In order to jack up Pakistan’s agriculture exports to China in a sustainable mode, “China-led Contract Farming”, a type of agriculture commercialization or corporate farming, is gaining robust traction in Pakistan.
The activity is helping Pakistan to increase its export volume, growers training on modern liens, transfer of agriculture-based technology, high-income generation to farmers, and revamp of input and output of Agri-infrastructure. Top of all, China-led contract farming is becoming an instrument to curtail the poverty level in Pakistan. It is one of the game-changer phenomena among others that powered up China to uplift more than 800 million people from extreme poverty.
Indeed, credit goes to Chinese companies especially China Machinery Engineering Corporation (CMEC) Pakistan, which is a pioneer in Contract Farming in Pakistan.
The journey of the Pak-China agroecosystem has taken effect in the light of CPEC 2.0 agriculture cooperation under the Belt and Road Initiative’s agriculture collaborations since it was propelled by Chinese President Xi Jinping in 2013.
CMEC Pakistan, part of CMEC group (a flagship company of SINOMACH Group which is one of the largest manufacturing & trading groups in China), debuted contract farming with around 500 acres in Pakistan by launching Chilli model farms in 2020. Later it made a breakthrough by unleashing sesame contract farms in Pakistan which led sesame export to China around $400 million in 2023. It is expected that sesame exports to China will exceed $1 billion in the coming years. Meanwhile, for Sorghum crop though CMEC Pakistan is yet to initiate contract farming but made headways by germinating test plants of Sorghum with local farmers.
In the past, Pakistan’s agriculture exports were in a sorry state of affairs. An annual report titled “The State of Economy 2017-18” launched by the State Bank of Pakistan (SBP) revealed that “in the agriculture sector, out of China’s global food imports of around $99.6 billion in 2018, Pakistan’s share was only around 0.37 percent. Under such a dismal situation, CPEC, BRI’s flagship project, came into action on agriculture cooperation. With Pak-China burgeoning agriculture cooperation, Pakistan exported different agriculture products worth $610 million to China in the first half of 2022. Pakistan’s total various Agri exports to China touched the figure of around $1 billion in 2023. If joint cooperation continues, Pakistan’ total agriculture export potential to China to reach more than $20 billion in the coming years.
On Pakistan’s agriculture landscape influenced by the Agri export industry and commercialization of Agri products, CMEC Pakistan is taking centre stage by introducing contract farming on Chilli and sesame seeds steadily and gradually.
Under China Pakistan Free Trade Agreement (CPFTA) phase II which allows tariff reduction, duty-free treatment, and trade liberalization, Pakistan’s top exported commodities to China are cotton, copper, cereals, fish, crustaceans, aquatics invertebrates, grain, fruits, beverages, aluminum, apparel, salt, sulfur, plaster, lime and cement, leather, and plastics. Now underpinned by CMEC Pakistan, chili and sesame seeds are becoming cash crops that are being exported to China on a large scale.
In Pakistan smallholder farmers are constrained by a lack of access to quality agricultural inputs, technology, innovation, knowledge, and demand-based extension services, impediments in getting the timely share of their irrigation water, lack of access to large markets, both domestic and international, imperfect market information, uncertainty about sale and price of Agri production and no capacity to hold, store and preserve produce to sell it at competitive market prices.
A plethora of farmers’ woes are being addressed by CMEC-led Contract farming models. CMEC-run contract farms have been brimming with multiple benefits for local farmers, such as providing smallholder farmers access to better inputs and technology, minimizing market risks, propping up income stability, and shoring up agricultural modernization.
Being a part of corporate farming, CMEC contract farming in Pakistan has picked momentum as an instrument to open an era of pre-agreed prices for the purchase of a commodity, enhance agricultural productivity, improve quality standards, and provide market access to smallholder farmers.
Recently I witnessed the “contract farming paradigm” led by CMEC after becoming a participant in the 1st “2024 sesame Contract Farming Project” formally rolled out by the China Machinery Engineering Cooperation (CMEC) group on 6th May in Faisalabad.
Unveiling of the project came into force after 1st “the 2024 sesame contract farming” project was signed between CMEC Group and local farmer “Joiya Zarai farm Tandlianwala” in collaboration with NorthWest A & F University China, Ayub Agriculture Research Institute, Faisalabad, Government of Punjab, Oilseeds Research Institute Faisalabad) and Trade Development Authority Pakistan (TDAP)
The launching ceremony of the private agriculture-based commercialization project kicked off with a seminar titled “Commercialization of sesame and Explore Potential” held at the main auditorium, Ayub Agriculture Research Institute, Faisalabad. Following the activity, the ribbon-cutting event took place with the participation of Mr. Joiya, a local smallholder farmer, Mr Dai Bao Vice General Manager of CMEC Pakistan, Prof Dr. Zhang Lixin Chairman, Silk-Road Bio-Health Agriculture Industry Alliance, NorthWest A & F University China and other CMEC officials, Agriculture scientists, government officials, local farmers, and traders.
In a seminar, CMEC (Private) Limited Pakistan Vice General Manager Dai Bao said that since China and Pakistan have been forging ahead in agriculture synergic collaborations, 1st “2024 sesame Contract Farming Project will be the impetus to opening up a brand-new chapter of Pak-China Agri-based commercialization to optimize sesame export potential. In the backdrop of the operationalization of many CMEC-run Model sesame Farms since 2020 that helped Pakistan to spur $ 400 million in sesame export to China, it is highly likely that sesame export to China will be $ 1000 million in the coming time, he added.
During a presentation in a seminar, CMEC senior commercial Manager Alan Xi said that with the efforts of CMEC, Pakistan has become 5th largest country in sesame production in the world.
Discussing the benefits of Pak-China sesame Contract Farming, he divulged that it is causing technology transfer with the adoption of advanced agricultural practices, improving quality standards of sesame, and increasing income generation for farmers. “CMEC contract farming also makes sure traceability systems formation, infrastructure development (irrigation system & processing facilities), skill development and capacity-building programs for farmers, strengthen trade & diplomatic relations between Pakistan and China, promote sustainable agriculture practices and contribute to poverty reduction and rural development,” he added.
Besides cultivating sesame seeds, he underlined the need to concentrate on its value-added productions like bakery & confectionary, oil extraction, sesame meal, cosmetics, medicine, fuel, fertilizer, cement, pesticides, and others.
In a seminar, Prof Dr Zhang Lixin Chairman, of Silk-Road Bio-Health Agriculture Industry Alliance, NorthWest A & F University China said that China has a huge demand for high-quality sesame in China and Pakistan has huge sesame production potential. The Belt and Road Initiative has brought enormous convenience facilitating China and Pakistan universities, enterprises, scientific research institutes, and growers work together.
Yasir Habib Khan
The writer is the president of Institute of International Relations and Media Research (IIRMR). He tweets at @yaseerkhan.