Global Food & Agriculture Memo: Afghanistan Expanding Pomegranate Farming, Launching $12 Million U.S.-Funded Marketing and Export Program

Ali Akbar, an Afghan pomegranate seller, arranges his product during the World Pomegranate Fair in Badam Bagh Farm in Kabul, Afghanistan, Thursday, Nov 20, 2008. Afghan officials have launched a marketing and export campaign for the fruit in the hope that it will give farmers an alternative to growing poppies. (Photo Credit: AP Photo/Rafiq Maqbool.)

Afghanistan has been producing the ancient fruit, the pomegranate, know as the Anar in the various regional tribal language spoken there, for about as long as the ancient country has existed in its many forms, from Kingdom to colony and now potentially budding Democracy.

The fruit however has historically been produced by Afghanistan's farmers primarily for national consumption and limited export to neighboring countries, despite the country's capacity to produce enough of the fruit for export.

Today many government officials and others in the country believe and hold out hope that exporting pomegranates could be a positive replacement for Afghanistan's current number one export crop -- the opium poppy.

And such an initiative was announced last week in Afghanistan.

With the help of a $12 million initiative funded by the United States, Afghanistan's government, farmers and others are planning to improve and expand pomegranate farming and processing in the country and launch a global export industry and marketing program designed to sell lots of Afghanistan-produced pomegranates throughout the world, as well as to attempt to position the ancient fruit long-grown in the ancient land as the best pomegranate on the planet.

Last year, Afghanistan exported its first pomegranates to outlets of the French hypermarket chain Carrefour in the Kingdom of Dubai, according to a report by the Associated Press. The fruit, larger and redder than many pomegranates imported from Turkey or North Africa, was a hit. Carrefour, which is the world's second-largest retailer after Wal-Mart Stores, Inc., quickly placed orders for all its Middle East stores, according to U.S. funders and Afghan officials.

This successful effort served as the impetus for the newly launched $12 million, U.S.-funded improvement, marketing and export plan.

Read the story, "Afghanistan markets its brand of pomegranates," from the Associated Press here

Opium production and export has long plagued Afghanistan. And in recent years the production of the crop has soared because the now re-emergent Taliban group is using the growing and sales of the poppy to fund there attempted return to power in the country and war against the elected government and U.S. and NATO troops.

The government under elected President Hamid Karzai has been reluctant to launch a mass poppy eradication program in the country because like it or not, without the poppy crop not only would there be millions more impoverished people in already impoverished Afghanistan, but the central government's major source of revenue besides U.S. aid, taxes paid by citizens, (few people pay taxes in the country but without the poppy crop even fewer would) would likely disappear.

President Karzai has long been arguing for financial assistance to build Afghanistan's agricultural sector. At one time the country was a solid agricultural producer in the region, before the war in the 1980's with the then Soviet Union, before the Taliban took over following that war, and before the current war following the September 11, 2001 attacks in the U.S. But that's been decades ago now -- decades of war and destruction of the country's infrastructure, which wasn't exactly good before that.

Many analysts and others are skeptical is an agricultural improvement, exporting and marketing program can work in the war-torn country, as you can read in the AP piece. However, Natural~Specialty Foods Memo believes it is well worth the $12 billion effort.

We also think the west, the U.S., Canada and Europe, where pomegranate sales have soared in the last few years, should do everything the nations can to open the door to the Afghanistan-grown fruit. After all, it is in the U.S. and Europe where most of the illegal drugs produced from Afghan poppies are bought and used.

The U.S. government under current President George W. Bush has been very vocal about wanting programs to eradicate the opium poppies in Afghanistan. Therefore both the U.S. and Europe should become part of the potential solution, the building of Afghanistan's agricultural and food industry starting with the pomegranate, by doing all that can be done to speeding up the process of allowing Afghanistan-produced pomegranates into the western markets.

