Liberty Discussion on “Do we need FDI in Agriculture” authored by Arun GC

On January 29, 2021, in-person sessions of Liberty Discussions finally continued at Gaia Coffee Shop and Restaurant. The discussion was based on the selected reader titled “Do we need FDI in Agriculture” authored by Arun GC and published in The Kathmandu Post.

The liberty discussion session effectively began by acknowledging the legislative aspect of the current amendment to allow Foreign Direct Investment (FDI) in areas of agriculture whereby the Government of Nepal has decided to allow foreign investment in the primary agriculture sector with the condition that at least 75 per cent of the produce has to be exported or repatriated. Speaking of which, the moderator clearly informed the participants that the condition is supportive of the current characteristics of FDI in agriculture across the globe based on the need to preserve food security in the investing country. 

As such, it raised the starting question among the participants regarding why the domestic producers are retaliating against the decision of the government to allow investment in primary agriculture whilst a significant amount of the produce is expected to be exported anyway? This question was answered with the consensus that 25 per cent of the produce that foreign investors can sell within the market can be voluminous enough to flood the market if investors are willing to invest on a massive scale not previously seen in Nepal. When questioning the relevancy of such, the likelihood of Amul Dairy, a leading Indian dairy producer, creating such a scenario with a meagre 25 per cent window appeared plausible. 

Moving forward, the discussion also touched upon the likelihood of such investment threatening the existence of small agro enterprises and semi-commercial small farmers who may face cut-throat competition from such investments that could be invested in establishing highly automated large scale commercial farms that would require significantly less unskilled and semi-skilled labour resources in compared to the current practice. While the discussion admitted such disadvantage of displacing and remobilizing currently existent small farmers and labourers to other industries even by upskilling or relearning other skills, the discussion also came to the consensus that such transferability of skills and the level of impact for marginally poor individuals engaged in farming to make their end meet can be disastrous. As such, the group came to the consensus that the government ought to build further clauses and ideas to ensure that the incoming foreign investment engages with the domestic agro value-chain to uplift the livelihood of such marginal farmers than displace them under the banner of capitalism. 

Also, the question regarding the issue of sovereignty was also raised in allowing FDI  in soil and land-related issues. But, participants came to the consensus that the likelihood of such was less as the government still holds the authority to seize and nationalize investments and assets if such is found to be used against the interest of the state.