in Pakistani agriculture, there is a need to explore the use of drip or spray irrigation to make better use of nation's scarce water resources before it is too late. As a first step toward improving efficiency, Pakistan government has launched a 1.3 billion U.S. dollar drip irrigation program that could help reduce water waste over the next five years. Early results are encouraging. "We installed a model drip irrigation system here that was used to irrigate cotton and the experiment was highly successful. The cotton yield with drip irrigation ranged 1,520 kg to 1,680 kg per acre compared to 960 kg from the traditional flood irrigation method," according to Wajid Ishaq, a junior scientist at the Nuclear Institute for Agriculture and Biology (NIAB).

3. Growing Urbanization Trend: Pakistan is already the most urbanized nation in South Asia where the farm sector contributes about 20% of the GDP, less than the 27% contribution by the industrial sector and the rest by service sector. And as the urbanization process accelerates, the farming techniques, emphasis on water-saving irrigation methods and productivity need to increase significantly to feed the growing population with fewer farmers.

If the foreign investors bring modernization to Pakistani farms, then the interest by foreign investors is worth considering. But the leases must be written up to ensure significant investment in the land and water management techniques, as well as much higher farm productivity benchmarks with the first right of refusal to the harvest given to Pakistanis.

A carefully crafted lease arrangement with foreign investors can accomplish the following:

1. Industrialization: Transform Pakistan from the traditional feudal society to an industrial society with modern agribusiness capable of not only feeding its growing population, but exporting surplus to add to the much-needed foreign exchange stream of earnings.

2.Productivity Enhancement: Increase productivity and improve Pakistan’s food security. There is significant room for increasing farm productivity in Pakistan. For example, Ahmed, Chaudhry and Iqbal of Pakistan Institute of Development Economics argue that per hectare wheat yield in Pakistan can be raised from about 2000-2500 kg to about 3500 kg with improved farming inputs and techniques. Since Mexico and Pakistan are located in analogous ecological zones, the introduction of Mexican varieties of high-yielding wheat by American agronomist Norman Borlaug in the country in sixties ushered an era of green revolution. But unfortunately the pace of development has not been maintained and Pakistan now lags significantly behind the Mexican yields, who are producing 3900 kg of wheat grain per hectare as compared to 2491 kg for Pakistan in the year 1999, the best season in recent memory. According to FAO data reported by, among spring wheat growing countries Egypt has the highest yield, producing 5422 kg of grain per hectare and Indian Punjab produces 4090 kg versus 2500 kg per hectare in Pakistan.

3. Public Revenue Enhancement: Grow Pakistan’s tax base from the annual leases and the farm income tax received from foreign investors. This additional revenue can help boost spending on the critical education and health care programs to develop Pakistan's lagging human resources.

The terms for any land lease agreements must protect the best interest of all Pakistani stakeholder, including the farm workers, farmers, the domestic consumers, local communities, and ensure improved food security for Pakistanis and the protection of the land, water resources and the environment, while helping the foreign investors meet their basic objectives of food security in their nations.

In my view, it is not a good idea to summarily dismiss foreign investor interest in leasing farm land and investing in Pakistan's agriculture sector. What is important is to carefully assess the opportunity and come up with the best possible terms for such an arrangement to be mutually beneficial to both parties. Joachim von Braun, the head of IFPRI, argues that the best way to resolve the conflicts and create “a win-win” is for foreign investors to sign a code of conduct to improve the terms of the deals for locals. Various international bodies have been working on their versions of such a code, including the African Union, which is due to ratify one at a summit this year.

While I do think some skepticism is justified here, doing nothing is not an option. Pakistan faces potentially severe food and water shortages in satisfying the needs of its growing population. Significant investments are urgently required to avert potential famines and droughts. The best course of action now is to try and pressurize Pakistan's leadership and negotiating team to proceed cautiously and craft the best possible terms for a few pilot deals they can to ensure Pakistanis' food security and looking after Pakistan's best long term interests, while offering reasonably attractive returns to investors.

Related Links:

Foreign Investors Buying Pakistani Farm Land

Is Leasing Agricultural Land to Foreigners a Good Idea?

Pakistan's Sugar Crisis and Dietary Habits

Wheat Research and Development in Pakistan

Pakistan's Water Crisis

Wheat Productivity, Efficiency and Sustainability

Agrarian Reform in Pakistan

Urbanization in Pakistan

Pakistan Agribusiness Report 2009

Pakistan to Lease 700,000 Acres to Arab States

Pakistan's Total Arable Land


Anita said...

It makes me so cross that they should consider doing this, when so many Pakistanis go hungry.

Riaz Haq said...

It is not a good idea to summarily dismiss foreign investor interest in leasing farm land and investing in Pakistan's agriculture sector. What is important is to carefully assess the opportunity and come up with the best possible terms for such an arrangement to be mutually beneficial to both parties.

