The forbidden s-word of agriculture

What is Pakistan’s largest agricultural and food commodity import over the past 5 years (excluding palm oil)? Regular coverage in the news cycle may lead readers to believe that import dependency in cotton, wheat, or sugar are behind the mounting food import bill in recent years. They would be wrong; it is soybean.

In 2019, soybean seeds were Pakistan’s sixth largest commodity import outside of crude oil and petroleum, based on 8-digits HS code data. In fact, in value terms, Pakistan’s domestic consumption of soybean is greater than the value of either rice or maize consumed domestically. While the public may be forgiven for its lack of awareness, what is the excuse for both media and policy circles for the lack of conversation on the subject?

According to USDA, in FY21, Pakistan’s annual import of soybean seeds may touch 2.4 million tons. Based on BR Research estimates, the country has already imported $650 million worth of soybean seeds during nine months of the ongoing fiscal year. And given the trajectory of global soybean prices in recent months, the import bill may very well blow across the billion-dollar barrier by June 2021. Over the past one year, soybean prices in global commodity markets have climbed by 58 percent, after bottoming out in April 2020.

But the real question is where is all the soybean headed? Turns out, it is the primary source of protein in poultry feed preparation but is also increasingly also substituted for traditional protein sources in livestock feed. And as if that weren’t enough, private label producers are also toying with the idea of using soybean to fortify indigenous wheat flour!

So why does Pakistan rake in a multi-million-dollar soybean import bill, but is little bothered by it? Because the indigenous cultivation of the oilseed is next to naught. In fact, given the average crop productivity in sub-continent, Pakistan would have to turn all of its maize and sugarcane acres over to soybean cultivation, were it to ever target import substitution. But USDA estimates that Pakistan’s demand of soybean is growing at a healthy rate of 10 percent every year. Given scarce foreign exchange resources, how exactly does the country plan to continue on this trajectory?

This is not a plea for import substitution nor an argument to impose tariffs on import. Soybean is a devil that Pakistan’s agriculture does not know so far, and given the mediocre crop productivities achieved in traditional domestic crops such as wheat, cotton, rice or sugarcane, it is best that Pakistan first tries to get its act together for crops that enjoy a high degree of acceptance in the farming community. But the lack of conversation regarding soybean import is still significant for other reasons, which are symptomatic of the absence of clarity of thought in agricultural policy making.

So why is soybean not discussed widely? Neither by the private sector, nor in the corridors of power. Turns out, just like cotton, Pakistan imports soybean oilseeds from countries in western hemisphere – mainly USA, Canada, and Brazil – which produces nearly three-fourths of global soybean production.

Unsurprisingly, countries in the western hemisphere are world leaders in soybean production because of high crop productivity, which is nearly twice that of regions such as India and China. Why? Because USA has pioneered early adoption of genetically modified soybean and championed its cultivation across both North and South American continents. And therein lies the rub.

When it comes to GMO crops, it appears that Pakistan’s state has made an institutional decision to keep its head buried in the sand. Consider that soybean is not the only GMO based agro-product that is imported into Pakistan. Almost all of the cotton imported (as well as locally produced) in Pakistan is also based on GMO varieties, which makes its ways to human gut through its use in animal feed preparation. But because the country has made a “principled decision’ to not forbid any food-based GMOs, it lets the Department of Plant Protection pretend that the “GMO-ness” is removed from imported commodities, after it is sprayed with chemical methyl bromide at ports!

The private sector also likes to keep it quiet. If the truth ever spills out and makes it into news headlines, a hyper-responsive administration would not think twice before banning GMO-based imports. Domestic prices of poultry (that uses soybean) or textile (that uses cotton) would run amok overnight, a nightmare Pakistan can ill-afford. But does “not talking about it” help?

But why do multinational seed companies not bother with lobbying for domestic soybean cultivation? After years of failed advocacy for adoption of GMO-based cotton and maize, it is clear that investor fatigue has set in among seed companies, irked by the bureaucratic labyrinth that refuses to ever get anything done. It is clear that MNC seed companies make do with the present scheme of things because Pakistan is one of the largest buyers of soybean from their sister-companies in western hemisphere. Meanwhile, Pakistan shares borders with two of the world’s ‘other’ largest producers of both soybean and cotton yet prefers to purchase from ‘elsewhere’. Call it the balancing act in “agro-diplomacy”!

Pakistan’s ostrich strategy viz. soybean import has delivered thus far largely due to depressed global commodity prices over much of last decade. Going forward that may no longer be the case, especially given growing population pressures and (the healthy!) switch towards a protein-based diet. How long before the policymakers talk about the forbidden s-word of agriculture?