Better agri output: Govt urged to introduce policies with focus on small farmers

ISLAMABAD: Agriculture economists and finance experts while stressing the need for immediate measures to increase agriculture output of the country have urged the government to introduce policy interventions with strict implementation, focusing on small farmers through agriculture credit, improving marketing, setting up agriculture development funds to provide an enabling environment with a view to bringing Pakistan’s agriculture sector at par with global standards.

Speaking at an event here on Thursday titled “Adaptation, Modernisation and Productivity; The role of agriculture in Finance”, organised by the Pakistan Institute of Development Economics (PIDE), they said the agriculture sector is almost 20 percent of Pakistan’s GDP, providing employment to 43 percent and about 50-60 percent Pakistan’s exports consists of agriculture-related but still it is not helping in dealing with poverty.

They said that instead of all this, a significant portion of the country’s population is facing food insecurity which has three dimensions including the availability of food, affordability, and a stable supply of food.

Dr Shujaat Farooq, Dean Faculty of Social Sciences PIDE as the keynote speaker on agriculture finance, said that around 20 percent people of the country are faced with food insecurity issues. Moreover, we are facing a serious food wastage challenge which is around eight percent and 30 percent food items Pakistan is producing is being lost owing to poor infrastructure which is estimated at 38 million tons, he added.

Farooq further said that agriculture growth is highly volatile, over the years, production has increased but productivity is not increased but the area under cultivation has been increased as a result the country has failed to reap the benefits of economies of scale. Over the years, cultivation methods have not modernised which has also resulted in low per acre yield. Livestock is contributing almost 66 percent of the agriculture sector. Rural transportation is also a major problem.

He said that the country has not a clear credit policy since 1947, recently the State Bank of Pakistan (SBP) has formulated an agriculture credit policy but it will take time to translate the results. Small farmers are the biggest part of the farming community but they failed to get the required finances as big farmers are getting a major share of the agriculture credit.

The agriculture sector desperately needs innovations and the government should focus on providing agriculture credit to the farmers bringing innovations in farming in a bid to reduce wastage and losses which will surely help increase the per acre agriculture production.

He said that the agriculture sector could not help in uplifting the economy until the state is not seriously taking steps to uplift the agriculture sector, he maintained.

He said that the first challenge is that agriculture growth rate is not sufficient to tackle the needs of an increasing population as around four million people per annum are added to the population. Multiple factors have a negative impact on the agriculture sector including profits margin, outlooks, climatic conditions, greater competition, recent floods and stubbornly low commodity prices. He said that despite occasional government policies, conditions on the ground for the farming sector will remain unstable in the future.

Fida Mohammad, Country Programme Officer Pakistan, International Fund for Agriculture Development said that the agriculture sector was also facing serious climate change challenges which play an important role. He said that farmers are also getting less than six percent of the total price of their produce eliminating all the costs which should be changed and small farm holders are getting below two percent of the global climate finance. Development and commercial farming should be increased with a special focus on small farmers, he said.

Kashif Umar Thanvi said that access to agriculture finance is a global issue but in Pakistan, it is more serious as deposit-to-GDP ratio is 26 percent which in India is 75 percent and in Bangladesh is over 50 percent while in developed countries it is almost 100 percent, which means 74 percent people totally depend on cash payments.

The agriculture sector contributes only one percent to the US economy while national lending for farming community in USA is two percent, while in Pakistan it is 3.5 percent, while agriculture is 20 percent of the national GDP. The agriculture sector of Pakistan is highly underserved on account of agriculture financing which should be increased.

The ZTBL was providing almost 75 percent agriculture credit to the farmers 15 years ago which now has declined and the ratio of microfinance institutions in agri credit has increased over the past 15 years.

Copyright Business Recorder, 2023