If the foreign investors bring modernization to Pakistani farms, then the interest by foreign investors is worth considering. But the leases must be written up to ensure significant investment in the land and water management techniques, as well as much higher farm productivity benchmarks with the first right of refusal to the harvest given to Pakistanis.

Anonymous said...


What is that saudi is going to offer by giving away the most fertile land in the world

Further the modern economics of value added product has been junked. The primary commodities prices are shooting up.

So it might be good for saudi to protect its food requirement but this will go against pakistanis in the the long run.

They are not selling the family silver they are selling the family. Nobody is allowed a piece of land in any gcc country but for an arab. Whether he can be a muslim of any country ?????????

Shams said...

I had promised myself not to criticize your blogs, but this one just sprung itself up begging to be shot down.

Most of the land being handed off to foreign countries is that part of Balochistan where the Baloch will kill a Punjabi as soon as he enters Balochistan, which is quite typical of Balochistan these days anyway.

Only a token piece of Punjabi land is being given out. The goal is to give that land to the Saudis and give 100% of the proceeds to Punjab. This has happened in case of all the privatized factories as well as Karachi Port Trust which is now literally owned by American President's Line (APL).

Perhaps you are not aware that when Ethiopia and Somalia were in the midst of a food shortage, the Qatari and Saudi land possessions there were harvesting quite well due to their investments in deep underground natural water reservoirs. Not one bit of grain was made available to the locals, even though Europeans were donating their own grain.

I do not know how much real ground work you did before claiming that "it is not a good idea to summarily dismiss foreign investor interest in leasing farm land and investing in Pakistan's agriculture", but the locals in Pakistan are opposed to the idea for a damn good reason.

Riaz Haq said...

Doing nothing is not an option. Pakistan faces potentially severe food and water crisis for its growing population. Significant investments are urgently required to avert potential famines and droughts. While I do think some skepticism is justified here, let's try and pressurize Pakistan's leadership and negotiating team to craft the best possible deals they can for Pakistanis' interests while offering reasonably attractive returns to investors.

Goldfinger said...

I agree with you Riaz sb, when you say, "In summary, it is not a good idea to summarily dismiss foreign investor interest in leasing farm land and investing in Pakistan's agriculture sector. What is important is to carefully assess the opportunity and come up with the best possible terms for such an arrangement to be mutually beneficial to both parties." But I too worry that the negotiators don't do sly, underhand deals, in which the locals are eventually left high and dry, a few become very rich, and the others go laughing all the way to their banks!

Anonymous said...


Have you seen any top guy in pakistan doing anything to the betterment of the country. All of them feather their nest so that one day they can leave and settle in an american country.

See mush is having a ball in england for the favour he had done to west when he was in power.

It would be stupidity to sell the lands to the foreigner. IN agrticulture what is that saudi has that the local pakistani does not have.

Why is that they are not looking at netherland where there is an excess of grains and milk [ tons were poured in the ground for protest ]

IN long and short they are selling away to a east india company that is all nothing else.

Anonymous said...

Riaz, when there is nothing else left to sell or pledge, leasing one's own land, which few sovereign countries will do in modern times especially given the dark memories of colonization, is the only option left for Pakistan. Pakistan ceremoniously joins the mostly subsaharan club of Ethiopia, Somalia etc. I would like to post a link which I read in Economist a couple of months ago.

As for your opinion of Saudis adding value to the local economy and local tribesmen, I am sure this would happen given their colourful history of human rights and commitment for pluralism. Ironic that this happens at a time when Pakistan with the help of international community is trying hard as ever to cleanse its soul out of Saudi Wahhabism.

Hearty Eid Mubarak

Zen, Munich, Germany

Riaz Haq said...

Zen: "Hearty Eid Mubarak"

I, too, wish you a Happy Eid!!

AS to the leasing of land, have you heard about Brazil? It not only leases, but sells farmland to foreigners. So do many other fairly well off nations, in South America and other parts of tyhe world. It's no different than leasing land for oil (or other natural resource) exploration and extraction that is routinely done around the world.

What the foreigners can or must do can be put into a contract and enforced, just like any other agreements. What is required is transparency, which is one of my concerns because most Pakistani politicians are bureaucrats are not honest.

Anonymous said...

"AS to the leasing of land, have you heard about Brazil? It not only leases, but sells farmland to foreigners"

Maybe. Even in Bangalore companies like Texas instruments leased the land for 99 years. AFAIK, this rule has changed and now they can buy. Nevertheless selling huge chunks of land to a foreign country which is secretive and authoritarian is not in the best interest of people in general and is different from leasing an oil field or technopark.

Anonymous said...


Atleast i did not expect this of you. North america and other countries have more land and less people. Why is that saudi not asking land in canada which has large number of unexplored land.

