The solution to Pakistan’s Agricultural woes through sustainable financing

The solution to Pakistan’s Agricultural woes through sustainable financing

By Syed Asim Ali Bukhari

Pakistan is an agriculture-based economy with the agriculture sector contributing approximately 20 percent to the country’s GDP, employing over 40 percent of the country’s workforce and providing raw materials for more than two-thirds of merchandise exports.

However, Pakistan’s agriculture sector is facing a losing battle for its survival. This agricultural country is plagued with food shortage, continuously escalating food inflation and an economically, socially and environmentally unsustainable growth pattern mainly caused by uncertain irrigation water availability, unpredictable weather patterns, underdeveloped cold storage facilities, low investments in extension services and research, rising input costs, and current lack of awareness among farmers for adopting sustainable agricultural practices. The agriculture sector of Pakistan needs a drastic digital and sustainable makeover. It needs to be revitalized on the concept of Agriculture 4.0, i.e., digitalization and sustainable agricultural practices, processes, and equipment.

The future of agriculture is the synergistic blend of precision agriculture, digital agriculture, climate-smart agriculture and organic farming to achieve sustainable agricultural growth. These concepts can revolutionize every aspect of the agricultural value chain through new techniques such as Hydroponics, Bioplastics, Desert agriculture, Seawater/rainwater farming, Vertical/Urban farming, 3D-printing, Drone technology, Data Analytics, Nanotechnology, and Artificial intelligence. The goals of sustainable agriculture are mainly increasing the productivity of the crops while ensuring higher environmental and social sustainability.

Green Banking is just the vital ingredient required by Pakistan to make this transformation possible. Being the engine of a country’s economic transitions, banks can facilitate Pakistan’s agricultural sector through this sustainable transformation. Green banking, a paradigm shift in the banking ideology, is the solution to Pakistan’s agricultural woes.

The digital revolution in any sector requires investment, which is where the banking industry comes into play. Banks can finance various digital farming or sustainable agricultural solutions under the umbrella of Green Banking through providing green financing facilities. The State Bank of Pakistan has issued ‘Guidelines for Efficient Agricultural Water Management Financing’ to promote water conservation across the agriculture sector through the banking industry. Sustainable/Green financing schemes, with low-interest rates, can be launched for various eco-friendly agricultural techniques, equipment, and processes such as solar-powered tubewells, use of drone technology in crop maintenance, minimization of water wastage through sustainable irrigation systems like drip/trickle irrigation systems, water conservation systems such as rainwater harvesting, development of agricultural waste management systems, production of bioplastics, setting up of urban/vertical farming systems, and so on

Banks should educate and facilitate all the value chain partners, including farmers and other supply chain partners, about the various environmentally and economically sustainable agricultural products and processes available, which will increase per acre yield and minimize adverse environmental impacts. The implementation of Green Supply Chain practices is vital for the development of sustainable agricultural practices. Green financing can be provided for the development of eco-friendly warehouses, transportation, and cold-storage units near the farms to facilitate food storage and help the small farmers prosper economically.

Prime Minister Imran Khan has taken steps towards advancing the country’s agricultural sector and has encouraged the cultivation of olives, avocados, maize, and saffron for wealth creation. The planting of palm trees across the vast coastal areas and other tree plantation on the country’s vast highways can substantially increase production and reduce import dependency. The “Kissan Card” has been launched to support and facilitate small farmers. However, there is a lack of any clear-cut policy that connects Green Banking with sustainable agricultural initiatives, enabling the agricultural sector to simultaneously achieve economic and environmental sustainability.

Farmers should be trained in sustainable agricultural techniques and products and educated about various green financing options available for them. In a rapidly evolving technological environment, the government needs to introduce new technology, both in agriculture and the public sector, more broadly. If the government subsidizes technological upgrades, farmers may reap the fruits of technology at more reasonable rates, producing food more productively and growing the sector. Focus should be given to developing agricultural research institutes functioning in line with the best global practices and coordination with the concerned industries.

The agricultural sector cannot flourish until the small farmers reap the benefits of their hard work as much as the other value chain partners. In Pakistan, farmers suffer from low income and low awareness regarding alternative agricultural methodologies. Green Banking initiatives aimed at nurturing a sustainable agricultural sector can ensure more efficient farming practices reducing waste of natural resources and maximizing economic returns. Our planet cannot survive our current wasteful, resource-intensive and polluting model.

Changing how we make and produce food through the transition to a circular economy can help us to tackle climate change and feed the global population of tomorrow. Integrating the agricultural sector in the country’s circular economic model can be the solution to Pakistan’s economic, social and environmental woes. It can provide a solution to the current food shortage and inflation problems and play an instrumental role in achieving a number of related United Nations-Sustainable Development Goals (UN-SDGs) 2030. Agriculture is inherently the backbone of Pakistan’s economic system and without the adoption of sustainable agricultural practices, the country’s other economic sectors cannot achieve sustainable development. (Pakistan Today).

Syed Asim Ali Bukhari is pursuing his PhD in Green Banking from the Universiti Sains Malaysia (USM), Penang, Malaysia and can be reached at [email protected]

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