Earlier today we wrote and published this piece, " about California-based Paramount Farms and its success in branding and marketing fresh pomegranates and value-added pomegranate products like fresh juice teas and other items under the POM Wonderful brand. William Phillimore, the company's executive vice president, was in Kabul, Afghanistan last Wednesday for the launch of the pomegranate export and marketing program, a marketing effort the California company might play a part in.

Phillimore, who works for the company most responsible for boosting consumer demand for pomegranates and pomegranate-based products in the U.S., said at the kick off event: Afghan pomegranates are "as good as anything I've tasted," adding that he thought there is plenty of room in the U.S. market for pomegranates exported from the country, despite the fact Paramount Farms is the largest U.S. grower of domestic pomegranates.

While Afghanistan remains a war-torn country, and in fact all signs are that things are about the worse they've been in the ancient land since the now resurgent Taliban were defeated in 2002, we think it important that initiatives such as the $12 million pomegranate marketing and export plan be initiated. Afghanistan needs economic development programs like this to build not only its economy but also its civil society. The people need reasons not to support the Taliban, and jobs, a decent economy and the civil society that comes with those things are just as important as winning in combat in terms of the outlook for and ultimate state of the country.

After all, it was such a vacuum that was created not so long ago right after the former Soviets were driven out of Afghanistan that paved the way for Taliban rule, which not only created a totalitarian state but also wiped out any economic progress the country had made prior to the war with the former Soviet Union, which of course we all know today as Russia.

Therefore we cheer the pomegranate export and marketing program. And having eaten an Afghanistan-produced pomegranate, we can tell you they indeed are delicious and of a very high quality, which is distinguished by the bright purple color and smoothness of the ancient fruit produced for so long in the ancient land of Afghanistan.

Additionally, on average, Afghanistan's farmers make about $2,000 per acre with pomegranates, versus $1,320 per acre growing opium poppies, according to currently available data. Therefore, if the west opens its markets to pomegranates grown in Afghanistan, the economic premium of producing the fruit over the poppies could, with this expanded export market and thus increased demand for pomegranates, serve as an economic incentive to get the country's farmers to switch from growing poppy to pomegranate. It's worth a try.

Global Food & Agriculture Memo: Will Parts of the Underdeveloped World Become the New Breadbaskets for Companies and Nations in the Developed World?

The practice of tenant farming primarily by family farmers was a common practice in the United States and elsewhere in the western more-developed world until the Dust Bowl years and the Great Depression of the 1930's, which when over ushered in what we see today as modern family-owned farming and corporate agribusiness in the west.

The tenant farming practice (also referred to as sharecropping, which in the U.S. was a common practice during the long period of slavery but also included poor whites), in which farmers rent land from landowners and then share a major portion of the profits from the sale of their crops with the landowners, still goes on in parts of the underdeveloped world. However, in nearly all of these situations the landowners, who reap the majority of the benefits from the arrangement, and the farmers, who are poor and willing to crow crops on land they don't own because they basically have no alternative, are local landlords and poor folks living in the countries where this practice continues today.

This practice, which most people would like to eliminate altogether and replace by giving the tenant farmers in these underdeveloped countries a helping hand to buy the land they work, is making a major comeback though -- but in a corporate way, including the new landowners being corporations and even nation's (Kingdoms mostly) based far away from the underdeveloped countries where the practice is starting to occur.

For example, South Korea's Daewoo Logistics this week announced it had negotiated a 99-year lease on some 3.2 million acres of farmland on the dirt-poor tropical island of Madagascar, off southern Africa's Indian Ocean coast. That's nearly half of Madagascar's arable land, according to the U.N.'s Food and Agricultural Organization, and Daewoo plans to put about three quarters of it under corn. The remainder will be used to produce palm oil - a key commodity for the global biofuels market, according to a story in Time magazine today.

