Horticulture- An unexplored avenue of growth

Agriculture is considered the backbone of Pakistan’s economy. According to Economic Survey 2019-20, agriculture contributes 19.3% to Pakistan’s GDP, absorbs 39% labor force and directly accounts for almost 20% of the country’s exports. The contribution of agriculture in the GDP of Pakistan has waned over the past six decades. In 1960, agriculture had 40% share in the country’s GDP, which has shrunk to 19.3% following decades of decline. Nevertheless, we cannot deny the importance of agriculture as 76% of the country's poor who live in rural areas have agriculture as their biggest source of employment. As per World Bank development indicators, 63% of all Pakistanis live in rural areas of Pakistan.

Since 1947, agriculture sector has received inconsistent attention. There have been times of great development however it can be argued that last two decades have been worse for the agriculture. A research conducted by the International Food Policy Research Institute (IFPRI) reveals that the Total Factor Productivity, one of the most informative measures of agricultural productivity, has been negative over the past two decades. This shows that our growth is now reliant on inputs or increase in area under cultivation. Other countries have witnessed sustainable yield gains of multiple crops through balanced fertilizer application, genetic improvement, improved farming practices etc. but we are not exploiting any of that.

Agriculture Census 2010 noted that 78% of the farmers in Pakistan have landholdings of less than 7.5 acres. Wheat, cotton, maize, sugarcane and rice are the main crops grown by these farmers. These crops are labor intensive and mechanization plays a small role. This means that sowing of these traditional crops is of little competitive advantage for these subsistence farmers as compared to high value agriculture. Therefore, it is high time to capitalize on the opportunities offered by horticulture and it has to be given a central role in order to boost the agriculture growth.

The global horticulture trade has almost tripled since 2000 indicating that the demand for these items is increasing. As per a report of Food and Agriculture Organization (FAO) of the United Nations, rising living standards and bourgeoning population will swell the demand for horticulture products by 70% over the next thirty years. Despite the fact that Pakistan produces a vast variety of fruits, vegetables and condiments, it has failed to harness the full potential of its horticulture.

Since the passage of 18th amendment, agriculture has become a provincial subject and the federal and provincial governments have struggled to come up with a coherent agriculture policy since then. Horticulture sector faces many challenges in Pakistan. Seed certification is a major challenge. Most vegetable seeds are imported in the country and the weak capacity of the federal seed certification agency has limited the options of the importers or the farmers to adopt new varieties. On paper, it takes two years of field trials for the importer or breeders to get the initial approval however practically it may take anywhere between three to five years before a new variety is introduced. The existing regulatory regime, slow to respond to market demand, is inefficient for the private sector service providers and limits their ability to introduce new cultivars in a short period of time.

Horticulture crops are at a greater risk of disease than agriculture and changing climatic conditions have exacerbated the problem. Having said that, introduction of safe and modern medicines is not an easy task in our country. Chlorpyrifos, Paraquat and many such chemicals which are banned in the developed countries such as Europe and North America continue to be sold in Pakistan resulting in the continuous production of unsafe horticulture produce.

Availability of credit to farmers in Pakistan is limited. The operating environment for a farmer is challenging, the linkages in the agriculture finance value chain are missing or frail or too rigid, the financial products are unsuited to farmers’ needs and banks have failed to come up with a viable model to financially include this large segment of active economic agents. In the absence of appropriate credit risk instruments, commercial banks are unwilling to take risk on the agriculture sector. Financing this low income, high risk, poorly organized rural sector prone to environmental factors that are hard to predict and control has always been a huge challenge for the financial service providers. Thanks to technological innovations and digital financial services, it is now becoming feasible for lending institutions to serve the agriculture sector in the rural economy.

Digital Value Chain Financing (DVCF) are playing an instrumental role in financial inclusion of farmers in developing countries. These services offer an opportunity for the banks, development partners and enterprises engaged in the agriculture value chains to design and develop products and services which can increase the access to finance for these farmers. State Bank of Pakistan (SBP) introduced specific guidelines for Horticulture financing in 2007 however the document failed to provide any real incentive or encouragement to the commercial banks to proactively look at the sector for lending.

According to the Labor Force Survey of 2017-18 conducted by the Pakistan Bureau of Statistics, thirty-nine percent of the country’s labor force is engaged in agriculture. However, Pakistan has no large-scale farmer training programs. Most of the farmers in Pakistan learn about agriculture from their elders, agriculture extension service workers and sales teams of inputs suppliers. There are approximately 18,000 agriculture extension workers employed by the agriculture extension department and in-puts supplier companies. If we compare this number with the total number of farmers, it is easy to conclude that it is impossible for these extension workers to train such a huge labor force. This creates a big gap in the skill set of farmers. The training needs assessments have also been missing. The lack of training means that the difference of yields for that of a skilled and an unskilled farmer will continue to increase and so of the income. Horticulture is believed to be far more complex than grain cultivation. The lack of knowledge and skills are among the top reasons of low agricultural productivity in horticulture.

Post-harvest losses in horticulture value chains are reported to be in the range of 30% to 40% which is quite high. Poor transportation, low storage and low skill set of farmers are one of the main reasons for these post-harvest losses. These losses effect costs and make farmers uncompetitive. We need to train the labor to reduce such losses.

Pakistan needs to develop a coherent national policy for horticulture development that integrates the views of all the stakeholders, i.e. farmers, input service providers, agriculture traders and provincial and federal governments. Seed certification regime, swift approval of crop protection chemicals which are safe and development and adoption of horticulture produce quality standards are the main areas to be worked on. A growing and developed horticulture sector can create avenues of employment for the rural poor, enhance house hold income, provide people with quality fruits and vegetable and open opportunities for exports.