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Corporate Farming

Presented by
Naila Sajjad
10-arid-1766
PhD Biochemistry

Corporate Farming(CF)

Corporate farming is the business based on agriculture specifically and


mega corporations
It is a modern food industry which involves the use of products for the
company itself, and entire chain of agriculture-related business
The term also includes the influence of these companies on education,
research and public policy, through their educational funding and
government lobbying efforts
Corporate farming" 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

Conti

is a business producing food or fiber products that is organized as a


corporate entity for tax purposes

It is owned by stockholders and run by a board of directors

Family &non-family corporate farm

A family corporate farm is one where the principle stockholders are


related by blood or marriage

A non-family corporate farm is one where the principle stockholders have


no family relationships

How people went for corporate farming

To increase agricultural production for the mushroom growing population


by using modern technology

To bring self-sufficiency in food and increase export earnings

To stop land fragmentation for the cost effective use of modern machinery

Food sovereignty & food security


are the major issues because during the last couples of years the extra
ordinary increase in prices of stable commodities (wheat, corn, rice etc)
have apparently compelled many states of the world including oil rich Arab
monarchies and middle eastern countries to grow their own crops to
manage supplies to their domestic consumers & also to build stockpiles for
bad times

Rationale of corporate farming

As the small farmers of Pakistan are unable to adapt new technologies and
cannot afford the costly inputs required to get optimum yield from new
crop varieties
The idea of Corporate Farming was to cultivate all waste Lands in Pakistan
by bringing foreign corporations, which Would cultivate these lands by
modern technologies by
Employing local labor
at attractive wages
train local People
pay local taxes
develop roads and communication net-works, and bring prosperity at
nominal profits to themselves

Corporate farming Ordinance 2001

Corporate Farming Ordinance (CFO) was passed in 2001 according to


which:

Listed corporations could lease land in the Country for 99 years

Broken into two periods of 50 years and 49 years

Government had identified 6.764 million acres of State lands for leasing to
different corporations

Land Identified for Corporate Farming


The provinces have identified 6.764 million acres of land for corporate
agriculture farming by local and foreign investors

Baluchistan
0.1 million
acres

Sindh
29,842
acres

Punjab
6.631
million
acres

Khyber
pukhtunkh
wa 2,449
acres

Activities under CAF Plan


Farming
food
processing

Production
and
marketing
of mutton

Animal feed
production
and
marketing

Food
packaging

Deep sea
fishing and
its
processing

Processing
and
packaging
of milk

Corporate Farming Objectives

To seek efficiency of production and increased incomes/revenues by


bringing together agricultural production, processing and marketing
activities at one place under management of a corporate entity

To improve agricultural productivity and profitability through the use of


latest production technology and adequate expertise particularly for exports

To produce high quality agricultural products due to favorable resource


base

To achieve/maintain internationally competitive unit cost of production for


all major crops, fruits and vegetables

Salient Features of Investment Policy for Corporate


Agriculture Farming (CAF)

100% foreign equity allowed (only in CAF on case to case basis)


Minimum $ 0.3 foreign equity investment
Remittance of 100% capital, profits, dividends allowed
Only such local and foreign companies will be entitled to Corporate Agriculture
Farming that are incorporated in Pakistan under the Companies Ordinance, 1984
No upper ceiling on land holding

The size of the proposed corporate farm may be left to be determined by the
prospective investor.

Conti..

State land can be purchased, or leased for 50 years through open auction,
extendable for another 49 years

All banks and financial institutions will earmark separate credit share for
Corporate Agriculture Farming (CAF)

Labor laws may not be presently applicable to Corporate Agriculture


Companies. Due to special circumstances of the agriculture sector however
appropriate labor laws be developed for this sector within five year

Agriculture Income Tax regime applicable in provinces, on income from


agriculture, would be applicable to Corporate Agriculture Farming

Fiscal Incentives for Corporate Agriculture Farming (CAF)

0% custom duty and sales tax on import of agricultural machinery,


equipment and implements under SRO 575(I)/2006 dated 5 th June, 2006

Exemption of duty on transfer of land for CAF

Tax relief; Initial depreciation allowance @ 50% of machinery cost.

