The State Bank of Pakistan (SBP) has set agriculture credit disbursement target of Rs500 billion for 2014-15 to facilitate growth in agricultural production, according to a statement released by the SBP at the annual meeting of the Agricultural Credit Advisory Committee (ACAC) held on Saturday.
Addressing the meeting, the SBP governor said the agriculture sector is an essential component of the country’s economy, accounting for around 20% of the gross domestic product (GDP) and nearly half of the labour force.
“The sector directly supports three-quarters of the population and contributes a large share of foreign exchange earnings to the country,” he said. The governor also emphasised that to increase agriculture production and foster its growth, Pakistan must increase productivity through optimum utilisation of resources and use of advanced farming techniques.
“The sector has a lot of potential, which can be better tapped by making available the required financial resources as and when needed,” he said.
Referring to SBP’s initiatives for improving access to finance to the farming community, the governor said around Rs389 billion had been disbursed by the end of 2013-14, surpassing the revised target of Rs380 billion.
He said the agricultural disbursements rose to Rs333 billion in 2012-13 from Rs169 billion in 2006-07, recording annual growth of over 10%. The revised target for 2013-14 was set at Rs380 billion, which was rather challenging for both the SBP and banks. The target was not only met, but also superseded, he noted.
The governor also pointed out that the share of banks’ credit to agriculture is around 5.7% of their total advances and the total outreach is to just over 2.15 million borrowers as opposed to 8.3 million farm households in the country. “This indicates ample room for enhancement of agriculture portfolio by the banks. According to estimates, only 35%-40% percent credit requirement of the agricultural sector is being met by the formal banking system while the rest is fulfilled through non-institutional credit sources.
Speaking on the occasion, Finance Minister Ishaq Dar said a National Food Security Council will be established, which will be responsible for ensuring policy coordination across provinces and relating to productivity improvements, market reforms, value addition and prices that ensure stable incomes for farmers.
Further, he said a package of incentives and support has already been approved by the government for the agriculture sector, which includes credit guarantee scheme for small and marginalised farmers, enhancement of the scope of CLI premium reimbursement scheme up to 25 acres land holding, livestock insurance scheme for all farmers getting financing for up to 10 cattle, initiating regulatory mechanism for establishment of a warehousing clearing system and receipt financing mechanism, and incentives for processing industries of special areas such as Makran Division, Gilgit-Baltistan, Swat District and FATA regions. “These steps will facilitate the farming community as well as banks to increase financial outreach in the sector,” he said.
Published in The Express Tribune, July 13th, 2014.
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