Islamabad, May 20, 2009: The Prime Ministerial Committee on Agriculture met on Wednesday at the Economic Affairs Division and discussed a number of cross-cutting agriculture policy issues and items to be proposed for the upcoming budget. The meeting was chaired by State Minister for Finance & Economic Affairs, Ms. Hina Rabbani Khar.

The minister reiterated that agriculture was of critical importance to Pakistan’s economy, both for food security and exports. She expressed strong support for agriculture sector that has potential and competitive advantage to grow.

The Competitiveness Support Fund (CSF) which is the secretariat of the committee has developed its structure, basing it on best practices used around the world.

CSF is a joint initiative of the Ministry of Finance, Government of Pakistan and United States Agency for International Development (USAID), established to reposition Pakistan’s economy on a more global competitive footing.

Ms Khar said that since the last meeting when a presentation was made on agriculture infrastructure and marketing, the process had been taken forward. “We have had meetings and interactions with all the stakeholders and there are going to be some allocations this year,” she said.

The meeting was attended by senior government officials, private sector leaders and leading agriculture business research institutions in Pakistan.

Following Ms. Khar’s remarks, a presentation was made by Asad Umer, CEO Engro Chemicals as the member of the sub-committee on finance. The presentation was on the creation of a financial product for farmers covering the value chain from input to output.

The committee suggested that land digitization issue should be taken up and since Punjab has digitized the record in two districts, now Sindh was following it. So keeping that as a model, those provinces can be given technical assistance that want to implement it.

It was pointed out that around 84 percent of the farming community had land holding up to 12.5 acres and majority of them did not have collateral to offer to banks. The proposed Rural Credit Guarantee Fund (RCGF) offsets risks of banks lending to such small farmers. The RCGF, can be used to pay the lending bank an agreed percentage of losses (usually 30 percent for small farmers and 50 percent for marginalized/landless farmers) on guaranteed loans.

Credit requirement of small and marginalized farmers is estimated to be around Rs 420 billion (US$5.3 billion). Rs 160 billion is the estimated amount initially required for the RCGF.

The meeting was told that Technical Assistance to setup the guarantee scheme would also be required in addition to the guarantee fund. RCGF will encourage banks to lend to farmers who have good prospect of success but do not necessarily have collateral or business record needed to meet the banks requirements.

On the issue of certifications, the private and international partnership should be encouraged with some initial intervention like payment of salaries by the government. The members further recommended that the scope of certifications should be broadened from merely organic certification to something that covers the whole of agriculture.

The members recommended that a central body with PARC be created and later on private sector intervention be sought.

Afaq Tiwana, CEO and Chairman of PARC Agrotech Company, spoke about the warehouse receipt system and said there was a need for having proper legislation on this.

Dr. Zafar Altaf, Chairman Pakistan Agriculture Research Council (PARC), made a presentation on the requirements for organic trade while also highlighting its social aspects, importance and opportunities.

He told the meeting that organic wheat had successfully been grown at the National Agriculture Research Council (NARC). “The crop held out very well,” he said, pointing out that it was rain-fed agriculture.

He called for bringing in innovative aspects in agriculture and stressed the need for changing mindsets. “The 21st century needs a different mindset altogether, otherwise we will be left behind in the race,” he said.

Shortly afterwards, Dr. Altaf spoke about the Marketing Cooperatives, basing his presentation on the Halla experience. He said that a small town like Islamabad had 104 commercial markets while the entire Punjab province had only 121 agricultural markets. “The farmers are at a loss to sell their produce,” he said.

The other provinces, in this light were worse off and framer’s productivity was dampened as a result. He suggested that steps needed to be taken to meet the objectives of farm welfare.

For the cooperatives to work, the committee recommended an apex body to start and move the process. The issue of cooperatives is a difficult one, because of financial cooperatives having a bad name. But many village organizations working under crop maximization project and social mobilization practices in almost all the development work, and the case of Halla Dairies is an example, do provide a basis for moving forward.

Dr. Kauser Abdulla Malik, a professor in biotechnology, talked about the National Agricultural Research System (NARS). Agriculture, he said had undergone tremendous changes over the past few decades and transformed from a food security issue to an engine of economic growth.

“The agricultural research system devised earlier has served well to some extent notably through provision of high yielding crop varieties but this research system has outlived its utility and needs a conceptual change,” he pointed out.

He also outlined the causes of declining efficiency in agriculture while also highlighting the technical manpower available with major agricultural universities and research institutions.

Dr. Malik proposed a two-fold increase in present funding on agriculture research to meet all the deficiencies if the desired objectives were to be met.

The committee noted that agriculture research was a provincial function and there was a lack of collaboration between the provinces and Islamabad. There is also no coordination between universities and research stations and institutions. Hence the research never trickles down to the farmers.

It was also noted that replacement for 70 percent of scientists at the age of 57-58 years was not being sought.

USAID’s support for CSF is part of the $2.8 billion aid that the U.S. Government has provided to Pakistan since 2002 to improve economic growth, education, health, and governance and to reconstruct the earthquake-affected areas..