Dividends from corporate agriculture farms are not subject to tax

Farm income given more favorable treatment than income from other
sources

The areas of Investment for Corporate


Agriculture Farming (CAF)

Land development / reclamation of barren land, desert and hilly areas for
agriculture purpose and crop farming.
Reclamation of water Front Areas/ Creeks.
Crops, Fruits, Vegetables, Flowers Farming / Integrated Agriculture
(Cultivation and processing of crops).
Processing of agriculture products.
Modernization and development of irrigation facilities and water
management.
Plantation/ Forestry.
Dairy, small ruminants (sheep, goat) and other livestock farming.

Incentive Package for the


foreign/local Investors from the
MINFAL:

The Ministry of Food and Agriculture (MINFAL), with a view to facilitate


foreign & local investors in the Agriculture Sector, developed a policy
package for CAF

The President of Pakistan conveyed the approval of this policy in 2002 and
directed MINFAL to coordinate with the concerned Ministries/Divisions
and Provincial Governments to expedite its implementation

Conti
To pursue the implementation of the CAF policy package, the Prime
Minister, in a meeting held on October 29, 2004 at PM Secretariat with
minister for food, agriculture and live stock directed that status of
implementation of CAF policy package be placed for the consideration of
cabinet

Cabinet approved the proposed policy package

Conti

No government sanction required to undertake CAF except registration


with securities and exchange commission of Pakistan

Foreign equity under CAF has been raised from 60% to 100%

Merits of corporate farming


Reduced
Reduced
Better
minimum
agricultural
quality
support
wastage
yield
price
Boosting
New
the
technology
agricultural
sector

Demerits of corporate farming

Lower profit
for farming
household

Higher
environmen
tal cost

Reduced
nutrition

Risk of
monopolisti
c
economies

Countries interested in corporate farming


in Pakistan

China

Saudi Arabia

United Arab Emirates

Corporate farming in China

Corporate farming in Saudi Arabia

Corporate farming in United Arab


Emirate

Forward Steps towards Corporate


Farming

The United Arab Emirates (UAE), which imports 85% of its food,
purchased 324,000 hectares of Farmland in the Punjab, Sindh and
Baluchistan Provinces in June 2008

Besides, the two UAE firms, Emirates Investments Group also expressed
their interest in investing directly for corporate farming

The UAE is also in negotiation with the provincial government in Sindh to


acquire farmland in the districts of Shikarpur, Larkana and Sukker, as well
as with the Punjab government for acquiring lands around Mianwali,
Sargodha, Khushab, Jhang and Faisalabad

Conti

The government is going to develop a new security force of 100,000 men


to be split among the four provinces to help stabilizing the investment by
Arab Monarchs

Khyber Pukhtunkhwa is in in the process of finalizing the terms and


conditions for offering their land on long term basis to the investors.

Key Policy Recommendations

A review of the CAF of Pakistan is needed from a human development and


food security perspective. It must involve all stakeholders specially small
scale farmers and pro-poor civil society organizations

The binding constraints on small scale farmers such as access to


technology, finance, and other input resources must be reduced

Special efforts should be made to improve agriculture infrastructure which


increases diversification in farm produce of the small scale farmer. Fruits
and vegetables are one of such key areas

Conti

A serious thinking of land distribution must be taken. Small scale farmers


may be given state land to help remove poverty and increase income
opportunities

There is need to formulate a climate change response policy in Pakistan


which addresses to the questions of small scale farmers and their
vulnerabilities

Cooperatives of the poor farmers which are managed by professionals should


be encouraged and special policy be made as well

The central policy recommendation is to develop special focus in mainstream


development activities which targets the poor small scale farmers on priority

Conclusions

Corporate farming is good and it will help to increase the productivity of


the farms as observed in various regions because it is backed & financed
by big corporations

It will enhance the use of highly advanced technology and will also
develop our farm-market infrastructure and will also increase agricultural
products export

It will also provide employment opportunities to agriculture graduates and


farmers. The present condition of Pakistans agriculture indicates that the
prospects of corporate farming in Pakistan is bright subject to the
managerial skills of the companies and their relationship with the local
community/small farmers

References

Zafar, S.M. (2011) Corporate farming: A threat to food and small


farmers.www.pkhope.com
Arif, M. Agriculture and Food Security in
Pakistanhttp://www.sappk.org/publications/eng_publications/Agriculturea
ndFoodSecurity.pdf
Malik,R. (2002) Corporate Agriculture Farming: Boon or Bane The
World
TradeReview,Available:http://www.worldtradereview.com/webpage.asp?
wID=76 [Accessed 22October 2011]