NationalVOLUME 16 ISSUE # 20


Although agriculture is the most important sector of the national economy in terms of employment generation, yet it has been largely neglected by policy makers over the years. The last two decades have been especially bad for agriculture. A research report by the International Food Policy Research Institute (IFPRI) reveals that the Total Factor Productivity, one of the most informative measures of agricultural productivity, has been negative over the past two decades. Other countries have witnessed sustainable yield gains of multiple crops through balanced fertilizer application, genetic improvement, improved farming practices etc, but we are not exploiting any of these resources.

Agriculture contributes 19.3% to Pakistan’s GDP, employs 39% labour force and accounts for almost 20% of the country’s exports. The share of agriculture in the GDP has declined over the past six decades. In 1960, agriculture had a 40% share in the country’s GDP, which has shrunk to 19.3% now. However, we cannot underestimate the importance of the sector as 76% of the country’s poor, who live in rural areas, have agriculture as their main source of livelihood.

It is estimated that 78% farmers in Pakistan have landholdings of less than 7.5 acres. Wheat, cotton, maize, sugarcane and rice are the main crops grown in the country. The sowing of these traditional crops is of little competitive advantage to the subsistence farmers. In the opinion of experts, it is time to diversify and train our farmers to switch to high-value crop varieties, such as horticulture. The latest figures show that the global horticulture trade has almost tripled since 2000, indicating that the demand for these items is increasing. According the Food and Agriculture Organization (FAO) of the United Nations, rising living standards and the bourgeoning population will swell the demand for horticulture products by 70% over the next thirty years.

Pakistan produces a large variety of fruits, vegetables and condiments, but it has failed to harness the full potential of its horticulture. The horticulture sector faces many challenges in Pakistan. Seed certification is a major challenge. Most vegetable seeds are imported in the country and the weak capacity of the federal seed certification agency has limited the options of importers or farmers to adopt new varieties. On paper, it takes two years of field trials for importers or breeders to get the initial approval, but practically it may take anywhere from three to five years before a new variety is introduced. The existing regulatory regime, slow to respond to market demand, is inefficient for the private sector service providers and limits their ability to introduce new cultivars in a short period of time.

Horticulture crops are more vulnerable to disease and changing climatic conditions. The introduction of safe and modern medicines to fight pest attacks is not an easy task in our country. Furthermore, many chemicals, which are banned in the developed countries, continue to be sold in Pakistan, resulting in the continuous production of unsafe horticulture produce.

Needless to say, the working environment for farmers in Pakistan is highly challenging. The essential linkages in the agriculture finance value chain are missing or too rigid; the financial products are unsuited to farmers’ needs and banks have failed to come up with a viable model for the financial inclusion of this large segment of the population. In the absence of appropriate credit risk instruments, commercial banks are unwilling to take a risk by lending to the agriculture sector.

However, thanks to technological innovations and digital financial services, it is now becoming feasible for lending institutions to serve the agriculture sector in the rural economy. Digital Value Chain Financing (DVCF) is playing an important role in the financial inclusion of farmers in developing countries. The services offer an opportunity for the banks, development partners and enterprises engaged in the agriculture value chains to design and develop products and services, which can increase the access to finance for the farmers.

It may be added here that the State Bank of Pakistan (SBP) introduced specific guidelines for horticulture financing in 2007. The need of the hour is to organise customized training programmes for farmers to teach them the latest farming techniques and try nontraditional crops. The task can be taken up by around 18,000 agriculture extension workers employed by the agriculture extension department and in-put supply companies. The lack of training means that the difference of yields for a skilled and an unskilled farmer will continue to increase.

As experts point out, horticulture is far more complex than common grain cultivation. The lack of knowledge and skills is the main reason for low productivity in horticulture. Also, post-harvest losses in horticulture value chains are reported to be in the range of 30% to 40%, which is quite high. Poor transportation, low storage and low skill sets of farmers are also to blame for the post-harvest losses.

Needless to say, we must without further delay develop a coherent national policy for horticulture development, incorporating the views of all the stakeholders, i.e. farmers, input service providers, agriculture traders and provincial and federal governments. Seed certification regime, swift approval of crop protection chemicals, which are safe, and development and adoption of horticulture produce quality standards are the main areas to be worked on. Our agriculture can be revolutionised by a flourishing horticulture sector, which can create new avenues of employment for the rural poor as well as provide people with cheap and quality fruits and vegetables.