Time to reform policies on agri and related sectors.

Byline: SHABBIR KAZMI

At present Pakistan faces a myriad of problems, from rising food import bills to very limited availability of foreign exchange. While the industrial sector remains import dependent, focusing on two of the large-scale industries i.e. textiles and clothing and sugar and allied can yield multiple benefits: from huge earnings of foreign exchange to creating extensive employment for low-skill workers. However, this requires a commitment from the government, the introduction of supporting policies and the implementation of these policies in letter and spirit.

It is on record that 20% to 40% of agriculture produce goes stale before reaching the market. This on the one hand deprives the farmers of a modest return for their efforts and on the other hand, creates shortages and use of paltry foreign exchange available to Pakistan. It is pertinent to point out that the Government of Pakistan (GoP) had come up with Warehouse Receipt Financing (WRF) program as back as in 2013. The lack of commitment on the part of the GoP as well as the financial institutions have failed in facilitating the construction of modern grain storage silos in the country.

Over the years the GoP has been increasing the quantum of lending to farmers and the indicative target for the current financial year is PKR1.8 trillion. The lending is being done under two heads: for the purchase of inputs and for development. The most shocking part is that some of the financial institutions prefer to pay the penalty, rather than extending credit to farmers. This has resulted in the exclusion of small farmers from the formal banking system.

Financial institutions have been lending to farmers against ownership documents of their land. Despite multiple land reforms, the bulk of the land is still owned by the feudal lords. Small landholders or those who have no land ownership documents have remained out of the formal banking system. WRF system was conceived as an alternative system for financial inclusion. Under this scheme, farmers could use their produce as collateral and secure funds from the financial institution.

If the GoP is serious it has to take on board the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan, commercial banks and Naymat Collateral Management Company to undertake the construction of grain storage silos on war footings.

The most disappointing fact is that the country produces over 25 million tons of wheat, the federal and...