PAKISTAN: ADB loan to boost agribusiness

[ This report does not necessarily reflect the views of the United Nations]

ISLAMABAD, 24 May 2005 (IRIN) - The Asian Development Bank (ADB) has approved a US $31 million loan to help develop the sustainable agribusiness sector in Pakistan. The project will help promote the entire production chain from input supply to processing and exports.

"This demand-driven programme is to boost agribusiness with a special focus on horticulture, livestock and related sectors," Salim Jhagra, joint secretary at the food, agricultural and livestock ministry, told IRIN in the Pakistani capital, Islamabad.

Pakistan's agriculture sector accounts for some 25 percent of gross domestic product and about 70 percent of exports.

"However, the sector's growth has been on the decline since 1990 and yields of major crops have stagnated in that past decade," noted the ADB statement.

Under the five-year project, about 2,000 agricultural enterprises are expected to benefit from the agribusiness support fund set to improve productivity and competitiveness of farmers. Poor infrastructure combined with inferior management and lack of resources are the main constraints to commercial agriculture and agribusiness development in the country. In addition, limited access to modern technology and to financial and business development services further hampers progress, according to the ADB statement.

However, some development experts have concerns about the viability of such a project for the large numbers of small farmers across the country.

"The government has not consulted civil society stakeholders over this and we don't know how small-scale farmers will benefit," Roshan Malik, an expert working with international development body, Actionaid Pakistan told IRIN in the Pakistani capital, Islamabad. "The priority of policy makers appears to be to promote corporate agriculture and agribusiness while overlooking the interests of small farmers. This is promoting rural poverty instead of reducing it," Malik added, referring to an ADB review published in March 2005.

The ADB paper looked at why agricultural growth of about 4.6 percent in Pakistan in the 1990s has not translated into poverty reduction. The report concluded that the inability of small farmers to diversify crop production, particularly in the cotton and wheat belt of Sindh and southern Punjab, where poverty is relatively high, contributed to an increase in rural poverty.

The government will contribute some $6.9 million towards the agribusiness project's estimated total cost of $49 million while the agribusiness enterprises would supply $10.4 million, private institutions $0.6 million and beneficiaries $0.1 million.

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