Points to Ponder May 2024
Wheat Fiasco
The month is marked by many critical happenings pertaining to political economy of agriculture. The issue of wheat importation as well as lack of wheat procurement from farmers, which had also been discussed in the previous issue, deserves further attention.
Many aspects of the wheat fiasco are worth highlighting. First, that the shortfall in the amount of wheat needed for the country’s consumption need not have been addressed through private sector importing wheat. According to data released, 2.45 million-ton of wheat shortage was expected for the 2023-24 period; however, an excess of 1.162 million tons of wheat was imported in FY24. The government prices of wheat in the market were higher and the private sector was selling at a lower price. Reports point to the Punjab government that had knowingly kept wheat release rate higher than the private sector, due to which flour mills preferred to purchase Ukrainian wheat imported by the private sector. According to the Pakistan Kisan Itehad, based on lower prices of imported wheat, the local wheat prices fell to PKR 2,800-3,000 per 40kg against the government rate of PKR 3,900.
The question is even if internationally wheat prices were lower, the state is responsible for shielding farmers’ livelihood. If wheat crop is not protected from the private sector, it will have a devastating impact on farmers income, as well as grave consequences in terms of ensuring country’s food security.
There are a total of 65 wheat importers in the country (of which 17 are flour mills who also import wheat), with Louis Dreyfus and United Resources Corporation, being the two major importers. The Plant Protection Agency had issued about 1,000 permits to wheat importers. The role of the caretaker government, and their collusion with the private sector in importing wheat has been highlighted.
Apart from the import of wheat worth PKR330 billion (of which 1.3 million metric tons was reported to be infected), there is also further collaboration of the government with the market actors, where PASSCO officials are being accused of selling the bardana (gunny bags) to traders, politicians and middlemen, allowing them to gain profit by procuring wheat at the subsidized rates set for farmers.
In the coming years, there seem to be clear developments for further strengthening of the private sector. According to news reports, the Punjab food department has decided to withdraw from its practice of wheat procurement, and it will become a law bringing an end to the food department’s role in wheat procurement. Further, according to the new policy the private sector will purchase wheat crop from farmers, directly; the government will fix wheat prices based on international prices of the commodity.
Another pertinent issue with respect to wheat production and country’s food security includes the rapid urbanization that is occurring based on ‘flagrant violations of the law’ in acquiring agricultural land. According to a report by Advocate General Punjab Khalid Ishaq, “Pakistan was a leading South Asian exporter of wheat. This trend has reversed in recent years, and it is reported that Pakistan (government and private sector combined) imported wheat amounting to USD 1 billion during July-March for FY2024.” The loss of agricultural land coupled with consistent damage and destruction of agriculture production due to climate crisis, is bound to increase food insecurity in the country.
Humanitarians?
The World Wide Fund (WWF) and Laudes Foundation have launched the ‘Regenerative Production Landscape Collaborative Pakistan’ initiative. The aim is to ‘revolutionize farming practices,’ and business models to address challenges faced by small farmers, especially women. Apart from increasing women’s income, the project will also be a implementing process that can overcome environmental degradation.
Anita Chester, Head of the Fashion Programme at Laudes Foundation has emphasized the “the initiative’s significant scale, spanning over a million hectares globally and benefiting hundreds of thousands of farmers, with specific plans to cover over 100,000 hectares and assist more than 50,000 farmers in Pakistan alone.”
Laudes Foundation is run by Brenninkmeijer, a European business family. According to an article in the Forbes business magazine, the Dutch retailer C&A Brenninkmeijer is considered one of the most secretive companies in the world. It has a sprawling business with 2,005 stores in 23 countries including the Americas and Asia.
One can only be skeptical of mega-corporations in investing in Pakistan, under the guise of overcoming environmental degradation as well as guarding interests of women workers; it is unfortunate that the plight of women in Pakistan is frequently used to launch projects that are meant for profit rather than promoting and protecting women’s rights. The profit-seeking interest of corporations is well known, and without any doubt, they are major actors responsible for the immense destruction of the planet, and carbon emissions that are responsible for the debilitating climate crisis.
The US AID has been putting funds into clean energy solutions. The Investment Roadshow is aimed to promote private sector investment for sustainable and clean energy solutions. It is noteworthy that at another USAID workshop, the dairy methane emission reduction, the US Ambassador remarked on Pakistan being home to ‘one of the largest livestock populations in the world,’ and hence its role in bringing down carbon emissions. It is indeed quite a brazen statement, given that the US total emissions in 2021 were 13.49%, whereas Pakistan’s total emissions are just 0.9%. Livestock is a key contributor to not only national wealth, but also a source of livelihood to millions of rural households, not to mention its contribution to food and nutrition to all citizens of the country. It is such interventions that raise concerns about the well wishes of those investing in the country.
One should also mention that the European Union has also launched two flagship programs for skills development and clean energy in Gilgit-Baltistan. It is indeed remarkable that highly industrialized capitalist regions, who are not only responsible currently but through centuries of dangerous carbon emissions, are so focused on promoting ‘clean energy solutions’ in our country. The impact of climate crisis has continued to be devastating for Pakistan’s economy as well as its people: the heatwave in Sindh has been devastating with temperatures as high as 44- 51°C. In Khyber Pakhtunkwa, school hours were reduced to deal with the heat wave, while people suffering from it flocked to the hospitals.
The Unholy Mantras – privatization, digitalization, liberalization
Pakistan’s development model seems to have certain constants of which of course trade liberalization and privatization are constant themes.
It is being stated that the government plans to privatise all state-owned enterprises (SOEs), except strategic entities. Prime Minister Shehbaz Sharif, at a high-level meeting has stated that “the government would privatize all state-owned enterprises, excluding the strategic ones, regardless of their profitability or financial losses.”
