Institution profile
Contact details
Government of Pakistan
Agribusiness Development and Diversification Project
Ministry of Food, Agriculture and Livestock
38-West, Khalid Plaza, 4th Floor, Blue Area, Islamabad
Description of Project:
Pakistans economic situation has improved considerably since 2001. In particular, economic growth has rebounded, inflation has remained low, debt indicators have improved considerably, and foreign exchange reserves have increased sharply. Recent growth trends have been particularly favorable, and growth is expected to exceed the target and reach 6.4% in FY 2004. However, the improvement in economic performance has not translated into progress in poverty reduction, particularly in rural areas where nearly 39% of the population was below the official poverty line in 2003. Pakistans economy is ...agrarian based accounting for 25% of gross domestic product and remains a major source of exports (about 70%, including processed products), and employment (just under half of the labor force). About 66% of the population lives in rural areas and virtually all rural residents earn a livelihood from agriculture. Over 90% of farm output comes from irrigated land. Minor crops, which include horticultural crops, contributed 12% of agricultural GDP, but grew only 1.7% in FY 2004 compared to a target of 3.5%.
Pakistan is a major producer of fruit and vegetables, with most of the production consumed in the domestic market. The total area devoted to fruit and vegetable production has increased rapidly in recent years, reaching 1.5 million hectares (ha) in FY 2004, as has production of fruits and vegetables. Fruit production has recently been affected in several areas because of drought and restricted water supply. Nevertheless, production has increased for some fruit crops such as peach (103%), persimmon (76%), and pomegranate (67%), reflecting the strong domestic market demand for horticultural crops. Citrus, primarily the mandarin variety kinnow, is the largest horticulture crop group by volume, and is a major export revenue earner. Export volumes increases from 100,000 metric tons (mt) in FY 2003 to 150,000 mt in FY 2004, with total production of 2.1 million mt in FY 2004. Pakistan is the fourth largest producer of dates, with 11% of world production, and exported 77,471 mt in FY 2002. In FY 2003 1.1 million tons of mangoes were produced, accounting for 5.9% of global production, of which 5% was exported. Vegetable production slowly increasing, with 2.9 million mt produced in FY 2003. Floriculture, which is dominated by petal and cut flower production, is a relatively new horticultural subsector, and has grown at an annual rate of at least 10% over the past three years, with annual export earnings of about 2 million.
While many developing countries have seen a fairly rapid expansion in agricultural exports over the past decade, with China, Malaysia, Thailand, and India among the strongest regional performers, Pakistans share in total world exports has actually declined. By contrast, Indias total exports rose more than three-fold to over 70 billion between 1990 and 2002, with its share of world trade increasing from 0.5 to 1%. Pakistans exports have remained heavily concentrated in low value added goods, while other regional producers such as India and Sri Lanka have improved product technology and value addition. Even in the low technology segment, such as in fresh fruits, Pakistans exports have declined or stagnated in recent years. The stagnation in the export market is largely because of the demand in world markets for a better quality product and improved traceability, related to World Trade Organization (WTO) regulations and standards, and other increasingly stringent standards in developed markets.
The last comprehensive survey of the manufacturing sector estimated that there were 4,474 firms based across all sectors and that the food and beverages sector accounted for 984 firms. Sub classifying the food and beverage industries into those directly related or allied to the agribusiness sector, there were about 94 firms, or 10% of the food, beverage, and tobacco sectors; and 2% of all industries in Pakistan, which is minimal given the potential for value addition and processing provided by the large volume of horticultural crops produced. It is estimated that about 1.5 million people may be employed in small and medium horticultural enterprises. The enterprises engaged in hortibusiness are generally either micro-scale village based activities, or large-scale operations being undertaken by nationally recognized companies. There is a need to promote the growth of micro-scale horticultural enterprises and mini processing units to support the transition to small and ultimately medium-scale enterprises to develop a competitive agribusiness sector in domestic and international markets.
