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Corporate Farming

Incentive package for corporate farming
Faraz Hashmi 

ISLAMABAD, April 27: Corporate agri-farming has been granted status of an industry by the government under a new package of incentives. The package opens a window for foreign investment in agriculture sector of the country. 

The package, which has already been approved by the chief executive Gen. Pervez Musharraf, was partly disclosed by Chairman Board of Investment Waseem Haqqie at a three-day 'Agri-Business Conference' opened by President Rafiq Tarar on Wednesday. 

In his speech, "investment polices for agri-business," Haqqie spelt out salient features of the new package offering agriculture land for local as well as foreign investors for developing farms. 

In the new policy, there would not be any limit or cap on foreign ownership, the amount of investment and ceiling on land holdings for the registered companies. 

It also envisaged a tax holiday of five years for irrigated agriculture, seven years for barani lands and 10 years for cultivable wastelands. 

Haqqie said under the new policy, state land would be sold or leased for 50 years extendible for another 49 years. 

Moreover, a substantial share from the credit programme of all the banks and financial institutions would be earmarked for corporate farming. 

The transfer of land for corporate agricultural farms would also be exempted from duties. The labour laws, would not be applicable as in the case of export processing zones, he added. 

Storage facilities for agriculture produce would also be placed under the corporate agriculture and these would enjoy the same incentives, he added. 

Apart from the package, the tax relief in the form of first year allowance (FYA) for agriculture had been increased to 75 per cent of the machinery cost, which was in line with 75 per cent FYA allowed in the case of infrastructure, agro-based and engineering/chemical projects. Other facilities available to export-oriented industries also apply to agriculture or processed agro-products, he said. 

The Board of Investment chairman said more credit would be made available to the agriculture sector and it would be doubled from the next financial year. 

He pointed out that China and Egypt had done a great deal in developing corporate farming. He said a Chinese delegation was on a visit and they would be taken to provinces, where they would explore possibilities of investment. 

Earlier, Federal Minister for Food and Agriculture Khair Muhammad Junejo in his speech identified some major problems afflicting the agriculture sector. 

He said productivity per unit in Pakistan was one of the lowest in the world. "In case of wheat, average yield is 2.4 tonnes per hectare against the world average of 2.7 tonnes per hectare, China reaps 3.8 tonnes, India 2.8 tonnes and Egypt six tonnes per hectare," he added. 

Water shortage, he added, was another problem threatening agricultural productivity. He said despite 40 per cent water shortage the production was low only by 12 to 15 per cent. 

Junejo pointed out decreasing public sector investment in agriculture sector as another impediment in development of the sector. 

"Investment by public and private sector in agriculture decreased from 10.38 per cent of total investment in 1990-91 to 6.11 per cent in 1996-97," he said. However, thereafter the ratio was raised to 10.34 percent in 1999-2000. 

Quality of agriculture produce was pin pointed as yet another problem. "This is a big issue to be addressed as the World Trade Organization's regulations require the export commodities to meet the international quality standards," he said. 

He disclosed that the ministry with the assistance of Food and Agriculture Organization had successfully developed and demonstrated a crop productivity enhancement model at village 44- Janobi in Sargodha district. 

"Government has agreed replicate it in 100 villages of all the four provinces," he said. 

Federal Minister for Commerce Razzak Dawood, in his speech, underlined the need for putting in place a proper framework for ensuring international prices to the growers. 

He said the country had surplus wheat, but it could not be exported because of low quality. 

The government as a matter of principle had decided not to interfere in the prices, which would ensure international prices to the growers, particularly of cotton. 

On a question regarding putting some restriction on export of cotton, he said if the government stopped export of cotton, the mechanism of free market it was trying to put in place would be disturbed. 


Dawn