WITH the establishment of new industrial units related to agriculture, rural entrepreneurs are also taking advantage of new opportunities. But in the absence of a broader framework of rural industrialisation, the full potential of agribusinesses cannot be exploited.

Officials of Ministry of National Food Security and Research say they plan to make a full assessment of the economic impact of growth in agribusiness in recent years adding that, as a first step, the ministry, with the help of the provincial governments, would conduct a country-wide survey for this purpose.

In last four years, between FY10 and FY14, the SECP registered 246 food and beverages companies, 40 vanaspati or vanaspati-related companies and 17 sugar and ancillary firms. Many of them have become operational, fuelling growth of agribusinesses within their supply and value-chain.

Besides, registration of 309 power generating companies (many of them being small captive power plants of sugar and textile mills) and their subsequent activation has encouraged agribusinesses. After meeting electricity requirements of the parent industries, these plants sell surplus output to local power distribution companies. “This kind of power supply buildup has encouraged setting up of new agribusinesses, particularly in Punjab and in rural Sindh,” says an official of the Board of Investment of Sindh.

In those areas where no such improvement has taken place, unregistered and small manufacturing units of UPS, power inverters and standalone batteries have popped up.


Increased provincial agriculture budgets have mostly targeted projects in irrigation, energy supply to farms, subsidies on inputs etc, but little has been done to promote rural industrialisation


Some of the agro-based industries that have flourished during past few years include small wheat and maize flour mills, rice husking and parboil rice mills, cotton ginneries, cotton waste management companies, oilcakes and oilseeds companies, small solvent extractors, food canners and packagers, corrugated paper makers, manufacturers of tin and plastic cans, barrels and tanks used in grain storage. Industry sources say the list goes on and on.

Industries in rural areas can be broadly categorised into two: In the first category fall large industries like cotton ginning, rice and wheat milling, food processing companies and big dairy and poultry farms. And, in the second category come, small and medium-sized businesses that cater to the needs of these industries or provide farm inputs or services, on a small scale, to crop growers or cattle breeders. Besides, a lot of ancillary businesses whose products or services are required in agricultural value-addition can also be categorised in this class.

The second-category businesses need better integration into overall agro-industrial supply and value chain.

Recently, commercial and microfinance banks have focused more on lending to agriculture-based SMEs, taking advantage of better regulatory framework provided by the State Bank.

In FY14, microfinance banks (MFBs) recorded a ten-fold increase in their active number of borrowers—rising to 687,000 by June 2014 from just 68,000 in FY13. Officials of MFBs say a majority of new borrowers were registered in rural areas and they also included micro business.

Increased provincial budgets for the agriculture sector have mostly targeted projects in irrigation, energy supply to agriculture, subsidies on inputs etc but little has been done to promote rural industrialisation.

However, the private sector continues to make modest investment in agribusiness. In Sindh and Punjab, hundreds of environmentally controlled poultry sheds have been set up, each with a minimum capacity of breeding 30,000 birds, industry sources say. Feasibility studies have been completed for establishment of modern abattoirs and Sindh government officials claim a couple of abattoirs would soon be set up in Karachi.

Investment also keeps trickling into such areas like biogas and solar-energy projects in rural areas.

Besides, production of farming tools and appliances is growing with new small-scale factories having been set up in Gjujranwala, Faisalabad and Gujrat in Punjab, and in Sukkur and Mirpurkha in Sindh, press reports suggest.

In Sindh, the Asian Development Bank has supported creation of farmer enterprise groups made up of around 300 farmers who have established in Kunri some solar chili drier units wherein chilies are dried within three working days instead of 7-8 days required for drying in the open air. Farmer enterprise groups were also formed, with the technical and financial support of the USAID’s Agribusiness Project, in Islamabad, to introduce tunnel farming for vegetables.

To some extent, tunnel farming for veggies, fruit grading, polishing, dates processing, fruit juice extraction and pulp treatment all have received private sector investment in recent years.

Published in Dawn, Economic & Business, February 9th, 2015

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