Agribusiness sector has the potential to be a source of economic growth and income generation with small farmers as major beneficiaries. There is a need for implementation of a project that will help to enhance the quantum of export especially of horticulture and floriculture items as well as value addition. Asian Development Bank (ADB) agreed to provide technical and financial assistance to explore the potential of agribusiness sector. A technical assistance proposal (PC-II)/feasibility study costing Rs. 52.7 million was prepared which was approved by the CDWP on 04-09-2003. The basic purpose of the TA was to assist the Government in designing a private sector lead agribusiness development project. Detailed survey of the potentials and constraints of the agribusiness sector was carried out. Data, facts and figures were collected. Consultative workshops and strategy Group Work Sessions were held. The facts and figures thus gathered, were analyzed to present the findings and give recommendation in the form of a report. The consultants submitted their report in July 2004. The present project is based on this feasibility study. There is a firm commitment from ABD to finance this major project. A series of meetings have been held with the ADB in this regard. Preparation and approval of the present PC-I are some of the conditionalities of the loan effectiveness. The consent of the provinces and allied agencies has already been obtained for the implementation of this project. Aide memoir of the ADB has been approved by the concerned agencies. A copy of the Aide memoir is attached for ready reference. Final Loan Agreement will be signed in the first week of March, 2005.
To tackle all problems and issues of agribusiness, a comprehensive approach is required. As it is a multidimensional sector, of rural economy, it will be dealt in thoroughly and deeply under the present project. The project components have been carefully designed to tackle all issues and deal all aspects of agribusiness sector. It will emerge as a full fledge sector in the rural economy.
The justification of the Project is based on an overall assessment of the Project components and interventions, and financial analysis of model budgets of indicative agro-enterprises, mainly in the horticulture, livestock and dairy sub sectors, that could be supported under the Project. Through ASF cost sharing grants the project will support agro-enterprise business development, agro-enterprise start-ups, farmer group enterprise formation, demand driven research programs, private sector led extension service, and BDS providers to enhance their capacity in the agribusiness sector.
In the short run, qualitative improvements with reasonable monetary incentives are envisaged. In the medium term, it is expected that an environment for encouraging various stakeholders to invest in the sub sector and adopt good practices will be in place. It is also expected that farmers will be able to realize reasonable increases in income by minimizing post harvest losses. Without these improvements, it will not be possible to realize comparative and competitive advantages. These advantages are due to nearness to markets with increasing demand for quality products, ability to supply during the off-season, and the sub sector being labor intensive. Given the overall nature of project interventions that are mainly geared towards realizing quality improvement and achieving higher value added, justification has relied on the assessment of non-quantifiable benefits. In the long run, seven years after project completion, it is envisaged that traditional agribusiness practices will have matured to a more commercialized approach.
The Project will cover all four provinces of Pakistan and the Special Areas of FATA, FANA and AJK. The provinces of NWFP and Balochistan and the Special Areas grow a large variety of temperate, semi-temperate and dry areas deciduous and other fruits as well as vegetables, spices, medicinal and culinary herbs and plants and ornamental plants and flowers. The provinces of Punjab and Sindh are besides suitable for growing a number of tropical and subtropical fruits, vegetables, spices, herbs, ornamental plants and flowers. Cultivation is normally done in clusters in different areas. Some fruits such as oranges, mangoes, apples, stone fruits, pip fruits, soft fruits and likewise some vegetables like potatoes, tomatoes, onions and chilies are produced abundantly with big surpluses and shortages from year to year responding to market prices. It is assessed that between 30 40 % of fruits and vegetables are lost post harvest. Moreover, margin for producers are minimized because of market exploitation by intermediaries and lack of processing facilities. The cooler provinces and areas are also suitable to grow non traditional and of season horticulture product/crops. Orchards and vegetables cultivation is done mainly by large farmers in Punjab and Sindh with several of them marketing their own produce. In the Special Areas and in Balochistan and NWFP small farmers are involved in horticulture production.
