Agribusiness Sector in Pakistan: Challenges and Options

1. Agribusiness Sector in Pakistan: Challenges and Options

2. Agriculture Sector :Some Basic Facts • Livelihood source for 66% of population • 20 % share in GDP • Employs 43.4% labor force • 65.9% population lives in rural areas • Over 60% of industrial production comes from agro business • Earns (directly or indirectly) 70% of export revenues • Provides raw material to industry and also a big market for industrial products So Poor performance of agriculture will have an adverse effect on Pakistan's economy. Source: Pakistan Economic Survey

3. Agribusiness Agribusiness is the hub of our economy which provides • Inputs to the farm sector, • Produce farm products, • and is responsible for marketing those farm products to ensure consumer welfare and food security.

4. Agribusiness Sector Frame Work Farm Supplies Feed Fertilizer Machinery & equipment Petroleum Transportation Seed Others Farming Processing Food Retail Other Industrial Supermarket Restaurants Institutions

5. Agribusiness has potential for: • Improving Agricultural Production both qualitatively and quantitatively. • Generating employment particularly in the rural areas. • Creating available export base through development of forward and backward linkages with farm production system.

6. Number & value of Agro-Based Industries (Million Rs.) Source: Agricultural Statistics of Pakistan, 2005-06

7. Value & Share of Agro-Based Industries (Million Rs.) Source: Agricultural Statistics of Pakistan, 2005-06

8. Value & Share of Agro-Based Industries (Million Rs.)

9. Major Trends Affecting Agribusiness • An increase in consumer power. • Demanding low-cost, nutritious, safe, good tasting, conveniently packaged, easily available, consistent and "green“ products. • Consumer courts • The industrialization of agribusiness. • Mass and specialized production • Linkages and alliances between components of the supply chain are emerging • The re-regulation of agribusiness. • Environmental protection • Food health and safety.

10. Major Trends Affecting Agribusiness • The globalization of agribusiness. • Trade barriers (Tariff) either reduced or eliminated whereas non tariff barriers have increased • Markets for agribusiness products and services expand. • Increased competition • Environmental concerns. • Increased production cost • Pressure on processors to disclose sources of raw material for food products. • The emergence of an information-intensive food production system. • Information respecting production, markets, customers and competitors. • Sophisticated marketing practices such as segmentation, targeting, and positioning.

11. Current Challenges • Sustainability of agribusiness to ensure consumer and producer’s welfare • Recent food crisis in Pakistan (wheat flour, sugar, pulses, rice, milk etc.) • Price differentials between national & international markets • Market distortions (shortage, hoarding, black marketing etc.) • Quality improvement and cost competitiveness • Increasing prices of utilities • Weak quality control & check system • Substandard quality & Shortage of raw material

12. Current Challenges • Compliance to increasing international standards • Quality standards (ISO 9001 to 9004) • Environmental standards (ISO 14000) • Labor standards (ISO 17000, SA- 8000) • Standards for accreditation labs (ISO 17025) • Eurepgap • HACCP • Diversification of agro based industries • Canning of fruits and vegetables, milk and milk products, foot wears, wood and furniture products, paper and paper products, packaging etc.

13. Current Challenges • Functional & Institutional Inefficiencies • Poor performance in marketing functions like storage, transportation, processing, market intelligence etc. • Inefficient wholesale markets • Absence of future markets & insurance cover • Lack of skilled management resulting in inefficiency • MBA Agribusiness • Low Value Addition • Nominal percentage of total produce is being converted in value added products • Absence of Effective Marketing Management • Low participation rate in international trade fairs

14. Current Challenges • No specific government policy for the promotion and development of agribusiness • Lack of modern technology and equipment • Inadequacy of financial resources for small scale agribusiness • Lack of infrastructure (poor market to farm access) • Research and development

15. Our Major Thrust Should be Now it’s the time to realize the central importance of agribusiness not verbally but by action also and to direct resources and policies accordingly. Its all about changing attitudes, psyche and commitment towards this sector.

16. Possible Options • Improving regulatory and administrative frameworks to improve institutional efficiency • Public private joint partnership • Enhancing entrepreneurship abilities and business incubators • Encouraging investment in agribusiness and allied industry (Packaging, storage, transportation and most importantly infra structure) • Human Resource Development specifically for agribusiness sector • Connecting agricultural research more closely to the needs of farmers and the food industry

17. Possible Options….Contd • Promoting culture as well as market for value added products • Acquisition and transfer of modern technology • Simplification of credit procedures and allocation of more credit/funds for agribusiness enterprises. • Strengthening of market linkages through exhibitions, trade fairs and diplomatic efforts • Improving agricultural marketing: both factor and product markets to improve sustainability of the agribusiness sector • Promoting a culture of standardization and compliance to national and international certification

18. The Way Forward Pakistan’s future lies in agribusiness and we should not only try to add value but create value as well

19. THANKS