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Role of Financial Institutions in Development of Dairy Livestock Sector in Pakistan Dr. Arshad H. Hashmi, Ph.D. Agri Fi

Livestock in National Economy. Livestock in Pak GDP 10.9 %Share in Agri GDP 52.2 %Livestock in export 8.5 % Dependent families > 8.5 mMilk Production (MT)42.19Income of farmers from Livestock40%Provides raw material for industrySocial security for rural poorSecurity

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Role of Financial Institutions in Development of Dairy Livestock Sector in Pakistan Dr. Arshad H. Hashmi, Ph.D. Agri Fi

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    1. Role of Financial Institutions in Development of Dairy &Livestock Sector in Pakistan Dr. Arshad H. Hashmi, Ph.D. Agri Finance Division Faysal Bank Limited Lahore July 23, 2009

    2. Livestock in National Economy Livestock in Pak GDP 10.9 % Share in Agri GDP 52.2 % Livestock in export 8.5 % Dependent families > 8.5 m Milk Production (MT) 42.19 Income of farmers from Livestock 40% Provides raw material for industry Social security for rural poor Security against crop failure in barani /irrigated areas Value of milk alone exceeds combined value of wheat, rice, maize and sugarcane Economic Survey (2007-8) Livestock Census (2006)

    3. Livestock Population (Million) Buffalo 29 Cattle 31.8 Sheep 27.1 Goat 56.7 Poultry Birds 518 Economic Survey 2007-08

    4. Institutional Support Livestock & Dairy Development Board Pakistan Dairy Development Company SMEDA ASF CSF

    5. What is Bank?

    6. Financial Penetration Rural Vs. Urban Dimensions Rural Urban Population 68% 32% Bank Branches 33% 67% Bank Accounts 37% 63% Deposits (number) 25% 75% Deposits (amount) 10% 90% Advances (number) 17% 83% Advances (amount) 07% 93%

    7. Rural Finance Rural Finance includes a range of financial services such as savings, credit, payments and insurance to rural individuals, households and enterprises, both farm and non farm on a sustainable basis. It includes financing for agriculture and agro processing/agribusiness (World Bank).

    8. Rural Economy of Pakistan Pakistan is predominantly a rural-based economy with about 68% population Majority of the rural population is involved in farm sector activities followed by trade, self employed small businesses and services activities According to a survey 42% of rural and 33% of small town enterprises, households, farmers etc have identified ‘Access to Finance’ as a key constraints for their development.

    9. Limited Access to Rural Finance 80% of formal loans require collateral Only 7% of small towns & 4% of village enterprises apply for formal loans Majority of rural population rely on supplier/informal credit at exorbitant rates Lack of enabling environment Banking behavior and practice Poverty or illiteracy/cultural and language barriers Lack of suitable rural finance product Regulatory barriers

    10. Agri Financing Agriculture financing is defined as provision of credit for development of agriculture

    11. A typical loan cycle

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