Corporate farming cannot alleviate rural poverty

Despite its rapid urbanisation, Pakistan remains an agrarian country. This is because over 60% of its population resides in rural areas, and because well over a third of the entire labour-force works in the agricultural sector. Yet, rural areas in Pakistan are much poorer than its cities, and recent climate-induced stresses such as water scarcity and increasingly severe and frequent floods are making matters worse.

While landownership patterns vary significantly across different districts, a lingering cause of rural destitution is highly skewed land ownership patterns. A very small number of landowners still own large parcels of cultivable land, while around half the rural populace remains landless. Landless farmers who lack the capacity to lease land by paying upfront rents, in addition to bearing input costs to grow varied crops, have little choice but to work as sharecroppers or agri-labourers on larger or middle-sized farmers.

Use of capital-intensive strategies to boost agricultural productivity can be traced back to the days of the so-called ‘Green Revolution’ which increased productivity but did so by reliance on environmentally harmful and expensive fertilisers and pesticides. The increasing use of mechanisation also resulted in major displacement of agricultural labourers. There have been a series of subsequent market-driven agricultural policies, endorsed by entities like the World Bank, which have paid little heed to the plight of the landless poor.

The promotion of corporate farming is now in vogue, but this too is a problematic strategy from the perspective of effectively alleviating rural poverty. Yet, the idea of banking on ‘progressive’ farmers who can purchase or lease large tracks of land and boost productivity via investment in cutting-edge technologies was recognised by World Bank endorsed poverty reduction strategies for Pakistan back in 2003 and 2007.

While doing my PhD research a decade ago, I had the chance to spend time at what was then a leading corporate farm in the country. This farm, operating on over 3,000 acres of leased land, was highly mechanised, employing highly qualified professionals not only including agronomists but also marketers, managers and accountants. It was efficiently using stored semi-perennial irrigation water via drip irrigation. This farm was making impressive profits growing cash crops like cotton and mangoes. The corporate farming venture was paying its taxes to the government on a self-assessment basis, which remains an unusual practice in the agricultural sector even today. Thus, by many important measures this corporate farm was doing extremely well and fulfilling its promise of boosting agricultural productivity.

However, assuming that effectively-run corporate farms in Pakistan can automatically alleviate rural poverty is wishful thinking. The aforementioned corporate farm only hired female agri-workers and seasonal male labourers, who were given no contracts and were working for meager wages. This highly mechanised corporate farm had little use for more regularised labourers. Conversely, because the farm had leased land from many surrounding farmers, its very presence had probably displaced many sharecroppers and daily waged male agri-labourers from neighboring farmlands.

Nonetheless, subsequent governments have been trying to entice investors from the Gulf and China to undertake corporate farming in Pakistan. The idea of external investors using finite land and scare water resources to grow crops for export when the country itself is facing water scarcity and food insecurity remains contentious.

More recently, the military has also announced its intention of undertaking corporate farming and it is supposed to get 45,000 acres of land on a 20-year lease in three districts of Punjab for starters. The creation of military owned dairy and horse breeding farms, and the provision of agricultural land to military personnel, are practices which can be traced back to colonial times.

The probability of military-operated corporate farms being able to help address rural poverty remains limited at best, especially if they are going to emulate other ‘successful’ corporate models of boosting growth within the existing agrarian economy of Pakistan.

Published in The Express Tribune, August 18^th, 2023.

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