Govt, India Inc plan to farm land abroad

Economic Times | 3 Sep, 2008

G Ganapathy Subramaniam, ET Bureau

NEW DELHI: Contributing their bit to the global Indian takeover, the government and India Inc plan to buy sizeable land abroad for cultivation. Seen as a long-term answer to keep prices of farm products under control, the grand plan envisages acquisition of large tracts of land in neighbouring countries like Myanmar and far off places like Paraguay. Canada and Australia are the other countries under consideration. The ministry of external affairs has suggested that purchase of land for cultivation should cover Africa, too.

Having discussed various proposals for overseas land acquisition at a top-level meeting, the government is also planning to revisit restrictions on investing abroad. Liberal rules would help Indian companies and public sector organisations to purchase land abroad for cultivation. The crop grown in these farms would then be shipped to India. The current focus is on pulses and oilseeds. Highly-placed sources said 10,000 hectares has already been identified in Paraguay, at $4,000 per hectare, for soyabean cultivation. Proposals have also come from Brazil and Argentina, where the price of farm land is around $6,000 per hectare.

The Solvent Extractors Association has identified land in Paraguay and has approached the Exim Bank for financing the deal. The acquisition in Paraguay is estimated to cost around Rs 200 crore. Interestingly, the move comes at a time when a major controversy is brewing over acquisition of farm land in the country for industrial development.

The government-run State Trading Corporation (STC) has also evinced interest in buying land overseas, the sources said. Oil companies are also exploring purchase of land in south America to produce raw material for ethanol. Officials involved think it is cheaper to buy huge tracts of land in south America or Africa. Apart from prices being high, they say, large tracts of land are not available in India, too.

STC, one of the companies involved in importing edible oil and pulses, is keen to procure land in Latin America, Canada and Australia. Senior officials who find the land acquisition plan interesting, however, have a word of caution too. “Arrangements have to be made for exporting the produce to India. Transportation and logistics are important in such cases. We should also make sure that local governments do not stall exports to India,” top government sources said.

Private sector players want the government to play a facilitating role, enabling them to buy land abroad. Chinese companies are making inroads into Africa with the active support of their government, they said.

In the case of neighbouring countries, the core issue is transport connectivity. The external affairs ministry, for example, feels that logistics should be tied up when land is purchased. At the government level, talks have been initiated with Myanmar for cultivation of pulses for exclusive export to India. The Myanmar government has already initiated work to upgrade a port there for better sea links with India. For decades, India has been depending on imports to meet its growing edible oil demand. Similar is the case with pulses and the situation is expected to be not much different in the case of other farm products too as demand is fast outstripping supply.

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