Sorry, it is the last nail to the coffin of pakistan. Did you see the controversy of the pakistan establishment selling away nuclear design for money and making aqkhan [ fixer and non technocrat being father of pakistan bomb ] a scape goat.

So u can expect the same in this case also.

Riaz Haq said...

Anon:" Sorry, it is the last nail to the coffin of pakistan. Did you see the controversy of the pakistan establishment selling away nuclear design for money and making aqkhan [ fixer and non technocrat being father of pakistan bomb ] a scape goat."

No one will believe that you are sincere in your concern for Pakistan or Pakistanis. You have lost credibility by your above comments.

Unknown said...

riaz sb,

my name is rao qasim and i am a practicing advocate in Lahore. I have been following the recent developments with regard to your article concerning lease of land to foreign countries.

i have been looking to file a writ petition in public interest in this regard and have been consulting senior lawyers regarding the modus operandi.

having read your article, i think that you will be better equipped to help us with the details of the project.

i do not want history to remember me as someone who went quietly into the night, i hope you are on the same page.

if you are interested, kindly contact me on the



Riaz Haq said...

Here's the transcript of an NPR report on feudal power in Pakistan and how it enslaves people on the large feudal estates in Punjab:

LAURA LYNCH: The midday sun throws a harsh spotlight on weathered faces. Women crouch low, searching for, then plucking out barely ripe tomatoes. Every crease and crevice in their feet, their hands, even on their faces is dusted with dirt from the fields they farm. They work from dawn to dusk - and the landowner gets most of the income. Nearly two thirds of Pakistan's rural population are sharecroppers. One of the male workers, Abdul Aziz, says they all owe their livelihood to their boss - so they support the political party he supports. He has always voted for the Pakistan People's Party he says; the party of the late Benazir Bhutto. Bhutto and other wealthy landowners like her had always been able to count on the loyalty of those who toil for them in the fields. At her gracious home in Islamabad, Syma Khar traces her lineage - both familial and political - through the photographs she keeps in the cupboard.

LYNCH: Khar is a member of the provincial assembly of the Punjab - the largest province in Pakistan. She is also a member of one of Pakistan's most powerful families. The pictures are from the Khar family estate just outside the city of Multan. The sprawling property includes fisheries, mango orchards and sugarcane fields. Thousands of people work there - most are loyal to their masters. Syma's husband, his father, brothers, nieces and nephews have all turned that to their political advantage to gain office. The workers are by and large, poor, landless and uneducated. Pervez Iqbal Cheema of Pakistan's National Defence University says that's the way most feudals want to keep it.

PERVEZ IQBAL CHEEMA: A feudal, in order to maintain his influence, will be probably not very happy for extension of education or health facilities because as long as they have a minimum interaction with the outsiders then the chances of new ideas germinating or causing some trouble are relatively less.

LYNCH: That star power was evident when Benazir Bhutto staged her return from exile in Karachi in October of 2007. Though it was later marred by a suicide bomb attack, the Bhutto power base in rural Pakistan bussed thousands of loyal followers in to cheer her arrival and dance in the streets. Even after she died, Bhutto's political machine ensured her husband eventually became President. And her son, Bilawal, inherited the party leadership even though he's only 20 with no political experience. In a back alley off a busy road in Rawalpindi, boys are just starting a late afternoon game of cricket. Aasim Sajjad Akhtar, rights activist and professor of colonial history at Lahore University of Management Sciences, keeps an office a few floors up. Akhtar sees the staying power of the feudals - and gives credit to the military. It is Pakistan's other power centre - staging four coups in the country's 62 year history. Akhtar says the military, interested in holding onto its own sphere of influence, finds a willing partner in the feudal class.
KHAR: If they don't' keep that attitude then people will be doing daytime robberies because they are illiterate people. They will, you know, kidnap the daughters they will take away the children they will take away the properties, they will kill each other. So a boss has to be a boss. He has to have that sort of attitude.
LYNCH: As a farm worker empties her bucket of tomatoes into a crate there is no smile of satisfaction - the day's work is still far from over. There's little chance her life will change soon. Several land reform programs have failed to change rural life in Pakistan. And failed to loosen the grip of Pakistan's large landowners on the country's politics.

Riaz Haq said...

Here's a report talking about the threat of war over water sharing between India and Pakistan:

The sharing of river waters between India and Pakistan is a "sensitive issue" that has the potential for triggering a war between the two countries, an adviser to Prime Minister Yousuf Raza Gilani has said.

Sardar Aseff Ali, who is also Deputy Chairman of the Planning Commission, made the remarks while speaking to the media after a seminar in Lahore yesterday.

He claimed India "will have to stop stealing Pakistan's water as the latter will not hesitate to wage war" over the issue.

