October 2000 - VOLUME 21 - NUMBER 10
P O L I T I C A L I N V E S T M E N T S
Corporate Farming Comes to Pakistan
The Harvest of Globalization
By Muddassir Rizvi
& Business Influence
Islamabad - Large, mechanized farms - owned and operated by giant multinational agribusiness companies - growing plant varieties protected under the stringent international patent regime. That is the government of Pakistan's vision for the future of agriculture in this poor agrarian country.
"We have to integrate our economy with the global economy, otherwise we'll be left out in this day of competition and technology," says Afaq Tiwana, a member of the Agriculture Advisory Group, formed by the military government to suggest ways to improve the productivity of the agricultural sector.
But an emerging group of critics is warning that economic integration may betray millions of small farmers who have been feeding the ever growing population of Pakistan, as well as undermine the national interest in food security.
"Liberalization of agricultural markets under international trade agreements and influence of global financial institutions is clearly a trap by the industrialized North to effectively take control over the developing countries," says Dr. Shahid Zia, a research fellow with the Sustainable Development Policy Institute (SDPI), a think tank based here in the Pakistani capital city of Islamabad.
Zia and others fear that, in its haste to reap short-term financial gains and to replenish its dwindling foreign exchange reserves, the government is ceding control over food, biodiversity and local economies to multinational companies. "Our future food security will be in the hands of a few multinational companies," says Zia.
The debate over Pakistan's agrarian future centers around two disputes: whether foreign investment and corporate farming should be permitted in Pakistan; and whether Pakistan's intellectual property rules should provide "plant variety" protection - a non-patent form of intellectual property - to genetically altered seed.
Food rights activists believe that plant variety protection coupled with authorization of corporate farms will transform the country's agriculture, from subsistence-based to corporate and export-oriented. "These two complimentary policies are clear proof of the government's tilt towards the multinational companies, which consider the agricultural markets of South Asia as the most lucrative in the world," says Mohammad Arshad, who works with Islamabad-based The Network for Consumer Protection. "Once these two policies are in place, these companies can own large farms and produce protected plant seeds on a mass scale. There will be no restriction on what the companies grow, and obviously they will be more interested in investing in commercially viable exportable crops rather than low-gain food grains," he fears.
Government officials do not stray far from this view. "Many investors are keen to make foreign direct investment in our agricultural sector, but not before we put in place conducive economic policies and bring our intellectual property laws in conformity with the [World Trade Organization's] TRIPS agreement," says an official of the country's Ministry of Commerce. At a time when Pakistan's economy, burdened by more than $30 billion of international bilateral and institutional debt, is in a shambles, its international credit rating alarmingly low and international monetary institutions non-committal about doling out more loans, "we cannot afford to let go of any foreign investment," says the official.
At stake is access to and control over a major market and a substantial portion of the economy of Pakistan, a country of more than 135 million people. The agricultural sector accounts for 24 of percent the country's gross domestic product, employs more than 65 percent of the total workforce and generates 60 percent of the country's total foreign exchange earnings that average around $10 billion annually. Giant companies like Aventis, Monsanto, Novartis, Pioneer Pakistan Seeds and ICI, to name a few, already are tapping the market, selling seeds of wheat, paddy, cotton, maize sunflower, pulses and vegetables-country's major crops.
To secure their agenda, say observers, the multinationals are investing heavily in the tools of political influence. "These companies have huge budgets to spend on lobbying, which is basically about cultivating the right people at the right place to protect the interest of a particular company," says Mumtaz Ahmed, a retired agricultural scientist, who worked with some multinational tobacco companies before a stint with the Pakistani government. "Bribes, trips to foreign countries, sponsoring functions of government institutions, advertisements in their publications and collaborative research with public sector research institutes are very common ways of gratification and influence," he says.
The Cost of Corporate Farming
Under existing law, companies are not allowed to own farms or enter into contractual arrangements giving them de facto control of farms.
Food rights activists are deeply troubled by the government plans to allow corporate farming. The corporatization of the farm sector, they fear, will lead large landlords to convert to corporate farms, potentially immunizing their land from future agrarian reforms, and spurring new investments in capital-intensive technologies that will displace farm workers.
Corporate farming may also displace subsistence farmers, they say, forcing them out of a livelihood that has run in families for centuries, and causing massive rural unemployment. This rural displacement, they fear, will spur a mass exodus from rural areas to urban centers, where the industrial base is weak and not able to absorb millions of new workers. In a country where approximately 50 million people struggle to live on less than a dollar a day, they fear social catastrophe.
Subsistence farmers already maintain a precarious existence in Pakistan. About 80 percent of farmers have less than two hectares of land or are landless. Small farmers are already under a tight financial squeeze due to ever-growing input prices, dwindling government subsidies and government price controls. Those who grow crops that will be forced into competition with a highly organized and capital-intensive corporate sector may find themselves unable to stay afloat.
In the mid-sixties, the Pakistani government instituted price supports for wheat, rice, cotton, sugarcane, gram (chickpeas), potatoes, onions, sunflower, soy, canola, tobacco and safflower, with the goal of ensuring farmers a fair price even when open market prices fell during post-harvest periods. However, the price support mechanism always worked against the growers in favor of urban consumers, especially when it came to food crops like staple wheat or rice, with prices held low and input costs typically rising faster than crop prices.
