Should Pakistan grow food for the Gulf?

June 16, 2008

Queuing to buy wheat flour in Peshawar/May file photoThis is an idea that looks crazy at first glance — Pakistan, struggling with its own food shortages and rising prices, rents out its farmland to grow grains for the rich Gulf states instead. 

But the idea appears to be gaining momentum. Saudi Arabia is holding talks with officials in Pakistan, among other countries, to set up projects to grow wheat and other grains to protect itself from crises in world food supplies. Dubai-based private equity firm Abraaj Capital has already said it is looking at investing in agriculture in Pakistan  and other Gulf countries are also showing an interest.

So is this good or bad news for Pakistan?

U.S. News & World Report says there may be ”potential for large and enduring benefits on both sides. The reported sellers of under-developed farmland, Pakistan and Sudan, for example, are poor and lack the resources to make their own land productive,” it says. “Foreign investment is meant to help the investor, but in these cases it might also help the host countries by improving roads and irrigation and, of course, providing cash.”

The Financial Times last month quoted a senior Pakistani official  as saying of the talks to sell farmland to the United Arab Emirates: “Our aim is not to do away with precious farmland but in fact to raise the productivity of our farms and turn barren land in to fertile farmland.”

On the positive side is the potential for big investments in Pakistan from wealthy Gulf economies looking to use windfall oil profits to diversify away from oil.  According to one expert, the cumulative sovereign wealth fund wealth in the Middle East is now about 1.5 trillion dollars, mostly in the United Arab Emirates; and their assets could triple or quadruple in five to 10 years time.

Pakistan also has an interest in keeping relations sweet with Saudi Arabia as it seeks a deal on deferred oil payments  to ease its own financial crisis. Is this the beginning of a new version of oil for food deals?

On the negative side are all the issues about sovereignty and economic control. And of course the perennial question in emerging markets. What will it mean for the poor man who is already struggling to feed his family.

Comments

If Pakistan is doing oil deals with Saudia Arabia or anyone else, What businessis that of yours? Why are you getting Jealous? I dont see Saudia Arabia offering the US or any western country oil on deferred payments to sustain, Bush was begging Abdullah at Sharam El Sheik to increase oil production to lower prices, This from the leader of the lone super-power! Hah!

Simply put Pakistanis will look out for Pakistan, No one else need concern themselves with our matters! Get lost!

Posted by Dr Idris Shah Ebrahimi | Report as abusive
 

So long as Pakistan gains economically, so long as there is enough profit staying in the country, so long as there is enough of that FOOD staying in the country, it should be okay.
Im interested in looking at a detailed draft of the agreement though…

Posted by Qasim Awan | Report as abusive
 

Pakistan should allow any body, any country to setup big farms or other industry to provide Pakistan with much needed investments and jobs for its poor citizens.

Posted by denali | Report as abusive
 

This is precisely the notion of Comparative Advantage and it is in the best interest of every country to practice it. Pakistan is still a predominantly agricultural state, having failed to sufficiently industrialize its economy over the past three decades; the three crucial decades in which most of the developing countries such as China,Taiwan, Malaysia etc. achieved their industrial economic success. Some catching up was seen during the Musharaf years but with a volatile and uncertain political environment and serious energy crisis, the trend is unlikely to continue at least in 2008.

It is therefore vital that the country at least does not miss the bus on its true edge; the agriculture sector. Gulf countries have been investing heavily in Pakistan’s telecom and construction sectors in recent years and extending the investment to farmlands and agricultural production in Pakistan. However, tough challenges await the investors in this sector due to serious water and energy shortages that the country suffers from at the moment.

For effective investment in the agriculture sector, the government must clear these impediments first. While energy problem can be overcome in the long run, water shortage will continue to hurt the agriculture sector. It must be noted that water shortage is not because of lack of dams and water storage facilities; even the presently operational dams tend to remain half empty these days because of water shortage.

Security and political instability are also crucial for foreign investment which Pakistan lacks right now. Resource-wise, Pakistan is fortunate to have vast fertile lands and excellent irrigation and road networks (built under British rule).

Exploiting global food shortage by boosting the agriculture sector in Pakistan is a good idea but I am afraid, just like the days of IT revolution in India in which Pakistan lost in competition, agriculture will have the same fate for the reasons stated above.

Posted by Safdar Jafri | Report as abusive
 

Dr Idris Shah Ebrahimi
Welcome to the global village.
What happens in Pakistan is a matter of concern to the rest of the world. A stable Pakistan might just mean fewer angry young men wanting to kill themselves (&anyone standing near them) in other people’s countries.
Safdar Jafri
Looking at the practical details/problems makes sense, but ignoring the critically important point of high level corruption isn’t helpful. It’s the little people of Pakistan that need the work, money & food, but they are not the people that are going to see any great change.
Pakistan needs to do some serious house cleaning before it invites the neighbours in.

 

If a region is capable of supporting a renewable resource that doesn’t harm the land, there is no reason it cant be rented out. Now pillaging something that can not be regrown is a different story. Also the nation can nationalize the farming infrastructure after it is developed.

 

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