The Asian Development Bank (ADB) will help promote the development of a competitive and sustainable agribusiness sector in Pakistan through a loan approved for US$31mn.
The Agribusiness Development Project will establish market-based approaches to agribusiness development and enhance technical and managerial capacity in the sub-sector. It will also dismantle barriers to entry for new enterprises and promote the expansion of existing ones into new markets.
The project will focus on horticulture and hortibusiness, though actions to improve the livestock and dairy institutional framework, and support for selected enterprises will be provided.
Pakistan’s agriculture sector accounts for 25% of gross domestic product, almost half of jobs, and about 70% of exports. However, the sector’s growth has been on the decline since 1990, and yields of major crops have stagnated in the past decade.
Commercial agriculture and agribusiness development in the country is constrained by poor infrastructure, sector institutions and policies, and governance practices. Limited access to modern technology and to financial and business development services further hampers development.
“The constraints facing the agribusiness sector are present throughout the production chain from input supply to processing and exports, leading to low productivity and value added,” says Brian Fawcett, mission leader for the project.
“A comprehensive and systemic approach to removing these constraints is needed for the sector to tap the huge potential growth opportunities provided by both domestic and international markets.”
In tackling these constraints, the project has five major components:
About 2,000 agro-enterprises are expected to benefit from the agribusiness support fund operations over the five years of the project life. Further, a handful of institutions are expected to develop dedicated agribusiness finance functions, which could benefit an additional 10,000 agro-enterprises, including up to 12,500 farmer entrepreneurs, by improving access to finance and providing significant jobs and income generating opportunities.
The total cost of the project is estimated at US$49mn, to which the government will contribute US$6.9mn, the agribusiness enterprises US$10.4mn, private sector institutions US$600,000, and beneficiaries US$100,000.
ADB’s loan comes from its concessional Asian Development Fund, carrying a 32-year term, including a grace period of eight years. Interest is set at 1% per year during the grace period and 1.5% per year subsequently.
The ministry of food, agriculture, and livestock is the executing agency for the project.