Most farmers complain that they do not have satisfactory access to agricultural credit, despite a rural network of branches of the public sector Agricultural Development Bank of Pakistan (ADBP) whose primary function is to disburse loans to farmers. In 1990, the bank doled out only 46 percent of approximately $160 million total credit to farms of the size of five hectares or less, which formed 81 percent of total registered farms in the country. The rest went to farmers with more than 5 hectares of land.
Against this backdrop, and with corporate farming legalized, even those small farmers not forced out of business are likely to sell off their land to private companies or large landlords.
What Monsanto wants, Monsanto gets
At present, 307 national private seed companies, five multinationals and three public sector seed agencies function in Pakistan. Although the national seed companies own and operate 57 seed processing units, their capital investment of $38 million is much lower than that of multinational companies on only 4 such units - $80 million. Following the opening of the seed business to private industry in 1994, the private sector now sells 16 percent of the 1.2 million metric tons of seed used annually in Pakistan. The multinational companies' share, for now, is tiny, about .5 percent. Predominant control over seed remains with farmers who share, retain and exchange seeds at the local level.
"We are concerned that the government policies will give away this control from farmer to private commercial sector," says Dr Zia.
Indeed, the government advertises that its seed protection policies will strengthen the hand of private seed companies, and expand the multinational seed company presence in Pakistan. "National and multinational companies will be encouraged to initiate variety development programs through the introduction of Plants Breeders' Rights," says the "National Directory of Seed Companies," recently published by the country's Ministry of Food Agriculture and Livestock. "Now the seed industry in Pakistan is at the threshold of exposure to international scenario for joint ventures in seed trade. Pakistan has also an added advantage of productive land, best agro-ecological conditions, availability of enough water and cheap labor."
Government policymakers carefully crafted the Plant Breeders' Rights Act to be responsive to the multinationals' needs. An early draft of the Plant Breeders' Rights Act would have required the owner of genetically modified seeds to pay compensation for hazards and damages caused by the use and handling of the transgenic variety. "In such cases, assessment of such hazards and damages shall be decided by the bio-safety committee," reads a clause in the proposed draft.
Monsanto responded to the draft with a prompt, unsolicited fax message to the government's Seed Certification and Registration Department, which was responsible for finalization of the Act. The August 16, 1999 fax from A. Rehman Khan, Monsanto's managing director in Pakistan, stated: "In the presence of this clause, anybody from public can sue us and ask for compensation for hazards and damages which are kind of open ended risks. Hence, take out this clause. Again I repeat that this clause is not acceptable to any multinational company and it should not be different than any non-transgenic variety."
The government duly accepted Monsanto's request. The final draft, now awaiting official approval for promulgation as law, does not contain the liability clause.
"This is a clear example of how companies manipulate and maneuver governments to protect their interests," says Mushtaq Gadi, who works with Sustainable Agriculture Action Group (SAAG), a coalition of farmers organizations in Pakistan. "While nobody knows the long-term impact of transgenic crops on environment and human health, the clause should have been kept in the proposed law as a safety valve to protect the interests of people and the environment."
Gadi and others complain that Pakistan is sacrificing rights won by developing countries in the Biodiversity Convention and its Biosafety Protocol. The Biosafety Protocol embraces the liability concept now rejected by the Pakistan government, and the Convention affords some protection to people's right to biodiversity. The government says that those provisions would hinder rather than facilitate foreign investment, however.
Meanwhile, to fertilize the private seed sector, the government has announced a range of services, incentives, tax preferences and other benefits. These include:
Under such government patronage and incentives, the private seed sector seems sure to bloom.
With the market opening, farmers' rights organizations fear that the inevitable heavy promotional activities of the multinational seed companies will soon lure farmers to abandon traditional seeds and switch to company-controlled seeds. Promoted as high yielding and disease resistant, the company seeds appear tempting.
Once farmers have made the switch, they become indentured to the multinationals. Frequently prohibited by licensing agreements or seed traits from saving seed, farmers must buy new seed every year. "Once the farmer buys the company seed, he would be out of the traditional seed saving and exchange systems and will have to buy seed for each sowing," explains Dr. Shahid Zia.
The effectiveness of multinational marketing strategies is well proven, Zia says. "Pepsi has effectively replaced traditional drinks even in the remotest of areas, only because the company has money to promote the product," he says. Another glaring example is pesticides, promoted on state-controlled television during prime time. The most aggressive campaigns are run by pesticide-manufacturing multinational companies, including Ciba-Geigy, Hoechst and ICI.
"The only way to challenge the growing tide of globalization is mobilization and resistance at the people's level, since small people's groups do not have resources to match the huge budgets of the big companies and run counter marketing campaigns," says Zia.
Some civil society organizations are now working with farmers to establish seed saver networks, with the primary objective of stopping disappearance of local plant varieties and a secondary aim of enabling farmers to stay free from company-controlled seeds. According to SAAG literature, around 4,000 varieties of rice have disappeared from Indian subcontinent over the last 100 years. "We are trying to educate the farmers about the impacts and challenges of globalization on their lives," says a SAAG spokesperson.
The stakes are high, Zia warns. "We are entering an era of seed politics, where control over seed will be a determining factor in international disputes and negotiations," he says.