SBP official recommends agri-sector transition

State Bank of Pakistan (SBP) Deputy Governor Salimullah has said that provision of subsidies only to the vulnerable segments and transition towards market mechanisms in the agriculture sector can help the national economy.

He was speaking at Pakistan Agricultural Coalition's two-day agri-conference and expo at Karachi Expo Centre on Wednesday.

"My view is that instead of providing a support price mechanism let the market develop because where government interventions are not available the sectors adjust to market dynamics," said Salimullah.

Speaking about the policy framework for agriculture, World Bank Lead Agriculture Specialist Olivier Durand said "public support is favourable for large farmers but we should target small farmers to fill a large productivity gap."

Earlier, Pakistan Agricultural Coalition Chief Executive Kazim Saeed said "the policies and economic structures set up in our agriculture sector in the 1960s and 1970s achieved their goals by the 1990s. So, if Pakistan's agriculture sector is to salvage our economy, we need to accelerate the transition where the private sector is driving change and investing."

Special Assistant to Sindh Chief Minister on Investment and Public-Private Partnerships Qasim Naveed Qamar said the Sindh agricultural department had initiated several programmes to support farmers, which included subsidised tractors, drip irrigation systems, provision of agricultural machinery, direct subsidies and others.

"We need strategic investments in farming techniques, precision agriculture and sustainable irrigation methods that can drive productivity and profitability. We need to encourage innovation in agri-tech, climate-smart farming and value chain development," he said.

FGM International Senior Agro-economist Matteo Lagatti, while talking about investing in agriculture for growth at scale, said corporate farming was still at a nascent stage in Pakistan as only 4% (840,000 hectares) of total cultivable land had been allocated for corporate farming development.

"There are 17 companies that are currently investing in corporate and contract farming for a total surface of 26,000 hectares and it is expected that the invested surface will increase to 80,000 hectares in the coming year," said Lagatti.

He added that some bottlenecks in the growth of corporate farming were water distribution, utilities and logistics infrastructure while on the regulatory side the issues were water pricing, seed registration, import tariffs and tax policy.

"A detailed sector-specific policy is missing and conflicts regarding water allocation are also creating hurdles in the way of corporate farming growth in Pakistan," remarked Lagatti.

A panel discussion on corporate and contract farming focused on its benefits and concluded that it could bring transformation in the local agriculture sector.