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$250 million ADB loan for agri-sector

Agriculture and agro-based industry collectively constitute major economic activities in Pakistan

Sep 24 - 30, 2001

The approval of a soft loan of $250 million by the Asian Development Bank for the development of Agriculture Sector is a manifestation of the confidence of the bank on the policy initiatives taken by the present government for revitalising the farm sector.

The loan from the ADB will provide the government with the much needed liquidity to cope with the uphill task of addressing the pressing need of the farm sector. The lack of liquidity and the inability of the government to provide soft term easy loans to the farmer has been one of the major hurdle in the development of this sector. Lack of realisation of its huge potential, criminal neglect of the successive past governments and absence of any sustained policy framework can be cited as other main reasons for our backwardness in this regard.

Agriculture and agro-based industry collectively constitute major economic activities in Pakistan. It is the backbone of our economy as it contributes 25% to GDP and 70% of our Foreign Exchange earning is from this sector. It is, however, unfortunate that only 22.04 million hectors of land is cultivated which is only 27.7% of the total land mass of Pakistan.

In order to break the stalemate and modernize agri-sector, there is a dire need to give immediate attention to utilization of waste-land production of high quality seeds, storage facilities for agricultural products, farm machinery and implements, marketing of agricultural product, the imputs Industry of fertilizers, pesticides and herbicides, livestock and dairy industry food processing and packaging activity, water managements and the financing of agri-business. A few of these activities were covered by the Industrial Policy in the last decade and as such might have received the benefits offered for their promotion. However, in the past the main agricultural activity stayed outside the ambit of Investment Policies and remained neglected.

With meagre inflows of investments, the agriculture sector has been badly beset by many ills of the past like the fragmentation of land holdings, the transfer of liquid assets out of farming, absentee landlordism, marginal utilisation of lands for mere survival, the outdated farming methods, and lack of interest in warding off natural enemies and pests.

However it is heartening to note that this indifference and disregard towards agriculture is melting. It is now being realised that this sector needs special attention as it helped the country to survive in the post-sanctions scenario. People now feel that agriculture should not only secure reasonable living standards for the growers but should also earn its share for the country. It has become the most promising areas for development and making investments. It is this spirit that the need for corporate farming is recognized.

A package for corporate farming has been developed which means: (a) there will be no crop on foreign ownership and the amount of investment. (b) there will be no ceiling of land holdings for the registered companies. (c) tax holiday for 5 years for irrigated agriculture, 7 year for the barani lands, and 10 years for cultivable wasteland is being considered. (d) State land will be sold or leased for 50 years extendable for another 49 years (e) a substantial share from the credit programme of all Banks and financial institutions will be earmarked for corporate farming. (f) exemption of duty will be extended on transfer of land for corporate agriculture farms. g. labour laws of the land will not be applicable as in the case of exports processing zones. However, appropriate labour laws would be developed for this sector within 5 years.

The government intends to offer the total available 2.8 million acre (MA) state land for corporate farming on lease for 50 years. Bulk of the state land (1.4 million acre) is located in Balochistan over 25 per cent in Sindh, 5.5 lath in NWFP and 70 thousand acre in Punjab, the official at the Ministry of Food, Agriculture and Livestock explained to this correspondent. He emphasised that the Ministry would be keen to lease pieces of land that were yet to be brought under cultivation to the foreign companies.

Government is also considering to declare the storage facilities for agri-product as a segment of corporate farming. Thus development and operation of Agri-storage facilities will also enjoy the status of industry and will be entitled to same incentives.

Pakistan due to its geographic location is having about 750 genetically different kinds of soils grouped into eight land capability classes. The first four of these classes are meant for arable use while the last four are for non-arable uses like forestry range management etc. Added to the classes of soil, is the availability of rain and irrigation waters as well as varied climatic conditions which allow our growers to grow almost anything and everything under the sun. Corporate investors can involve themselves in land development, reclamation of creeks barren desert and hilly areas for agricultural purposes, production of crops and horticultural products, integrated agriculture with on farm processing, water management and modernisation of irrigation facilities, plantations and forestry, dairy development and breeding and upkeep of livestock. For facilitation of the corporate farming, the BOL, the Federal Ministry of Agriculture, the Bank and the Provincial government will provide service to investors in the identification and acquisition of lands. Such lands would be available on 50 years leases from the start which would be extended, through mutual consent for a further period making it a total lease for 99 years. All these steps will convert this vital sector of our economy into a vibrant, commercial and profitable business activity. This will not only enhance the RoR (Rate of Return) for the investors but will also increase productivity and ultimately the GDP.

Many foreign investors have already shown their interest in agriculture sector in Pakistan. Chinese Companies have already done some spade work in this regard. A Chinese company, Yuan Longping High Tech Agriculture Co Ltd, headed by Zuo Lian Sheng, who is currently visiting Pakistan has already established a tea processing plant in collaboration with PARC that will start production within few weeks. The company, is seeking more areas for tea growth. Corporate farming that aims at both extensive and intensive agriculture will no doubt bring a pragmatic change in the overall economic scenario of our country.