Pakistan might seek international arbitration on the water issue by taking it up with the International Court of Justice or the UN Security Council if India tries to build any more dams that affect the country's share of waters, Ali said.

Pakistan can also back out of the Indus Waters Treaty and India will be responsible for the consequences, he said.

However, Ali also acknowledged that a solution to the problem cannot be found through sentimental rhetoric and the Indus Waters Treaty is the proper forum for resolving the issue.

Replying to a question on India's Baglihar dam, Ali said former President Pervez Musharraf was responsible for this project being built without any protest from Pakistan.

Riaz Haq said...

Here's the transcript of a recent NPR radio show on how Brazil has emerged as a major exporter of food:

Next we're going to explore how Brazil became an agricultural superpower. It is the world's biggest exporter of beef, poultry, orange juice and sugar cane. And it also supplies a quarter of the worlds soybeans. The credit goes in part to Brazilian scientists who've been working since the 1970s to make what was once an agricultural wasteland bloom.

And Brazil, which elects a new leader Sunday, promises to become even more productive in years to come. NPR's Juan Forero has the story from Brazils grain belt.

JUAN FORERO: Slowly, a powerful New Holland harvester advances over rolling hills here in Brazils dry, hot savannah, the Cerrado. In the cab is farm worker Luiz Tavares, who marvels as he cuts through golden stalks of wheat.

Mr. LUIZ TAVARES: (Foreign language spoken)

FORERO: This is a wheat thats resistant to plagues, he says, a wheat that has an especially high yield and is excellent for flour. Its wheat that Brazilian scientists created for this tropical climate and acidic soil. Paulo Kramer is the owner of this farm and he gives the credit to Embrapa, the government-run agricultural research institute.

Mr. PAULO KRAMER: (Foreign language spoken)

FORERO: When we started planting here, he said, we never thought wed be planting wheat. Wheats a cold-climate crop, Kramer said, usually found in places like Iowa or Argentina.

Barely two generations ago, many considered this 1,000-mile swath of low-lying trees and scrubland good only for raising cattle. The military government that ruled Brazil then decided, with unusual foresight, to create Embrapa. The head of its international wing is Francisco Souza, a tropical seed expert.

Mr. FRANCISCO SOUZA (Embrapa): Back in the '70s, Brazil imported most of the food. We had food crisis, the government at that time decided to really invest in modern agriculture.

FORERO: The nationwide system of laboratories that made up Embrapa was entrusted with improving Brazils soils. They also work on new crop varieties and find more efficient ways to fatten up cattle and hogs. Embrapa started by developing its know-how. And it did that by sending hundreds of young scientists to earn their doctorates in American universities. Among them was Thomaz Rein.

(Soundbite of footsteps)

Rein, a soil scientist educated at Cornell University, walks through experimental fields of sugar cane and beans. He stops in a stand of corn, the leaves of which look yellow and easily crumble in his hands.

Dr. THOMAZ REIN (Soil Scientist): So you see here the bottom leaves are necrotic, already dry, at this time, so this is a sign of nitrogen deficiency.

FORERO: The corn with the greener leaves, he said, was inoculated with nitrogen-fixing bacteria. Such is the work of Embrapa scientists trying to resolve problems particular to Brazil.

Mr. REIN: So the soil are very poor in terms of nutrients that are required by the plant like phosphorus, calcium, potassium, and what are called also micronutrients. And also the soil are very acid.

FORERO: The soil in the Cerrado, in fact, is so naturally toxic that roots cant grow well. Embrapa added just the right mixture of limestone and other nutrients to make the soil fertile.�And Rein said scientists determined that gypsum helped correct the acidity, permitting roots to reach deep for water.

Embrapas advances are important well beyond Brazil - in the tropical countries of Africa, which struggle to feed their people. As wind whips through a test field, Rein said Embrapa continues to tinker.

Some of its most recent advancements come with wheat. Wheat wont ever become a big export for Brazil, Rein said. But Embrapa is always looking to find ways for all crops to bloom.

Riaz Haq said...

Here is a NY Times report on African farmers losing farm land to investors:

SOUMOUNI, Mali — The half-dozen strangers who descended on this remote West African village brought its hand-to-mouth farmers alarming news: their humble fields, tilled from one generation to the next, were now controlled by Libya’s leader, Col. Muammar el-Qaddafi, and the farmers would all have to leave.

“They told us this would be the last rainy season for us to cultivate our fields; after that, they will level all the houses and take the land,” said Mama Keita, 73, the leader of this village veiled behind dense, thorny scrubland. “We were told that Qaddafi owns this land.”

