CPEC and Agriculture

CPEC and Agriculture

Introduction:

CPEC has been called a game changer and has many aspects one of which is the agriculture component. The CPEC plan reveals, thousands of acres of farmland will be leased out to Chinese enterprises in Pakistan.  Chinese enterprises will be allowed access to large tracts of Pakistani farmland, either by lease or purchase. On that land, they will allegedly be permitted to operate their own farms and processing facilities, backed by robust capital grants and loans from Beijing and the Chinese Development Bank. Keeping in view the fact that agriculture sector accounts for around 20 per cent of Pakistan`s GDP and employs over 40pc of the country`s labor force, both Pakistan and China have agreed to enhance cooperation on agriculture under the China-Pakistan Economic Corridor (CPEC),

China and Pakistan have an agreement to promote the transition from traditional agriculture to modern agriculture in the regions along the CPEC to effectively boost the development of local agricultural economy and help local people get rid of poverty and become better off, strengthen the up-gradation of agricultural infrastructure, promote the construction of water saving modern agricultural zones, and increase the development and remediation of medium and low-yielding land to achieve efficient use of resources

Due to shortage of arable land and freshwater resources in China, the country needs to import land-extensive crops (such as wheat and rice) to feed its population. Further, with rising living standards, the Chinese demand for agricultural imports is gradually moving up, which is likely to create agro-based trade opportunities in countries having substantial potential in agriculture produce. China`s demand for cotton yarn and rice imports is met by the emerging economies of Asia, such as Pakistan, Vietnam, Thailand and India.  

The recent trade war between USA and China will possibly hurt both parties but it does present opportunities to others Chinese imports from the US are mostly agricultural produce. Pakistan is a natural agricultural country. Its climate and hard-working workforce are a blessing for the nation. China faces a decreasing agriculture output per capita since there is a rural to urban migration, economic growth has brought about significant increase in family food budgets, urban wages are significantly higher than rural wages, and the levels of demand are not being met with by domestic sources.

Trade Balance between Pakistan and China:

Trade between Pakistan and China is lopsided. To address this gap the agriculture potential can be utilized .The low volume of trade between Pakistan and China is not reflective of the economic size of two neighboring countries. This indicates there is a huge untapped trade potential in both countries.

China is the world’s largest importer of agricultural products. In 2015, China imported $160 billion worth of agricultural products. However, Pakistan’s share in these exports was minuscule — less than half a percentage point — despite having a large agrarian base and a shared border with China. With a population of 1.3 billion people, China consumes almost $1 trillion worth of food every year. With increased urbanization and rising incomes, Chinese consumption patterns are also changing, and demand for high quality imported food items is growing at a pace much faster than population growth. Therefore, the domestic consumption is expected to grow by another $500 billion in the next 10 years. it takes about one acre of arable land to feed an average US consumer. With present population, China only has about 0.2 acre per citizen, which is going to be far short of future requirements, considering the evolving demand.

China, the world’s largest importer of vegetables, gets 50 of these imports from the US and Brazil. In the world of international trade, shorter distances can provide a strategic advantage through lower transportation costs. But for perishable items like food, such proximity can translate into yet another edge. During transit over long distances, food items face higher risk of spoilage and contamination. Because of this, not only additional cost is incurred for preservation and packaging but often exporters have to make use of extra pesticides to increase shelf-life of food. Pakistan, being China’s neighbor, therefore enjoys a unique advantage and CPEC provides an unprecedented opportunity to capitalize on that.

Initiatives already under way:

Various agricultural projects have been initiated to get maximum benefit of the CPEC initiative, which include: Fruit processing industry in Gilgit-Baltistan: The climate and fertile soil of Gilgit-Baltistan offer ideal environment for producing fruits like apples, peach, cherries, almonds, apricot, etc. According to an article published by the Asian Development Bank, farmers in Gilgit-Baltistan produce over 100,000 tones of fresh apricots a year. Setting up the fruit processing industry in the region would help boost the country`s fruit exports.

Meat production and processing facilities in KP: Setting up of meat production and processing facilities in KP would help increase Pakistan`s meat exports to China, as well as, to Afghanistan and Central Asian market. KP-China Sustainable Donkey Development Program: To increase the donkey population in Pakistan so as to ensure interrupted backward supply for export of live animals and raising income of donkey breeders and traders. 

