Vested interests prevailing

The Supreme Court has issued a stay order on the government decision to allow foreign investment in agriculture. This comes as no surprise as the entire business community is against it. What is surprising is that there is no voice of protest from farmers let alone researchers, practitioners, academicians and think-tanks. The only argument that the business community and different professional groups give is that there should be a comprehensive study before jumping into conclusions. Ironically, industrialists and business community have no interest in supporting studies that feed into policy decisions. Such a culture is non-existent in the country.

All the umbrella organizations of private sector protested. The Federation of Nepalese Chambers of Commerce and Industries (FNCCI), the Nepal Chamber of Commerce (NCC) and the Confederation of Nepalese Industries (CNI), they all said the decision to allow foreign investment should be taken after the private sector commissions a study and discusses its pros and cons. Similarly, the Dairy Industries Association Nepal (DIAN), the Nepal Dairy Association (NDA), the Central Dairy Cooperative Association (CDCA) and the Federation of Central Livestock Cooperative (FCLC) are also against the decision. They claim their investment worth around $850 million will be at risk if this decision is implemented.

The government decision could also be interpreted as going against the Foreign Investment and Technology Transfer Act (FITTA), 2019. But it is not against the act’s spirit. The decision is to allow foreign investment in sub-sectors such as fishery, beekeeping, dairy, livestock, fruits and vegetables and other primary areas. Foreign investment can bring new opportunities to farmers and allow them to get better prices for their products, both in short and long run.

Against this backdrop, we must consider issues related to seeds and ecology while allowing foreign investment in primary areas of agriculture. One major concern should be ensuring diversity and maintaining continuity of traditional seeds while the market could be flooded with patented seeds. Another aspect that we must pay attention to is ecological balance. But both issues remain in the backseat in an economy where a large number of people struggle for basic means of livelihood. Nepal’s per capita income of $1,074 matches those of the poorest countries in the world, and many Nepalis have to live in fear of food insecurity round the year.

An archaic dilemma arises: should we let people suffer from hunger and malnutrition to protect ecology and environment? Global experience shows us that once a certain income threshold is crossed, people start caring about the ecology they are part of and the climate they live in. But some countries prefer to remain perpetually poor in the name of protecting their domestic actors. India is an example of such willful poverty, as it hurts its farmers by embracing protectionism.

Opening foreign investment poses challenges no doubt. But the country can craft policies that ensure that the money coming in is going to right areas at right times. Static policy regimes do not work because there must be cost-benefit analysis of any policy that involves primary areas of agriculture. That is exactly where Nepal falls behind. Nepal’s policy-making is not dynamic enough to accommodate new challenges and opportunities. The private sector, which is supposed to make the market more competitive, is instead lobbying to maintain the status quo.

Industrialists and businesses could help domestic think tanks conduct studies and come up with policy recommendations. But they are spending their resources on lobbying and litigating against the decision, without any proof that such actions is in the country’s broader interest. This is largely because of their lack of interest in promoting the sector. It may not be right to question their intent. But it is for everyone to see that they have been clear beneficiaries of the status quo in agriculture. This must change and the only way to change it is to disrupt the system. Foreign investment in agriculture will bring about that disruption.