Across Africa and the developing world, a new global land rush is gobbling up large expanses of arable land. Despite their ageless traditions, stunned villagers are discovering that African governments typically own their land and have been leasing it, often at bargain prices, to private investors and foreign governments for decades to come.
“The food security of the country concerned must be first and foremost in everybody’s mind,” said Kofi Annan, the former United Nations secretary general, now working on the issue of African agriculture. “Otherwise it is straightforward exploitation and it won’t work. We have seen a scramble for Africa before. I don’t think we want to see a second scramble of that kind.”

A World Bank study released in September tallied farmland deals covering at least 110 million acres — the size of California and West Virginia combined — announced during the first 11 months of 2009 alone. More than 70 percent of those deals were for land in Africa, with Sudan, Mozambique and Ethiopia among those nations transferring millions of acres to investors.
He listed countries whose governments or private sectors have already made investments or expressed interest: China and South Africa in sugar cane; Libya and Saudi Arabia in rice; and Canada, Belgium, France, South Korea, India, the Netherlands and multinational organizations like the West African Development Bank.

In all, Mr. Sow said about 60 deals covered at least 600,000 acres in Mali, although some organizations said more than 1.5 million acres had been committed. He argued that the bulk of the investors were Malians growing food for the domestic market. But he acknowledged that outside investors like the Libyans, who are leasing 250,000 acres here, are expected to ship their rice, beef and other agricultural products home.

Every farmer affected, Mr. Sow added, including as many as 20,000 affected by the Libyan project, will receive compensation. “If they lose a single tree, we will pay them the value of that tree,” he said.
“Ante!” members of the crowd shouted in Bamanankan, the local language. “We refuse!”

Kassoum Denon, the regional head for the Office du Niger, accused the Malian opponents of being paid by Western groups that are ideologically opposed to large-scale farming.

“We are responsible for developing Mali,” he said. “If the civil society does not agree with the way we are doing it, they can go jump in a lake.”

The looming problem, experts noted, is that Mali remains an agrarian society. Kicking farmers off the land with no alternative livelihood risks flooding the capital, Bamako, with unemployed, rootless people who could become a political problem.

“The land is a natural resource that 70 percent of the population uses to survive,” said Kalfa Sanogo, an economist at the United Nations Development Program in Mali. “You cannot just push 70 percent of the population off the land, nor can you say they can just become agriculture workers.” In a different approach, a $224 million American project will help about 800 Malian farmers each acquire title to 12 acres of newly cleared land, protecting them against being kicked off. ...

Riaz Haq said...

Here's a news story about "Arab Land Grab" in other nations:

Less than 40 years ago the UAE was populated by small local communities who lived satisfactorily off the desert land. Their meals consisted mostly of locally sourced livestock and produce.

Now, only a few generations later, the dinner tables around the UAE are heaving with rice from India, tuna from Japan, mushrooms from France and meat from Brazil. A steadily growing expatriate population with diverse tastes means demand has rapidly overtaken what the market has to offer. This, paired with worldwide shortages and spiralling prices, has made having secure sources of food a matter of strategic importance for the country.

According to the International Fund for Agricultural Development (IFAD), Arab countries account for more than five per cent of the world's population but less than one per cent of global water resources. Because of its arid desert climate, which is not conducive to large scale farming, the UAE imports more than 80 per cent of its food, spending Dh2.5 billion in 2010 alone.

In order to insulate themselves from market fluctuations, the UAE and the other GCC states are following in the footsteps of China and investing heavily in agricultural land abroad. By shipping the produce home and bypassing world markets, they can cut food costs by up to 25 per cent.

Sultan Bin Saeed Al Mansouri, Minister of Economy, recently cited the main areas of investment for the UAE as Vietnam, Cambodia, Egypt, Pakistan and Romania.

"Serious negotiations on agricultural investments are also ongoing with other countries including Australia and Indonesia," the minister said.

While the concept of buying or leasing farmland abroad is not new, the rising food prices have caused a recent flurry of investment activity. Between 2006 and 2008, UAE investments in agriculture abroad increased 45 per cent. According to the International Food Policy Research Institute (IFPRI), the UAE ranked third in the amount of agricultural land obtained by selected investors between 2006 and 2009. In first and second places were China and South Korea.

Source: A Lowe Gulf News

Agrilandsales comment

The UAE imports over 80% of its food. As its population is growing fast, this figure will grow even more. The same situation applies to other Arab states. All have fast rising populations and shortage of water. The need to secure food supplies will become desperate and states will be scrambling to secure supplies. In fact, they are starting to act with speed now.

The cheapest way to ensure regular food imports is to actually own the means of production in the foreign country – namely, the land (see bold text in text above). The UAE is targeting Romania, which is just over the border from the best farmland in Bulgaria – the Dobrudja, where Agrilandsales and their partners Blackseavillas operate. You can imagine how this big investment will push up land prices, and this is a process that will only accelerate in the near future.

Food shortages and rising farmland prices are pushing to the top of the news agenda at the moment. This isn’t going away. In fact, this is a super trend that investors would do well to heed and ride. It will deliver big profits

Riaz Haq said...