Livestock sector represents 11.4% of the GDP, involves 6 million farms families or 38 million of the population for their livelihood. Pakistan is the 5th largest producer of milk in the world but only 2% of this is processed against 40% in India. Health safety aspects are totally absent in informal milk marketing. The Idara-e-Kisan in Halla Punjab has evolved a highly successful milk collection, processing and marketing and dairy production activities under a participative arrangement. This offers extremely promising prospects and the President of Pakistan himself has desired its expansion. The local market for meat is growing by 5% annually while demand for meat and live animals both organized and illicit in the neighboring countries is drawing down on availability of live animals and resulting in explosive meat prices. Pakistan has a large buffalo population in Punjab and Sindh. Small ruminants predominate in Balochistan, NWFP and the Special Areas. Highly recognize breeds of cattle both local and crossbred are available. Livestock sector like horticulture sector offers promising prospects for agribusiness both for milk and dairy production and for meat of all types to the benefit of the local economy, consumers and millions of small livestock farmers.
Institutional capacity to back stock agribusiness and carryout promotional activities are generally limited all over the country though the Province of Punjab is somewhat batter endowed. Business entrepreneurship lacks likewise in the different areas. The two resource deficit provinces and the special areas besides lack the technical capacity and financial resources to build up their support services, capabilities and entrepreneurships. The project is based on the concept of a private sector lead project with the public sector involved in a facilitating, coordinating and supporting role. It is proposed to bolster the existing Pakistan Horticulture Export Promotion Board and to create a new Livestock and Dairy Development Board in conjunction with an Agribusiness Support Fund and Business Support Finance Program through Participatory Financial Institutions. Within these parameters the provinces would have flexibility to operate in tandem their own programmes. The project would support the provinces and special areas on both initiatives. Besides the project incorporates a lump sum provision of Rs.1 billion out of Government of Pakistan funding for financial support of provincial and special areas programmes. Rs.800 million out of this amount shall be earmarked for agribusiness finance programmes identified by the provinces (for 80% of this amount on NEC formula basis) and 20% for the programmes of the special areas. The balance Rs.200 million would support capacity building and support services for agribusiness in the special areas and provinces of Balochistan and NWFP. The fund would be used based on the project strategy and priorities and identified priorities by the provinces and special areas. The input of various research and investigative studies perceived in the project will be kept in view. The identified proposals by the provinces and special areas after endorsement by the concerned Provincial/Special Areas Coordination Committee shall be reviewed and approved by the Project Steering Committee. On this approval the concerned provinces /special areas shall process project proposals for approval under the normative process.
OBJECTIVES OF PROJECT
The objective of the Project is to support economic growth and employment generation through agribusiness development by:
-creation of an enabling environment
-provision of appropriate support services for agribusiness.
-The re-structuring and strengthening of institutions to facilitate development of agribusiness,
-capacity building and enhanced coordination,
The project purpose is to develop a competitive and sustainable agribusiness sector.
As such the project design focuses on key interventions to create an enabling policy and institutional environment, based on strong public/private sector linkages, to catalyze private sector agro-enterprise development.
The project components are directed, in particular, to provide the policy framework and enabling environment for agribusiness, capacity building for the necessary agribusiness support and the provision of business support services to agro-enterprises to enhance entrepreneurial skills throughout the value chain (from the field to the consumer) and to provide the opportunity for demand driven research and extension. The aim in this regard is to create a flexible service delivery mechanism that is responsive to private sector demand within the provinces. The components will not be directly linked to specific provincial interventions or pre-set financing limits for each province. It will be on the basis of first come first served with requests for support being bottom up and demand driven.
The primary focus will be on the horticulture and the hortibusiness, livestock and dairy development sub sectors which is in line with the countrys development strategy of diversification into intensive high value crop production that will lend itself to value addition and labor intensive cultivation for the creation of rural employment and increased rural incomes. Emphasis has been placed on germplasm and raw material supply by improving production and yields and enhancing product quality and uniformity. Without a quality raw material base the countrys produce will be at a severe disadvantage when the national market has opened up fully.
The livestock for meet production and dairy for milk collection are also included in the project.
The project will help in:
increasing the production of agriculture sector as a whole.
exploiting potentials of non-conventional sub-sectors of agriculture sector such as horticulture, hortibusiness, vegetable production and floriculture.
enhancing income of the farmers.
improving production of livestock sector.
arresting rural-urban migration by creating employment opportunities in agribusiness sector.
poverty alleviation.
skill enhancement in horticulture, hortibusiness, livestock, dairy, floriculture and in vegetable production.
