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Agriculture — The mainstay of the economy in Pakistan

Banks asked to prioritize agriculture financing with a target of Rs700 billion in 2017

Agriculture sector, which is considered as the backbone of the economy has yet to come out with its full strength to serve economic needs as well as food security of the country with a nation of 200 million plus population.

The agriculture sector plays a central role in Pakistan’s economy. It is the second largest sector, accounting for over 21 percent of GDP, and remains by far the largest employer, absorbing 45 percent of the country’s total labor force. It is unfortunate that excessive involvement of politics in this sector has hampered its growth in the real sense, there is a need for radical reforms to let this important sector to play its due role in nation building.

It will not be out of place that the cotton production which provides the basic raw material to the huge textile industry remains unpredictable for various reasons including lack of research, quality seeds and modern techniques to increase its per acre yield.


It is important to note that after missing the cotton production target by 25 percent in the outgoing fiscal year, the government has set a target of 14.0 million bales for the upcoming season compared to a target of 14.1 million bales last season.

However, owing to better crop price in the outgoing season, area under cultivation for cotton is expected to increase, however, there are lingering threats on the production on account of canal water shortage in Punjab. In the global perspective, the production in the upcoming year is expected to increase backed by growth in India and China while global stock levels are expected to decline by 6 million bales.

Domestic cotton price is expected to take the lead from international trend, however, the water shortage might put pressure on price, if sustained.

In order to ensure productivity of all the major crops like cotton, wheat, rice, sugarcane etc the Governor State Bank of Pakistan Ashraf Mahmood Wathra has urged the banks to understand the needs of the economy and focus on agri financing as it is a viable business activity having huge cash flows, and significant contribution in GDP with strong backward and forward linkages.

The governor said this in a meeting of the Agricultural Credit Advisory Committee (ACAC). He highlighted the active role played by the Central Bank for promoting agri finance in the country. He emphasized that over the years State Bank of Pakistan has adapted itself into the role of a facilitator and developmental partner of financial institutions to accelerate the growth of agriculture finance in the country.

The financial institutions need to strengthen their agricultural finance policies, increase dedicated human resource, simplify lending procedures, rationalize lending rates, work diligently for creating mass awareness and develop other prerequisites for building lending portfolios and timely provision of credit to farmers and harness untapped potential of agri credit demand in the country.

There is a need for collaboration of banks and government departments for promotion of agri credit, enhancement of agri. Credit infrastructure in underserved areas and development of Shariah-compliant products and services for meeting the financial requirements of faith sensitive clients.

It may be mentioned that during Financial Year 2015-16, banks disbursed agricultural credit of Rs 598.3 billion, which is nearly 100 percent of the overall annual target of Rs 600 billion and 16 percent higher than the disbursement of Rs 515.9 billion made during last FY 2014-15.

Moreover, for Financial Year 2016-17, during the first six months (July-December, 2016) financial institutions have disbursed Rs 301.7 billion, which is 43.1 percent of the indicative target of Rs 700 billion for the year.


– Allocation of geographical and sector wise targets and enhancement of agri. credit infrastructure particularly in underserved area;
– Expediting the loan approval process by delegation of authority at branch/regional level;
– Development/adoption of digital innovations to improve financial services of the small farmers;
– Devise mechanism to provide wholesale lending products to microfinance Banks/Institutions to strengthen outreach of small farmers;
– Development of long term financing facility for the promotion of fruit orchards; and
– Creating financial awareness among the masses to make informed choices for improving their livelihood.

SBP”s vision on financial inclusion and the ongoing efforts is to focus on broadening access to finance to the least served segments of the country. The financial institutions were also required to explore new markets, develop innovative products, increase use of alternative delivery channels, value chain financing, and create more linkages for improving livelihoods in the country.

Governor State Bank of Pakistan Ashraf Mahmood Wathra thanked the participants and hoped that all stakeholders will play their part in development of country. The Governor also highlighted various initiatives taken by SBP for the promotion of exports, SMEs and agricultural activities.


Taking lead from the government policy of encouraging agriculture financing, the Khushhali Microfinance Bank (KMB) has planned to come out with agricultural loans under the Khushhali Agri Plus scheme.

As part of its MSME outreach strategy, these agri loans shall aid farmers in purchasing agricultural machinery, assets and other irrigational tools. The loan scheme is organized under the Financial Market Development (FMD) project – a five year technical and training collaboration program funded by USAID in which Khushhali Microfinance Bank is one of the Development Credit Authority’s (DCA) partner banks.

With the help of Khushhali Agri Plus, farmers in rural & semi-urban localities can purchase machinery equipment like tractors, trailers, threshers, rotavators, laser levelers, sprayers, seed drills etc. along with allied irrigational tools such as Peter engine, turbine, transformers, solar tube wells and more. In the pilot phase, loans can be repaid on a monthly, quarterly and semiannually, while flexible repayment amount (SC / SC+PA) will be considered after piloting.

At the launch of Khushhali Agri Plus, the bank’s CEO & President Ghalib Nishtar commented: “The foundation of Khushhali Microfinance Bank was laid on the noble idea of providing financial services to low-income households across Pakistan. Staying true to our mission, we are enabling farmers to realize their dreams through the launch of Khushhali Agri Plus scheme. This scheme not only empowers farmers to innovate their farming practices, but also assists them in amplifying their crop yields with the latest machinery.”

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