Under CPEC, efforts are being made to strengthen drip irrigation technology for water efficiency, strengthen cooperation in the fields such as crop farming, livestock breeding, forestry and food growing, and aquatic and fishery, with the highlight on technical exchange and cooperation in the fields of development of comprehensive agricultural production capacity, construction of farmland water conservancy facility and agricultural products circulation facility.

The CPEC Agri sector is also focusing on improving post-harvest handling, storage and transportation of agricultural products and innovates in marketing and sales models, Improve water resources operation and management, strengthen development of pastoral areas and desert, and promote application of remote sensing technology.

The key cooperation areas focus on strengthening production of agriculture inputs particularly pesticides, fertilizer, machinery and support services including agriculture education and research, collaboration in forestry, horticulture, fisheries and livestock medicines and vaccines as well as strengthening production of horticulture products.

Rationale of Intervention:

Pakistan is among the top 10 producers of many crops such as rice, wheat, cotton, sugarcane, milk, meat, mangos, chickpeas, and citrus fruits. But because of a poor economy and lack of modern techniques and technology, it has not been able to exploit its strength in the agriculture sector fully. However, China’s experience in agriculture has been very successful, and the progress it has made in this sector during the past four decades is amazing.

China was facing food shortages just 40 years ago, but with its reforms in the agriculture sector from 1978-84, it successfully turned shortages into surpluses, and began exporting produce to other countries and generating foreign exchange. China pulled around 500 million people out of poverty within just six years of its reforms in the agriculture sector. Chinese scientists, technologists and farmers worked very hard, developed new varieties and new techniques, and the country modernized its farming patterns. Now Chinese agricultural enterprises are mature, experienced and financially strong.

They could enter Pakistan’s huge untapped huge market and make joint ventures with local entrepreneurs to exploit the real potential of Pakistan’s agriculture sector. This would help Pakistan’s economy to take off and would also be a good opportunity for Chinese entrepreneurs to make good profits as well as compensate for any disturbance caused by US export of agricultural produce  

Coordination Efforts:

Sino-Pakistan Hybrid Rice Research Centre at Karachi University: Both countries have recently initiated research to produce high-yielding and high-quality rice. Setting up a rice research centre is a right step towards achieving the objective.

The basmati rice grown in Pakistan’s Punjab province is long and slender-grained. It is aromatic, fluffy when cooked and, in classic Pakistani dishes, pairs well with lentil and gravies made from chickpea flour and spices. At market, it draws double the price, if not more, of non-basmati, long-grain rice varieties.

In recent years, however, basmati revenues have slumped in Pakistan amid low-yield harvests and uneven quality. At the Sino-Pakistan Hybrid Rice Research Center in Karachi, Chinese and Pakistani scientists are working to reverse this trend. Using state-of-the-art genetic technologies, they are developing high-yield, high-quality, and pest-resistant rice varieties, for both domestic sale and export.

The $1.3 million research facility is a harbinger of many changes soon to come to Pakistan’s agriculture sector under the ambitious development scheme known as the China-Pakistan Economic Corridor, or CPEC  For agriculture, CPEC promises technology transfers, infrastructure upgrades, and extensive cooperation between Chinese and Pakistani farming enterprises.

 A group of Chinese hybrid-rice researchers and experts along with local scientists has visited more than 100 rice farms across the country under the `Travelling Rice Seminar `initiative.
The travelling seminar was designed by Pakistan Agriculture Research Council (PARC) and Chinese Yuan Longping High-tech Agriculture Company and aims to boost hybrid rice cultivation in the country.

According to Program Coordinator and Member Plant Science PARC Dr Anjum Ali, the experts also visited research stations, agricultural universities and seed outlets of different companies to exploit the cultivation of hybrid rice. The Chinese experts travelled to Khyber Pakhtunkhawa, Punjab, Sindh and Baluchistan in order to create awareness about the cultivation of hybrid rice among growers. ‘This was a month-long activity in which a group of hybrid rice researchers from China comprising 12 scientists trained the local scientists, seed producers and field extension departments of the provincial governments,` he added.