Privatization and foreign direct investment seem to be top priorities at the moment. Since the launch of the Special Investment Facilitation Council (SIFC) last year, the Council’s name has cropped up frequently with respect to a number of trade liberalization and investment ventures. The Green Pakistan Initiative projects promoting private and public partnerships (PPP), include tourism, agriculture and livestock. Development of Keenjher Lake, Haleji Lake, Hawks Bay and Gorakh Hill Resorts into tourist spots are on the books.
In addition, the Government of Sindh is also discussing the establishment of shrimp farms/hatcheries as well as outsourcing of provincial government’s cattle farms in Rohri, Umerkot and Naukot.
The objectives of private sector investment include improving cattle breeds for milk and meat. International corporations are eager to take over the dairy and meat sector in the country. It is unfortunate that help is being extended to them for this corporate capture. The University of Veterinary and Animal Sciences (UVAS) Lahore has signed a Memorandum of Understanding with Nestle Pakistan Limited for research collaboration in product innovation, reproductive biotechnology to improve dairy farms economics, livestock health & dairy animal breeding. Apart from losing indigenous breeds among livestock, the country also faces loss of much needed foreign exchange, as repatriation of profit and dividend by foreign investors has been reported to grow by 250 percent. According to the State Bank of Pakistan, foreign investors have repatriated some $887 million on account of profit and dividend during July-April of FY24 compared to $253.4 million in the same period.
The SIFC apex committee is also assuring Chinese investors for providing facilitation for investment in the mining sector. Other areas that are to be prioritized for investment include minerals, and information technology (IT). In Balochistan, a Free Zone Agriculture Industrial Park in Gwadar has been inaugurated.
In Punjab, with the help of the World Bank, digitalization of land records in Punjab are being undertaken. It seems that development is now hinged to digitalization, which is persistently emphasized in agriculture.
Apart from the Chinese other delegations that are being entertained include those from Saudi Arabia, UAE, Japan, Azerbaijan, Qatar, and other countries.
A delegation from Saudi Arabia came on a visit to enhance trade ties between investors from both countries and identify trade and investment opportunities across various sectors of national economy. According to the Ministry of Commerce, “leading” Pakistani companies would collaborate with at least 30 Saudi companies across different sectors, including agriculture, mining, human resource, energy, chemicals, and maritime. Discussions were also to be held on other sectors such as IT, religious tourism, telecom, aviation, construction, water and power generation.
The fact that foreign direct investment (FDI) rose 8.1percent to $1.458 billion during July-April FY24 compared to $1.349 billion in the same period last fiscal year, is testament to the government’s preliminary success in attracting foreign investors. The biggest investor was China, with FDI at $439.3 million as compared to $604 million in the same period last year. Another important inflow was from Hong Kong, where FDI increased to $297.9 million compared to $206 million in the same period last year. Inflows from the UK and the USA were $219 million and $216 million, respectively, both of which showed an increase from last year.
Apart from attracting foreign investment to Pakistan, other schemes that provide ease of access to modern information technologies are also being floated. Kisan Card schemes have been launched in previous years; recently the IT Ministry launched the ‘CropWise Grower’ application for farmers. It should be noted that the application belongs to Syngenta, now a part of the Chinee chemical giant Sinochem, a Chinese state-owned corporation. It should be noticed that CropWise uses artificial intelligence (AI) providing image-based problem diagnosis, as well as information for all its nearest stores (called Naya Savera) selling Syngenta products. A new scheme for Kisan Card, as well as the Benazir Hari Card in Sindh are also to be launched in the coming months.
In addition, the Habib Bank Limited has also entered a partnership with Agrilift, a Pakistani company that was formed in 2021. Agrilift, according to its company information, is an AI-based platform offering crop monitoring technology. Other such enterprises include the “Bakhabar Kisan.”
Feudalism for the poor, Capitalism for the rich
On one hand, capitalist policies are being thrust across the entire production landscape, especially in agriculture, but on the other hand feudal as well as colonial policies and practices remain for controlling the vast rural population, ensuring that they remain oppressed and exploited. According to Human Rights Watch, the colonial-era Land Acquisition Act is used often to evict ‘low-income groups;’ the 1894 law is used for public land acquisition, which is then often used by government authorities for public-private partnerships, and even for private corporations. It is clear, that while new laws and policies facilitating investors and corporations are enacted regularly and rapidly, colonial laws, especially those guarding land rights of the powerful feudal forces have remained untouched, even after more than 70 years of so-called independence from British colonizers, and are used forcefully against the marginalized oppressed classes.
There is a report of an agricultural worker tortured to death by a landlord. In Pakistan, more than often criminal acts of landlords and those in power often remain outside the reach of law enforcement. The fact that land disputes remain a regular feature in our rural areas highlights the fact that feudalism remains a key feature of Pakistan’s political economy.
After all of the above endeavors of the government to carry out privatization and trade liberalization, the final impact can only be measured based on the socio-economic conditions of the people. According to a research study, conducted by the Pakistan Institute of Development Economics (PIDE), the poverty rate in Pakistan over the past five years has increased from 38.6 percent to 39.5 percent. National poverty rate has reached 39.5% while in Balochistan it is 70 percent, in KP 48 percent, in Sindh at 45 percent, and in Punjab poverty rate stands at 30 percent. The report revealed that rural areas have recorded higher poverty rates than urban areas across the country, as the poverty rate in rural areas was recorded at 51%, whereas, in urban areas 17 percent.
These abysmal figures are the crux of the matter. Only when the country’s working class, its peasantry is able to reap the benefits of economic policies can it be said that the government has made people-centered decisions and policies, ridding the country of hunger, malnourishment and grinding poverty.