Here's a News report on FAO stats for Pakistan 2011:

The Statistical Book 2011 of the United Nations Food and Agriculture Organization (FAO) reveals that Pakistan is way behind in wheat, rice, sugarcane and pulses production, both globally and regionally.

According to experts, water shortage, absence of high yield verities of seeds, and lack of research and development are the basic causes of low per hectare yield of crops in Pakistan. The two consecutive floods in 2010 and 2011 have also disrupted the agricultural productivity of the country. The FAO report released last week relates to authenticated data up to year 2010.

According to the report Pakistan is among the top ten producers of wheat with around 24 million ton output in 2010, but its per hectare yield of 2.6 ton pales in comparison with over 115 million ton wheat produced by China with per hectare yield of 4.7 ton.

India obtains 2.8 ton wheat per hectare, Bangladesh 2.4 ton. The United Kingdom with wheat yield of 7.7 ton per hectare is top in productivity but its wheat cycle is spread over one year against five months in Pakistan, the report said.

In rice Pakistan with average productivity of 9 million ton is among the top 12 producers and its per hectare rice yield is 3.1 ton. China again is the largest producer of rice with an output of 197 million ton with per hectare yield of 6.5 ton, Bangladesh obtains 4.2 ton rice per hectare, Sri Lanka 4.1 ton per hectare and even India with rice productivity of 3.3 ton per hectare is ahead of Pakistan, the FAO report said.

In coarse grains China produces 5.2 ton per hectare, Pakistan 2.2 ton per hectare and India only 1.2 ton per hectare. Italy with per hectare yield of 7.6 ton per hectare is the productivity leader in coarse grains.

China produces 0.6 ton per hectare of oil crops while India and Pakistan produce 0.3 ton per hectare. The leader in oil crops production is Malaysia that obtains 4.5 ton of oil crop per hectare.

Pakistan produces 1.1 million to 0.9 million ton of pulses per year with per hectare yield of 0.6 ton which is the lowest in the region. China produces 4.4 million ton pulse per annum at 1.2 ton per hectare which is twice that of Pakistan.

Per hectare production of pulses in Bangladesh is 0.9 ton while it is 0.7 ton in India. India though is the largest producer of pulses in the world with total annual production of 17.11 million ton. The highest per hectare yield of pulses is 3.9 ton which is obtained by the United Kingdom.

In roots and tuber production Pakistan is on top in productivity with per hectare yield of 21.6 ton but it is far below the world best of 42.1 ton obtained by the United States of America. India produces 20.6 ton roots and tuber per hectare, China produces 17.8 ton per hectare and Bangladesh 17.7 ton per hectare. Pakistan’s sugarcane production of 52.4 ton per hectare is slightly higher than that of Bangladesh that obtains 43.8 ton of sugarcane per hectare. India with per hectare yield of 66.1 ton is the leader in sugarcane productivity in the region followed by China that obtains a yield of 65.7 ton per hectare.

Brazil is the largest global producer of sugarcane with total output of 719 million ton at 79.2 ton per hectare. The highest sugarcane yield is obtained by Columbia which produces 118.1 ton per hectare, the FAO report said.

Riaz Haq said...

Here's a Nation newspaper report on PASSCO ending middle men in wheat procurement:

ISLAMABAD - The Pakistan Agriculture Storage and Supply Corporation (PASSCO) is working on a plan to end the role of middle-man to purchase wheat in bulk rather than bardana.According to sources the move will go a long way to help reduce the rising trend of corruption in wheat procurement process and will help to discourage the role of middle-man in wheat purchase operation. It has also plan to register farmers and issue PASSCO cards during wheat sale operation and under the proposed plan wheat can only be procured in bulk without bardana in order to curtail the role of middle-man.It proposed by PASSCO to minimize the subsidy burden on the government of Pakistan and also to minimize the carrying cost wheat procurement targets allocated to PASSCO should be need driven and wheat procurement target to be given keeping in view the average requirement of dependent provinces .Armed forces plus strategic and any unforeseen factors."A payment mechanism be developed wherein the cost of wheat dispatched to Gilgit-Baltistan and Government of Azad Jammu and Kashmir (AJK) are directly paid at source in advance to PASSCO by the Federal government which, will save the national exchequer heavy mark-up which keeps accumulating due to present payment mechanism," sources said."PASSCO requires minimum storage capacity of 1.5 million tons because its godowns has the capacity of only 0.431 million (28 per cent) tons and the remaining 72 per cent wheat stocks were stored in open under tarpaulins," official date reveals." the situation is precarious at 2.039 million tons wheat stocks are lying in the open in far-flung areas (as on 24.09.2012) which has more susceptible to climatic hazards and pest attack,".It said there was a dire need to create additional storage facilities for PASSC and in this regard proposal and offer of Islamic Development Bank for construction of silos with capacity of .65 million tons need to be persuade at war footing on government level.It is quite relevant to mention here that PASSCO has to pay Rs12 billion mark-up on Rs93.54 billion of loans taken from commercial banks in current financial year 2011-12 to run its operations whereas it has to recover Rs19.7 billion dues from regional and provincial governments and other organisations, including the Pakistan Army, on account of wheat supply. In addition to these, PASSCO was to receive Rs3.8 billion on account of mark-up and financial charges from different agencies.