He said the main aim of this joint initiative is to enhance per acre crop productivity, increase profitability and produce surplus commodity for exports enhancement. ‘In order to further enhance the local rice output, China and Pakistan have decided to work together for conducting joint awareness programs to adopt hybrid rice seeds,` he added.

The Chinese scientists trained 30 Pakistani agriculture scientists who were selected from across the country. Dr Ali said the Chinese experts will also impart training to the members of the provincial field extension departments on hybrid rice cultivation. In addition, the activity will also help in capacity building of local experts from all over the country in order to promote hybrid rice techniques.

Road-shows and field visits were organized across rice-growing areas to address issues and challenges faced in promotion of hybrid rice seed, he added. He further said a revolutionary hybrid rice seed has been developed recently by the Chinese researchers, which would help Pakistani farmers to enhance significantly their per acre yield, hence the country would be able to export more rice, he added

Challenges Faced by Pakistan Agriculture:

Firstly, the fertility of soil is decreasing day by day. The thickness of fertile layer of soil in Pakistan is more than 6 inches but the average yield is lower than other countries where layer of fertile soil is only 4 inches; water wastage is very high in our country. The archaic method of flood irrigation is still in practice in whole of the country which wastes almost 50 to 60 percent of water; owing to old methods of cultivation and harvesting, Pakistan has low yield per acre that means the average crop in Pakistan is just 1/4th of that of advance states.  Nepal, India and Bangladesh, are using modern scientific methods to increase their yield per acre. For this purpose, these states are using modern machines to improve their yield; small farmers are increasing in our country as the lands are dividing generation by generation. So, there are large numbers of farmers who own only 4 acres of land. These small farmers do not get credit facilities to purchase seeds, pesticides, fertilizers etc; water logging and salinity is increasing day by day. As the storage capacity of the dams is decreasing so the water availability per acre is also decreasing. Therefore, the farmers are installing more and more tube wells to irrigate their crops. This is why salinity is becoming the major issue in most parts of Punjab and Sindh; focusing more on land, crops and yield problems the man behind the plough is always ignored. While formulating the 5 or 10 years plan, no emphasize has been laid on the importance of solving the problems of farmers. Most of the farmers are illiterate, poor and ignorant.

Infrastructural problems:

 Inadequate rail and road networks are one area of concern.. Pakistan is also facing grain storage problems at large scale throughout the country. The people often store their grains in godowns, which cause time to time damage to the seed. Thus, hundreds of thousands of tones of crops have to be stored in temporary facilities that afforded inadequate protection and pilferage. The hazards may occur because of improper ventilation, lack of control over temperature and humidity, high moisture content in seeds, lack of control over rain due to broken walls, floors and ceilings, spoil and un-cleaned godowns, lack of spray and fumigation etc. That results in increase number of dormant seeds, sprouting and rotting, increase of insect damage and bird contamination.

Cold storages:

All fruits and vegetables require specialized post-harvest treatment, appropriate temperature and relative humidity for their storage. Establishment of cold storage provides refrigerated storage and preservation facilities for different fruits, vegetables as well as flowers. Special licenses are required for food items like milk, meat etc & can be studied in the. Because of technology advancements and logistic strategies, the cold storage of perishable items has become an important stage in the distribution between manufacturers / processors and retail locations. The cold storage will ensure the increased availability and improved quality of high value perishable fruits and vegetables for both export and local sale, which would otherwise perish or deteriorate.

Value added Sector:

Livestock revolution enabled Pakistan to significantly raise agriculture productivity and rural incomes in 1980s. Economic activity in dairy, meat and poultry sectors now accounts for just over 50% of the nation's total agricultural output. The result is that per capita value added to agriculture in Pakistan is almost twice as much as that in Bangladesh and India. Although Pakistan's value added to agriculture is high for its region, it has been essentially flat since mid-1990s. It also lags significantly behind developing countries in other parts of the world. For example, per capita worker productivity in North Africa and the Middle East is more than twice that of Pakistan while in Latin America it is more than three times.

