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Tareen''s vision for agriculture growth
A graduate from the University of North Carolina, Jehangir Khan Tareen possesses rich and varied experiences in the private as well as the public sector.
He has taught at the University of Punjab, been a banker at Grindlays Bank, and is also the owner of one of the most efficient sugar mills in the country, complete with its own sugar plantation and sugar cane research organisation.
Adding to his laurels, this visionary has also worked with the government in various political capacities, and is a staunch advocate of sustainable development.
Tareen's vision for agri growth In this Interview with BR Research, Jehangir Khan Tareen discusses the shortcomings of the government machinery in uplifting the agriculture sector of the country.
Speaking of policies related to fertiliser subsidies, RGST and land reforms along the way, Tarin also highlights his own farming model and the factors have enabled him to make this model a success in Pakistan.
BR Research: Let's start with the hottest issue: the political economy of our farming sector. Why is it that our agriculture sector is not being adequately taxed?
Jehangir Tareen: The tax on agriculture income has three slabs 5, 10 and 15 percent.
So there is 15 percent of tax on agri income if you own or lease more than 50 acres of land.
However, the flat tax you pay is not the full and final liability, it's a presumptive tax and if your income is more you have to pay more tax.
The arthi (آڑھتی) or the middleman, however, pays zero tax.
The real problem is that nobody pays it, neither in Punjab nor in Sindh.
There is no political will of provincial governments to collect it.
BRR: How can this political will be developed?
JT: This will be developed the day the leadership of big parties understands its importance.
When they will start paying their own personal income taxes others will follow; if they won't pay, no other sector will pay taxes.
Today, we have a system where the rich protect each other and implement regressive taxes like the RGST, with increasing incidence on the poor.
But this will not work for long.
The mindset of the elite must change.
BRR: Do you think the revenue department is doing its job properly?
JT: No.
Reforming the FBR is the stepping stone to enhance taxation.
It needs to start sectoral investigation and I think if it catches four or five black sheep, others will automatically comply with.
For example, there are a few good sugar mills that pay taxes and declare dividends, then how come neighbouring mills a few kilometres away get away by declaring severely low profits.
But such investigations are not happening; there is a culture of collusion.
BRR: Where does politics fit in?
JT: While there are many honest and capable people in the parliament, the blame is on the leadership of the parties.
They all are family oriented and have created monopolies of political power.
They are not interested in governance but only interested in growing and developing their own dynasty.
The exclusion of party elections in the 18th Amendment is a classic example of the collusion of party heads to have their respective controls.
Plus, instead of playing a supportive role, the bureaucratic system has become a hindrance to our economy.
BRR: But corruption by politicians is also present in India, yet they are growing?
JT: You are right, Indian parliamentarians are also controversial, but there is a national consensus on national economic growth.
The boom in India is more sustainable because they are running on the same polices for the past twenty five years.
Also, the institutions over there are running independently.
BRR: Will land reforms as advocated by MQM help?
JT: Land reforms have already taken place in Pakistan by virtue of the Muslim inheritance law.
According to agriculture statistics of the 1990s census, the percentage of landholding, in terms of cultivated land above 150 acres of land, is only 5.6 percent whereas 82 percent is below 50 acres.
And inheritance must have reduced it further in the last twenty years.
The real problem is feudalism which must to come to an end.
The land reform agenda of MQM may not be able to eliminate feudalism which is a state of mind, where one person thinks of himself as superior to the other.
It can only be eliminated by educating rural masses; our basic fundamental weakness is that we never taught our masses and we never provided them any skill set.
BRR: 'Revolution' is another buzz word these days.
What do you have to say about it?
JT: For revolution, you need people who can conceptualise.
The elite can't bring revolution.
Revolutionaries are those who have nothing to lose or people like Lenin and Marx who are learned and well-read and form a clout for revolution.
However, under the prevailing circumstances, anarchy is an outcome, the possibility of which is increasing day by day.
BRR: Do you think that having big lands brings economies of scale? Instead of having small lands, shouldn't there be big lands with well-defined land titles?
JT: Yes having large cultivated lands helps bring economies of scale and also makes it viable to employ foreign expertise.
We need to get foreign experts who know where the world is and who can transfer the knowledge to locals.
As for land titles, these things are already happening.
There are several hard working farmers who are getting land from lazy people on rent and cultivating themselves.
What is required is provisioning of capital to these enterprising farmers to enhance productivity through technological innovations and other measures.
However, the person who is working on lease doesn't have access to capital due to ownership issues.
