Via Future Directions International, a report on how Indian farmers are looking overseas to expand their farming operations:
Background
Farmers from the Indian province of Punjab are increasingly looking overseas to expand their farming operations. Punjab is commonly referred to as the breadbasket of India, due to the fertility of its soils, but in recent years the high cost of land, labour shortages and the lack of available agricultural land for expansion, have reduced the profitability of the agricultural sector.
Punjabi farmers have a long history of migrating overseas in search of new lands to farm. In the late 19th and early 20th centuries many Indians migrated to other areas of the British Empire to work first as soldiers, policemen and railroad workers, before buying land and becoming farmers.
In recent years, Georgia and Ukraine have become attractive destinations for Punjabi farmers. The price of farmland is significantly cheaper than in Punjab and large tracts of land are available for rent or purchase. Currently over 2,000 Punjabi farmers have migrated to Georgia and the Indian community in Ukraine is constantly growing.
Comment
There are a number of reasons explaining the migration of Punjabi farmers to other countries. Population pressures and a high demand for agricultural land, which have pushed land prices beyond affordable levels, are the main reasons. The average price of land near major cities or adjoining roads is approximately US$600,000 to US$700,000 ($817,000-$954,000) per hectare, while plots in rural areas can cost US$75,000 to US$150,000 ($102,000-$204,000) per hectare; leasing rates have also increased dramatically. This makes it difficult for farmers to expand their holdings, with many holding several small farms rather than big holdings, which would be easier to manage, as there is simply not enough land available for purchase.
To put this in perspective, for the amount needed to buy one hectare of land in Punjab, an Indian farmer can buy the equivalent of 200 hectares in Georgia.
Land prices are not the only factor driving the migration of Punjabi farmers; the state‘s irregular power supply and decreasing rainfall are also important reasons. In Punjab, the majority of agricultural households only receive electricity for four to five hours per day, which prevents farmers from using irrigation systems for most of the day, unless they can afford a diesel generator. The decrease in rainfall is also a problem, as Punjabi farmers rely on groundwater sources, that are being depleted, for their water needs. Irrigation is only available in a limited area of the state.
The significant lack of red tape in Georgia compared to India is another strong reason for the migration of Punjabi farmers. Georgia is ranked 9th on the World Bank’s Ease of Doing Business list, while India is ranked 100th. The significant corruption and regulation pressure that farmers face in Punjab reduces the profitability of the sector and creates an incentive for farmers to migrate overseas.
Furthermore, the migration of Punjabi farmers to foreign lands has a strong precedent, stretching back to the days of the British Empire. More recent examples include the migration of farmers to Canada, where thousands of farms were empty due to urbanisation, or to Eastern and Central Africa, where cheap and fertile land is readily available. Migrating overseas in search of farmland is therefore an accepted practiceamong Punjabi farmers.
In Ukraine the average price of farmland is approximately US$3,000 to US$6,000 ($4,000-$8,000) per hectare and lease rates are only US$32 to US$75 ($44-$102) per hectare each year. While in Georgia, farmers can purchase land for only US$1,000 to US$1,500 ($1,300-$2,000) per hectare and can lease land for 99-year periods for only US$950 ($1,300) per hectare.
Most of the Georgian and Ukrainian land cultivated by Punjabi farmers was previously part of large state farms, which have remained untilled since the fall of the Soviet Union. Rather than continue to let vast tracts of fertile land remain untilled, both the Ukrainian and Georgian Governments have introduced legislation to privatise state farms in an effort to rejuvenate their respective agricultural sectors. Georgia, in particular, has made 40,000 hectares of newly privatised land available in an attempt to attract overseas farmers.
There are several other reasons for the recent migration of Punjabi farmers to Ukraine and Georgia. Both countries have greater access than India to the growing markets of Russia, Europe and the Middle East, due to their proximity and well-equipped ports. Agricultural inputs such as seeds, fertilisers and affordable labour are also widely available, which allows a greater return on investment.
Ukraine, as Europe’s breadbasket, has access to advanced marketing and food processing industries that are vital to the profitability of the farming sector, but have not been developed in Punjab. Furthermore, the Ukrainian Government is actively supporting related businesses in an attempt to attract foreigners.
Ukraine and Georgia are just two examples of countries where Punjabi farmers are seeking fertile farmland and a better life. As they are lured by the promise of cheap land, this trend is likely to continue as long as land prices in Punjab remain high.
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