New commodity ecosystem in making.

Byline: Shabbir Kazmi

In Pakistan the three most contentious issues facing the farmers are: low productivity, distress selling of produce and huge post harvest losses. All these culminate at one point, low return to farmers, which does not allow them to undertake cultivation on modern lines. As a result, the country has not been able to achieve food security. This can be best understood if one examines what has happened in 2020. The country was been forced to import wheat and sugar, after witnessing a shortfall in output. Import of these basic commodities caused erosion in foreign exchange reserves of the country, payment of millions of rupees subsidy and above all disruption in supplies resulting in hike in prices.

Without mincing words, it may be said that limited availability of credit to farmers is the mother of all evils. It is true that lending to farmers has increased substantially in the recent past, due to concerted efforts of State Bank of Pakistan and commercial banks, but it is still far below the demand of farmers. One of the key impediments is, the existing system of lending against 'Pass Book', using land ownership document as collateral. To overcome this issue a new ecosystem is being developed whereby farmers will be able to acquire credit from financial institutions using the produce as collateral.

At present, Pakistan has limited storage facilities, based on modern storage silos. Therefore, collective efforts have to be made to come up with three pronged strategy, short term, medium term and long term. Under the short term plan the existing facilities has to be brought at par and issued accreditation. Under the medium term, those facilities which have certain deficiencies have to be upgraded on top priority basis. Under the long term plan new facilities have to be constructed throughout the country.

As stated earlier, warehouses have to be accredited, meaning that the facilities have to be thoroughly examined and issued certificate of being fit, particularly for the storage of food staple grains. Keeping in view the colossal need for the...