Monday, September 28, 2009


Global recession and stagnating markets for value added food products are naturally turning the attention of agri-business giants to business opportunities in third world countries for staple foods. It is an undeniable fact that many poor countries with vast land holdings are unable to marshal the critical input resources necessary to raise staple crops, necessary for the very survival of their populations. Multinational companies with deep pockets are willing to invest in these countries provided favorable policies are in place. Many countries have already succumbed to this ploy but how far the humanitarian aspect will get precedence over the economic factor, remains to be seen.

Chinese government which was late in entering the WTO circle, always had a protectionist policy towards its farmers and their vigilance regarding the moves by multinationals is making it difficult for foreigners to establish any toehold in the agricultural sector. On the other hand Chinese themselves are behaving like a multinational corporate by investing in agriculture in other parts of the world."The food price rises of 2007-8 have sharpened criticism of the global traders, and there is evidence that China is now reviewing its policy on foreign direct investment. Chinese investments in vast agricultural projects in Asia, Africa, and Latin America, aimed at exports to its domestic market, point to the adoption of an alternative strategy for ensuring food security that may eventually challenge the hegemony of the global traders. Such a strategy, however, is not without its risks, and the hostile reactions to similar investments on the part of South Korea in Madagascar serve as an alert".

India also may be in the same boat though there are pressures to let multinationals enter the country and deal with agricultural land owners through contract system of growing. As long as such deals raise farm production through better inputs and the produce is channeled into value addition route, such arrangements may be mutually beneficial. But if the fresh produce so raised is exported without value addition, country has to be concerned about it. Foreign investments, as a policy must not threaten the food security of the country either due to unjustified price rice of the staples or because of uncontrolled exports creating a shortage.


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