Riaz Haq said...

Here's Ashby Monk of the Institutional Investor:

Pakistan: Qatar's Hassad Food is apparently interested in some food assets in Pakistan, as it's just opened an office in Lahore. This comes on the heels of the announcement yesterday that the Kuwait Investment Authority has signed an MoU with Pakistan’s Board of Investment. Is Pakistan the hot new frontier market? Or is this about food security?

- Emerging Markets: Survey shows emerging markets are the key for pensions trying to meet their return expectations. ...

Riaz Haq said...

Pakistan, which is currently in negotiations with Qatar for liquefied natural gas (LNG) supplies, has opened its farm sector to investments from Qatar, which has placed utmost priority on food security.

Punjab province Chief Minister Shabaz Sharif invited investments in his meeting with the Qatari Businessmen Association (QBA), where both the sides discussed ways of enhancing trade co-operation and investment as parts of strengthening bilateral relations between the countries.

The meeting was also attended by Shahid Khaqan Abassi, Pakistan’s Minister of Petroleum and Natural Resources, and Shehzad Ahmed, Pakistan’s ambassador in Doha; while the QBA was represented by its chairman Sheikh Faisal bin Qassim al-Thani and other officials such as Nasser Sulaiman al-Haidar, Maqbool Habeeb Khalfan and Sarah Abdullah.

During his presentation, the visiting chief minister highlighted the investment opportunities available in Pakistan in different sectors, especially in electricity generation, and the energy sector in general.

Secretary of the Ministry of Petroleum and Natural Resources Abid Saeed had said last week that the Pakistani government was making arrangements to import 2bn cu ft of LNG per day in the next two years to meet energy needs.

The first LNG terminal would be completed by Elengy Terminal Pakistan Limited at the Port Qasim by the end of February next year, he said.

In addition to the energy sector, Pakistan, Sharif said, is also keen to attract investments in agriculture, which can strengthen Qatar’s food security programme.

The Qatar National Programme for Food Security, which was established in 2008, is aimed at developing a sustainable food security programme for Qatar by enhancing domestic agricultural production and strengthening the reliability of food imports from abroad.

Pakistan has been witnessing increasing interests in corporate farming, which has brightened the prospects for fresh investments in different areas of the sector in Punjab, Sindh and Khyber Pakhtunkhwa provinces.

QBA chairman Sheikh Faisal expressed the interest of Qatari businessmen to explore investment opportunities in Pakistan, particularly the transport and construction, electricity generation, and tourism and hotel sectors.

He requested the Punjab chief minister to provide QBA members with detailed studies of different projects available in Pakistan for investment as a preliminary step to organise a (business) delegation to Pakistan.

Qatar has signed a number of bilateral agreements with Pakistan, including an agreement on promotion and protection of mutual investments; an agreement to regulate the recruitment of Pakistani workers in Qatar; a memorandum of understanding between the Qatar Investment Authority and Pakistan regarding the establishment of an Islamic Bank and an insurance company; and an agreement to avoid double taxation and prevention of fiscal evasion.

Trade volume between Qatar and Pakistan reached $800mn in recent years compared to $450mn in 2006.

Pakistan’s economy depends mostly on the service sector, which constitute 53.1% of the GDP, followed by the agricultural sector which amounts for 25.3%, while the industrial sector amount for 21.6%.,-farm-investments

Riaz Haq said...

Answer to #UAE's water security crisis could lie in #Pakistan's Dash River, says head of Geowash … via @TheNationalUAE

ABU DHABI // The answer to the UAE’s water shortage could lie in a pipeline from Pakistan, according to an Emirati businessman.

Abdulla Al Shehi, chief executive of Geowash, has written a paper suggesting an underground pipeline from Dasht, a river 500 kilometres away in Pakistan, to Fujairah.

“Technology is not a problem. We are at an advanced stage in engineering where it is possible politically as well. I don’t think there will be any problem. It is beneficial for both countries,” he said.

He said the Dasht River floods annually, which prompted the Pakistani government to empty the excess water through channels leading to the sea. That excess water, said Mr Al Shehi, could be put to use in the UAE.

The idea may sound far-fetched, but Mr Al Shehi is something of a specialist in saving water.