Conclusions

 Agricultural development is one of the seven areas of cooperation under CPEC, wherein China is specifically interested to explore areas like cotton productivity, efficient irrigation and post-harvest infrastructure along the CPEC route, a gateway for enhancing agriculture exports to China. Where infrastructure can undoubtedly serve in allaying the bottlenecks in the agriculture sector, this progression requires economic and political reforms by the government and private sector. The government should consider removing tariff and non-tariff barriers for agricultural trade with China, renegotiating the Pak-China Free Trade Agreement for better returns on its agricultural exports. The private sector and agriculture entrepreneurs should explore viable market opportunities and partnerships in the Chinese market and with international firms. Most importantly, a modern agricultural policy needs to be formulated to work in tandem with CPEC and support the rights of the local farmers.

  The private sector and agri-entrepreneurs should become the trailblazer and start exploring viable market opportunities in the Chinese market and forge partnerships with international firms to get a foothold. The government and private sector should jointly invest in research and development and post-harvest technology to improve product variety and quality. Last, but not the least, value chain expansion should be prioritized. Fruit processing, for instance, can fetch greater value with far simpler SPS requirements and more stable demand.

Update

During Prime Minister Imran Khan`s visit to China, Islamabad and Beijing inked a few initial agreements on agriculture; on the basis of which detailed frameworks of cooperation in the field of crops, livestock, fisheries and forestry will be developed and implemented. Officials say that the Memorandum of Understanding (MOU) signed during Mr Khan`s visit provides the basis for attracting Chinese investment and Chinese technical assistance in all sub-sectors of agriculture.

`From strengthening the seed sector, increasing crop yield, modernising livestock and fisheries and enlarging our forest cover, there is a long list of areas in which Chinese funds and technical cooperation will be coming in,` says a senior official of the Ministry of National Food Security and Research.

`Whereas it`s true that we`ll develop detailed frameworks for implementation of the PakistanChina cooperation agreement, it`s wrong to assume that none exists right now. A number of such frameworks are already in place since 2015 when the CPEC master agreement was signed and implementation on them continues,` he said.

Officials, however, are tight lipped about the critical issue of land acquisition in Pakistan by Chinese state-run or private firms for furthering cooperation in agriculture. That was an important feature of the CPEC long term plan.


Chinese companies have already been engaged in development of hybrid paddy and wheat seeds in Pakistan. Sinochem Group Agriculture Division, for example, has been running pilot projects at 200 sites in Pakistan including experimental bases and local farms.

A hybrid rice variety developed and cultivated by a Pakistan rice research and exporting company in collaboration with Yuan Long ping High-Tech Agriculture Co, has already been exported to the Philippines. In the seed manufacturing industry, Syngenta Pakistan is aggressively increasing its market share after China took over the Switzerland-based Syngenta in the middle of 2017, industry officials say. it would be naïve to expect that Chinese investment will start pouring into our agriculture sector automatically,` says a Sindh government official working on the province`s long-term agriculture policy.

`Chinese companies that are already here are all working in active partnership with local companies or federal or provincial institutions. They will continue to take this relationship one-notch further every time they decide to increase their level of cooperation. This effectively means we must prepare ourselves to work with them,` he opined.

Sindh is about to unveil its agriculture policy for 2018-2030 and officials working on it say that similar to Punjab, where Chinese and other foreign companies have been actively engaged in agricultural development, Sindh also wants to seek greater international cooperation. 

About three years ago, the Pakistani and Chinese governments had identified a couple of areas for cooperation in agriculture and China had promised to build agriculture demonstration centres across Pakistan and supply seeds and machinery to Pakistani farmers.

Authorities have so far not shared with the public how many of such demonstration centres have been built and the arrangement under which the Chinese are supplying seeds and agriculture machinery.

According to an MOU signed in this regard in October 2015, Pakistan was to use Chinese capital, technology and experience to improve irrigation, reduce post-harvest losses and enhance water use efficiency.

Officials with background knowledge of agricultural programmes under CPEC say work is progressing on the above-mentioned and several other areas of agriculture development and poverty alleviation. Currently it is difficult to say how much of the Chinese funding we can expect in state grants and loans, and how much through foreign direct investment of Chinese companies,` a federal government official explained.

Some projects like those of farm-to-market road networks that are connected with storage, packaging and processing units, fall under infrastructure development in CPEC wherein long-term state funding can rightly be expected.But both state-run Chinese institutions and companies will be involved in other projects like construction of modern slaughter houses or pulses, tea and oil seeds crop cultivation or deepening of agricultural research programmes