THE agribusiness sector is growing. But in the absence of a comprehensive policy framework, the contribution of agro-based industries to the overall economy remains much below its potential.

Between FY10 and FY14, the Securities and Exchange Commission of Pakistan has registered 246 food and beverages companies, 40 vanaspati and allied firms, and 17 sugar and ancillary outlets. And most of them have become operational, facilitating hundreds of other unregistered agribusinesses related to their supply and value chains.

In FY14, 195 firms were registered in the corporate agriculture farming segment. But market sources say so far only some of them have begun operations, mostly in Punjab, and others are still at various pre-launch stages.

Nonetheless, some corporate entities are changing the agribusiness culture with their multiple economic activities.

Four Brothers Pvt. Ltd, for example, is engaged not only in providing agricultural services, but also in seed-production, farm mechanisation, and managing cotton and rice production in several districts of Punjab through its own human resource and infrastructure.

A majority of registered corporate agriculture farming companies, however, operate in areas like seed- and forage-production, pesticides and insecticides research, and in the poultry sector, market sources say. Corporate farming arms of major food processing companies are also actively involved in the dairy sector.

The issue of mapping agribusinesses has been under discussion for quite sometime, officials

say. Starting with a sort of national census of agribusinesses, the government can formulate a dedicated policy to promote them

Regardless of how corporate farming companies are changing the agribusiness culture, “our entire agribusiness sector, as such, remains scattered,” laments an official of the ministry of national food security and research.

The yearly increase in the number of industrial and commercial enterprises, that can be categorised as agribusiness, cannot be ascertained precisely because normally these are classified into various other heads and monitored by multiple institutions and ministries.

Officials say the mapping of agribusinesses across the country has become essential now to obtain some essential series of data, both about their nature of operations and their impact on the economy in crucial areas like agricultural value-addition, linkages between agricultural and industrial supply chain and job creation etc.

This issue has been under discussion for quite sometime, the officials say. They add that starting with a sort of national census of agribusinesses, the government can formulate a dedicated policy to promote them.

Some of the good things that have happened over the years thanks to growing agribusinesses include reduced post-harvest handling losses, wider use of technology, creation of higher marketable surplus, quality standardisation, enhancement of storage capacity, better access of farm produce to markets, and improvements in packing and packaging. And these things continue to be reflected both in domestic sales as well as exports.

Annual exports of kinnow, for example, more than doubled to 350,000 tonnes in just five years largely due to improvements in quality and standards brought about by companies that invest in yearly crops months before the fruit picking season begins.

Foreign assistance is also helping develop agribusiness. Under a $90m USAID-funded agribusiness project, 2,500 stakeholders continue to receive technical training. Besides, $310m has been leveraged from the private sector through the provision of cost-sharing grants to more than 45,000 farmers and group members, associations, cooperatives, and agribusinesses.

Examples of successful public-private partnership (PPP) projects can also be found in the formation of farmer enterprise groups, global GAP certification of citrus value-chain development, and the establishment of the Idara-e-Kissan (IK) and its subsequent registration as a cooperative, which has led to organised dairy milk collection, processing and marketing.

In the first three cases, all efforts were initiated in the mid-2000s with active support from the Food and Agriculture Organisation, but the IK initiative was taken way back in the mid-1980s.

In the last four fiscal years, the activation of a large number of small captive power plants by sugar and textile mills has also encouraged activity in agriculture. Electricity supply by them has encouraged the setting up of new agribusinesses, primarily in Punjab and Sindh.

Some agro-based industries that have flourished over the 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, and manufacturers of tin and plastic cans, barrels and tanks used in grain storage.

An important aspect of these developments is that the complete devolution of agriculture to the provinces since FY10 has enabled provincial governments to attract more foreign technical help and funding in their respective agribusiness sectors.

But it’s difficult to ascertain if this, or the PPP projects, has made any shift in the expansion of agribusinesses in a particular province since major agribusinesses often operate simultaneously in Sindh and Punjab, while sometimes having links with Khyber Pakhtunkhwa and Balochistan as well.

Published in Dawn, Economic & Business, April 20th , 2015

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