Agriculture Sector still remains the main pillar of the national economy in Pakistan


Oct 28 - Nov 03, 2002

The experiences of the past 52 years have led to the conclusion that the progress and prosperity of the country is strongly linked with the growth of the agriculture sector in Pakistan.

It is the agriculture sector alone which contributes 44 per cent in terms of employment, directly or indirectly, while two third of rural population solely depends on the outcome of the agriculture sector which plays the lifeline role for the national economy.

A well organized and well disciplined agriculture sector can really strengthen the government's hands to achieve the desired results of the campaign launched by the government for poverty alleviation from the country.

The Agriculture Development Bank of Pakistan (ADBP) which is major source for providing financial services to the agriculture however has failed to deliver the goods on account of excessive political interference which also help producing a crop of lethargic and corrupt work force within the organization.

As a result of inefficient handling and politicization the agriculture bank has become the house of stuck up loans losing recovery of 40 per cent of the disbursed loans to the farm sector every year.

Due to poor rate of recovery, ADBP had to reduce the portfolio of loaning and credit to the tractor industry from Rs6.57 billion in 2001-02 to Rs5.49 billion for the year 2002-03. The reduction in allocation for tractor industry which play a significance role for growth of the farm sector as well as the tractor industry just on account of hopeless disbursement and recovery policy of the bank. The tractor industry had raised its production capacity to 50,000 units per annum but due to non-availability to credit facility its production capacity is underutilized. Consequently, only 12,615 tractors were funded by ADBP during 2001-02 against 19,169 tractors funded during 2000-01, while loaning portfolio further reduced this year from Rs6.57 billion to Rs5.49 billion the sale volume will also be reduced further.

ADBP has extended loans for about 2,317 tractors only, compared with 2,909 tractors in the corresponding period last year.

Shaukat Aziz, Federal Minister for Finance has recently expressed his concern over what he called the poor performance of the Agriculture Development Bank of Pakistan, the main source of financing arrangement to the farmers.

It is amazing that instead of running the bank purely on professional lines to produce better financial results and commercial viability, the bank is surviving on subsidies from the government which may not work any more in the changing atmosphere.

ADBP, which is the major credit provider to the agriculture sector, is virtually lying sick in the intensive care unit. He described the status quo conditions in ADBP as dangerous as overestimation demanded a visible change in the Bank's policies to improve its working.


The finance minister has made it clear that government was not providing funds to the ADBP for adding to the problem of bad debt but to cater better and timely services to the agriculture sector. He agreed that the Bank's perception was not good and one of its major reasons was massive corruption. It is identified that political interference and forced decision in the past as main causes of poor recovery rates. The minister was of the view that the staff of the bank responsible of such wrong practices as they had failed to introduce a culture based on merit while disbursing loans to the farmers. The government has taken measures for restructuring the bank as the world class financial institution.

The Asian Development Bank (ADB) has offered financial assistance for restructuring of Agriculture Development Bank of Pakistan (ADBP).

The ADB wants ADBP as an efficient bank to cater financial needs of the agriculture sector on commercial basis and enhance farm production in Pakistan.

ADBP has got registered itself under the Companies Ordinance 1984 with the Securities and Exchange Commission of Pakistan (SECP). By virtue of that registration, ADBP is now a public limited company.

Acknowledging the importance of the agriculture sector, the experts have suggested that a strong research and training cell should be established at country level to overcome the hurdles confront that textile exporters as well as agriculture export. The training and research especially in the export of agriculture-based products is of vital importance to produce quality products to face the tough competition in the days to come after implementation of WTO rules.

Agriculture Sector still remains the main pillar of the national economy in Pakistan. It was mainly due to the strong agriculture base that the economy of the country survive in the backdrop of excess politicization, giving an edge to the personal and party interests over the country in the past, the agriculture sector provided fuel to run the unfit vehicle of the economy in Pakistan.