According to the piece in Time.com, 'A Daewoo manager, Hong Jong-wan, told the Financial Times newspaper recently that the crops would "ensure our food security," and would use "totally undeveloped land which had been left untouched."' 'Land is scarce and expensive in South Korea, which makes it the world's third-largest importer of corn. Daewoo says the Madagascar land will be leased for a price of around $12 an acre, which is a fraction of the price for farmland in the corporation's home country,' according to Time.

South Korea's Daewoo, a huge conglomerate which might be best known for the automobiles of the same name, isn't the only entity looking to acquire mass-acreage outside its own nation to grow and then export food back to the country where the company is based.

Time magazine reports in today's article that 'Africa's fertile soil certainly appeals to the countries of the oil-rich Persian Gulf, whose vast deserts force them to import most of their food.'

"The Gulf states have an incredible surplus to invest and now that the old economies are facing recession they are looking at Africa," says Marie Bos, an analyst at the Gulf Research Center in Dubai. 'Although such wealthy countries as South Korea and the Gulf states are easily able to pay for food imports, this turmoil on global food markets may have increased the incentive for food-importing countries to secure their own sources of supply,' writes Vivenne Walt in Time.

Read the full article, "The Breadbasket of South Korea: Madagascar," from today's Time.com here.

This new development in global agriculture, should it become widespread, could change the way crops are grown and food is marketed over time in the world.

For example, if foreign corporations based in Asia like Daewoo, and Kingdoms like those in the middle east mentioned in the story, acquire tens or hundreds of millions of acres of land in underdeveloped countries like Africa and then grow crops for exportation exclusively back to their respective home nations, such a practice could seriously hamper the underdeveloped nations' ability to produce food for its own peoples as well as to eventually develop an agricultural exportation industry which would create jobs.

On the other hand, if it is true like Daewoo says that in its case the 3.2 million acres of land its acquired is otherwise useless land for farming, then the practice would seem to use to be much more benign. We find it hard to believe though that most corporations and foreign nations would be searching for useless land to create their overseas farming programs on. The logic of doing so goes counter to common sense and would seem to result in vastly higher expenses in initial and ongoing land improvements than any for-profit company would want to make, although in the case of Daewoo it is subsidized by the South Korean government. Time will tell if this is the case or not we suspect.

Most important though for Africa and other similar underdeveloped countries is being able to feed their own peoples through a domestic agricultural industry, something they aren't even able to do at present, despite an abundance of land. The mass ownership of land in these countries by foreign corporations and nations also makes it much less likely tenant farmers in these places will be able to own the land they farm anytime in the future.

This emerging new form of corporate and nationalistic global agriculture also could have implications for changes in food exportation. For example, it's likely a giant company like Daewoo would for example sell any surplus product, either in commodity or value-added form, it produces in Africa beyond what the South Korean market doesn't demand, especially if selling it globally to say European countries brings in a significant financial premium.

Many corporations already produce crops on lands outside the countries those firms are based in. However most operate on a corporate agribusiness model rather than using tenant farming practices. And the practice is nowhere as widespread as it would be if other corporations follow the Daewoo model of grabbing massive acreages in one fell swoop.

It's also qualitatively different because the corporations like Daewoo, and the middle eastern nations looking to do the same thing, aren't producing crops in these lands to then sell in these same countries and globally. Instead the express purpose of this overseas farming practice is to bring most if not all of the crops back to their respective home countries.

If such a practice were to prove successful, we could see numerous other corporations copying it. After all, land and labor is far cheaper and much more available in these underdeveloped countries than it is in Europe and even North America. Crops could be produced in Africa and elsewhere using super-low labor (tenant farmers) and then sold at reduced prices globally. This practice also has the potential, if it became widespread, of undercutting agribusiness company's and family farmers in places like the United States, Canada and Europe -- and even Mexico and Central America -- which in all cases likely have higher costs of labor and certainly higher land and production costs for the crops they produce.

This emerging new global farming practice is one worthy of watching closely in our analysis.