Since its inception, Mr Al Shehi has run Geowash, which washes a car using only four litres of water, compared to the 220 litres conventional cleaning takes.

Mr Al Shehi’s technique has allowed the company to save 500 million litres of water since 2008.

The pipeline, if built, would not be the longest – that honour belongs to Turkey’s 9,300km pipeline in the Harran Plain.

Nor will it be the most difficult feat of engineering. However, it would face other issues that Mr Al Shehi admitted.

“There will be an environmental impact. There might be a negative effect, which I think is minor,” he said.

“However, the benefits in saving water from desalination and the amount of biological life it will spur will offset the effects.”

However, for Professor Hussein Amery, who wrote a book titled Arab Water Security, the concept of creating a pipeline is fraught with political issues.

“I won’t discuss the economics of engineering challenges. I am suspicious of a project of this sort, because let me remind you that Qatar and Kuwait both have explored importing water from south-west Iran,” he said.

The problem with creating cross-country pipelines, he said, was that it created a security situation where a nation is dependent on a neighbour – described by Prof Amery as “hydro-dependency”.

“Gulf-Pakistani relations are different than Gulf-Irani relations. I am totally aware of that, but the engineering would be challenging and difficult considering the terrain,” he said.

He said that the political and technological hurdles can be overcome, but even then, the idea still would not be efficient.

“We use a very small amount of water in our homes in the Gulf states,” he said.

“Anywhere between 70 to 80 per cent goes to agriculture.

“It’s much cheaper and much more efficient to have the Pakistanis grow wheat and feed cows, then export the food [than import the water and grow food locally].”

Furthermore, he said, the UAE relies heavily on a very energy-intensive water source.

“The biggest threat is that it [the UAE] is hyper-arid and it doesn’t have any permanent water source, which created the reliance on desalination technology, as such it has become the destiny for the Emirates and other Gulf states,” he said.

Dr Ahmad Belhoul, chief executive of Masdar, said although it is investing heavily in researching renewable energy to provide energy to desalination plants, he welcomed new ideas, especially as the year of innovation comes to a close.

“I think that the very spirit of creating a company like Masdar is to encourage people to come up with ideas, some which are very practical and others more ambitious,” he said. “Either way, it warms my heart that Emiratis and expats alike are thinking proactively of solutions.”

Riaz Haq said...

Why #SaudiArabia bought 14,000 acres of #California farm land? #CaliforniaDrought #dairy

Saudi Arabia's largest dairy company will soon be unable to farm alfalfa in its own parched country to feed its 170,000 cows. So it's turning to an unlikely place to grow the water-chugging crop — the drought-stricken American Southwest.

Almarai Co. bought land in January that roughly doubled its holdings in California's Palo Verde Valley, an area that enjoys first dibs on water from the Colorado River. The company also acquired a large tract near Vicksburg, Arizona, becoming a powerful economic force in a region that has fewer well-pumping restrictions than other parts of the state.

The purchases totaling about 14,000 acres have rekindled debate over whether a patchwork of laws and court rulings in the West favors farmers too heavily, especially those who grow thirsty, low-profit crops such as alfalfa at a time when cities are urging people to take shorter showers, skip car washes and tear out grass lawns.

"It's not easy to completely grasp the business model of the Middle East, but it may not be about business at all," said John Szczepanski, director of the U.S. Forage Export Council. "The primary focus is food security, and the means to that end lie in acquiring the land and resources to ensure long-term supply."

For decades, Saudi Arabia attempted to grow its own water-intensive crops for food rather than rely on farms abroad. But it reversed that policy about eight years ago to protect scarce supplies.

To further conserve water, the country has adopted bans on selected crops. This year, the kingdom will no longer produce wheat. In December, the government announced the country will stop growing green fodder, livestock feed derived from crops like alfalfa, over the next three years.

Almarai already farms worldwide to make sure that weather, transportation problems or other conditions don't interrupt supplies. The expansion in the American Southwest was a "natural progression" in its effort to diversify supply, said Jordan Rose, an attorney for the company's Arizona unit.

"The cows feed multiple times a day, and they need to be certain that they are always able to fulfill that unwavering demand," she wrote.

Despite the widespread drought conditions, the U.S. is attractive to water-seeking companies because it has strong legal protections for agriculture, even though the price of land is higher than in other places.

"Southern California and Arizona have good water rights. Who knows if that will change, but that's the way things are now," said Daniel Putnam, an agronomist at the University of California, Davis.

Over the last decade, Saudi Arabia and the United Arab Emirates emerged as significant buyers of American hay as their governments moved to curb water use. Together they accounted for 10 percent of U.S. exports of alfalfa and other grasses last year.

The land purchases signal that Almarai doesn't just want to buy hay; it wants to grow. And it's not the only Arab-owned Gulf company to take that approach.