Credit by the formal banking system is provided on an ownership basis not on the land under cultivation; banks along with the central bank must come up with a methodology to overcome this impediment.
In my own case, I have grown to an extent that now I need to corporatise my whole farming.
I am working with A.F.
Ferguson for the past six months to form a limited company for my farm business.
After making the company, I will go to the banking system for raising capital as the cost of inputs in farming, including oil and fertilisers, has magnified - my cost of production per acre has escalated from Rs 40,000 to Rs 120,000.
What we need to do now, is to ensure that a person owning two acres of land can also do these things.
BRR: Do you see any improvement in political structure after the 7th NFC award and the 18th Amendment?
JT: No.
You need to have governance.
Now that the burden has been shifted to provinces, I believe powers should be further transferred to districts so we can have accountability and responsibility in true sense.
BRR: Will a local government system really help; we have already experimented with two models of local government in times of Zia and Musharraf?
JT: Both these dictators wanted to replace traditional politicians with fresh blood, but the objective was to gain legitimacy and not to build the system.
BRR: Why have we failed to construct dams?
JT: The problem is that we have wasted a lot of time on the debate over Kalabagh Dam.
It became an emotional issue for Khyber-Pakhtunkhwa as well for Sindh due to a host of issues.
You can't construct a dam without consensus; therefore you need to first construct the next dam in pipeline which is Basha.
The tragedy is that Punjab kept on insisting that the only dam that will be constructed will be Kalabagh dam.
That is why Punjab is equally responsible for not having Basha now.
If Musharraf had decided the first day that Basha would be built, then it would have been close to completion by now.
By virtue of constructing Basha, you could have cascaded three places downstream before Tarbela to produce electricity.
And then you can store water in Tarbela at the end.
Similarly, because we remained stuck with Thar coal, we failed to produce electricity from imported coal which is a much cheaper option than furnace oil.
BRR: What is your view on fertiliser subsidies?
JT: I think these subsidies should be phased out as we have increased the prices of agri commodities by large proportions, so the farmers can afford expensive fertiliser.
BRR: What's your view on RGST?
JT: In my view, instead of having new taxes, the government should start collecting taxes from those who are already in the net but from whom the taxes are not collected.
You need to fill the black holes - like tax on properties and agriculture - before putting an additional burden on the economy.
However, without reforming the tax collecting authority, the objective will be elusive.
TAREEN'S MODEL FARMING
BRR: How do you think can urban folks be brought into the farming business?
JT: Farming is not an easy job; it has a different culture which doesn't suit urban dwellers.
For me farming is my culture, I am a farmer who went into the industry.
I know how to mobilise human resource for farming which is a big hindrance for urban people.
BRR: Tell us a bit about your model.
JT: I quit Grindlays Bank in 1978 and came into farming.
Then, after sixteen years of farming experience, in which I built up sufficient scale, I decided to go outside Pakistan in search of questions, to which all the local agriculture research institutions failed to give logical answers.
Initially, I was into cotton and mango farming, then I went to Australia and brought a cotton farming expert and he worked every season with us for three years.
Then I again went to Australia and brought a mango consultant and developed my mango orchard on his advice.
Basically, the breakthrough to my farming success is in realising that Pakistan agriculture has fallen far behind world standards, and foreign expertise is required to bridge the technology gap.
BRR: Has there been a spill over of expertise?
JT: Oh yes! Whatever I learned in cotton, I passed it on to the others and same is the case in mangoes.
Even as of today, people are learning from us.
Our practices are open for anyone to come and learn.
I am working in livestock and have brought modern day expertise in dairy farming as well.
I have regular agriculture experts coming over to my farms and transferring it.
My mango expert is regularly coming for the last fifteen years.
Then I have moved to chillies and onions.
We have economized on the use of fertilisers, water and other inputs, and yet our yields have improved significantly.
I am also using 25 percent less water than the others and have a target to reduce it by a further 25 percent.
In a nutshell, we re-engineered the farming business.
BRR: Some industry experts complain that foreign experts are not ready to visit Pakistan due to the law and order situation, and that, in turn, is impeding development.
How have you managed so far?
JT: I have people from Europe, Australia and even America visiting as of now.
I am upgrading my workshop for 500 tractors; I even have a tractor expert visiting us these days.
I have also invited experts for sugar mill business.
So while I agree it is hard to attract experts to Pakistan these days, but you have to be creative for that.
For instance, since the experts don't bring families anymore, I facilitate them to work for a month and take off the next month.
But he remains in touch through email and my people work with him.
Interview by Ali Khizar Aslam
