WHILE Pakistan’s economy is bleeding red, mainly due to Covid-19, this is the best better moment to make it green through agriculture. However, this may not happen via ‘business as usual’ but rather by making agriculture the ‘usual business’.
Despite being one of the largest agriculture producing countries, there is a visible absence of value addition in food items. For example, even though Pakistan has one of the largest livestock bases, the country does not feature in significant places for processed milk production and is almost absent in sectors of cheese and other high-end dairy products. So is the case in other areas; one hardly finds any food brands originating out of Pakistan. Moreover, farmers get very low prices for their produce while consumers have to purchase at much higher prices while a huge sum of money is lost somewhere in between.
Something needs to be done to change this situation. Agritech and agripreneurs could be game-changers in the future economy of Pakistan. This, however, warrants a change in perspective and requires a focus towards agriculture to provide an enabling environment that fosters productivity, technology deployment, value addition, market mechanisms and agribusinesses. There is a need to bring the private sector, capital, youth, labour, technology and entrepreneurship to the farms.
It is unrealistic to expect smallholder farmers to deploy the latest technologies due to affordability. What if there was an independent business that provided these services on a rental/subscription basis?
In Pakistan, we have three classes of farmers: a few big ones with landholdings in hundreds of acres, another few corporate farms and smallholder farmers that make up more than 90 per cent of the share. The focus should be diverted to support those smallholders by filling gaps that they cannot fill themselves.
At present, one of the biggest problems in the agriculture sector is of middle-men or intermediaries, which eat up most of the value that may otherwise have been in farmers’ hands. I would argue in favour of them but of a different nature, i.e. the agripreneurs. It may be unrealistic to expect that the smallholder farmers could deploy the latest technologies due to affordability and economies of scale issues. What if there is an independent business that provides those services on a rental/subscription basis? This includes providing the latest machinery and other farm-level infrastructure, advisory services on crop management and connecting farms to markets/consumers including through e-commerce. Thus, the case of encouraging agripreneurs.
The current government has announced an agriculture emergency support programme to the tune of Rs 300 billion. This will be deployed mainly through provinces for typical agriculture support measures. I suggest allocating just 10pc of this package, i.e. Rs30bn to a new initiative titled the green-tech revolution, which would be aimed at agribusiness start-ups (agripreneurs) focusing on value addition, technology deployment and connecting farmers to consumers. This fund may also support existing businesses, particularly technology companies to develop tools and products for agriculture.
In the initial phase, the green-tech revolution initiative may focus on high-value agriculture items such as horticulture, dairy and meats. The potential for urban farming may also be explored as it is a promising solution for fresh food supplies.
Technology and innovation, both the hardware and software (i.e. data and analytics), are essential elements for achieving productivity gains in agriculture. The problem is access to such technologies and the cost-benefit equation. Through the proposed green-tech revolution initiative, the government may foster the private sector to develop and/or implement innovative technologies in agriculture. These technologies should cover areas such as farm, crop and water management, productivity and storage solutions, physical and virtual connectivity to markets and consumers.
This may also result in the creation of vertical integration of agribusinesses in Pakistan, i.e. a business unit owning all segments of the agriculture supply chain, from farm to fork. It could lead to a quantum leap in much-needed productivity and profitability in agriculture and also bring youth to farms thus contributing towards employment generation.
Global food markets have huge potential but the prerequisite is value-addition, meeting global food standards and integration in regional and global food value-chains through functional and sustainable business models. This could easily be done with agriculture farms that are run as business units with agripreneurs there to take care of the rest.
Food security is a challenge for any government, more so for the Pakistani government due to increasing population and decreasing natural resources, particularly water. Partnering with the private sector, through promoting agribusiness and agripreneurs would certainly contribute towards meeting this challenge.
There have been plenty of plans, efforts and support packages for the agriculture sector since the birth of Pakistan. Often these are drawn at quite a broad level and are focused on input supplies and price support mechanisms. The interplay between the government and the farmers has been the one constant. Probably, it is time to introduce a third factor, private sector or agribusiness, and expect a better result.
Published in Dawn, The Business and Finance Weekly, May 18th , 2020