Formulation and re-orientation of national policies with regards to above sub-sectors of rural economy.
Agribusiness Development and Diversification Project Brief
Agribusiness Development Project (Assisted by ADB), Agriculture & Livestock Products Marketing and Grading Department, Government of Pakistan. The project activities will be carried throughout Pakistan including special areas (FATA, FANA and AJK). All the relevant stakeholders, i.e. farmers, traders, small and medium entrepreneurs, researchers, extension workers, policy makers and experts of agriculture sectors will be involved. The administrative headquarter will be at Islamabad.
Realising the potential of agribusiness sector, the government of Pakistan with the help of Asian Development Bank has initiated Agribusiness Development and Diversification Project which will be implemented over next five years. The project aims to address constraints that impede development of the sector, and exploit domestic and export market opportunities in the agribusiness sector, thereby contributing to increased economic growth and rural employment. The Project will promote the realization of these opportunities by (i) improving the managerial; production, and processing skill levels of entrepreneurs and farmers to ensure the production of good quality raw material, and uniform and high standard products; (ii) supporting participating financial institutions (PFIs) to increase agribusiness lending to allow stakeholders to exploit market opportunities; (iii) reorienting government institutions to become facilitators of agribusiness development, using public-private partnerships; (iv) improving the policy, regulatory, and financial environment to make it more responsive to private sector needs, and encourage producers and entrepreneurs to invest in agribusiness; and (v) establishing the framework and standards to comply with increasingly stringent international standards.
Project objectives and focus
The Project objectives are to support economic growth and employment generation through agribusiness development and to develop a more competitive and sustainable agribusiness subsector. The project interventions focus on increased productivity, product quality, and value added by removing constraints facing agribusiness that occur throughout the product value chain from production and input supply to processing and exports. Constraints will be addressed using a comprehensive and systemic approach throughout the value chain to remove market and institutional failures and rigidities that impede the development of the agribusiness sector, and promote demand-driven development with maximum participation of the private sector.
Project Components:
The Project comprises following five components:
1.Agribusiness Support Service Provision
The Project will facilitate increased access to Business Development Services (BDS) through agribusiness enterprises by financing eligible services for capacity building, including technical, managerial, financial, and marketing skills. The Project will establish an agribusiness support fund (ASF) to provide funds to eligible agribusiness enterprises, farmers, research and extension service providers, and BDS providers. Eligible services for ASF finance include (i) capacity-building and related assistance to existing agribusiness enterprises and for enterprise start-ups, but excluding the financing of capital equipment; (ii) support to individual farmers and farmers' groups for the formation of legally registered agribusiness enterprises that can then obtain ASF support for other eligible services; (iii) demand-driven research by private or public sector research institutions leading to increased and better quality production and improved production processes, or to meet an identified market demand; (iv) development of private sector extension services to be provided to small-scale farmers proposing to supply raw materials to agribusiness enterprises; and (v) support for private sector BDS providers to enhance the availability and quality of services provided to agribusiness enterprises.
2.Agribusiness Finance Development
The Project will support the development of financial services, particularly credit, to agribusiness enterprises that do not have ready access to such services. The Project will support PFIs to develop their understanding of the potential agribusiness finance market, and subsequently, to enhance their capacity to undertake agribusiness lending. Cooperation with PFIs will be implemented using the services of international consultants, first through awareness building, and second, through specific in-house consulting services provided to PFIs.
3.Agribusiness Capacity Building
Capacity building for agribusiness will focus on horticulture and hortibusiness, but will also support project activities to be undertaken in the livestock and dairy subsector. The component will seek to increase the private sector participation in the provision of services currently provided by public sector institutions. To facilitate agribusiness development and international compliance, the Project will support the rationalization, restructuring, and coordination of relevant Ministry of Agriculture, Food and Livestock (MINFAL) agencies and offices concerned with alignment with WTO regulations and international product standards.
Market Information. The Project will improve the availability of market information, identified as a significant constraint to agro-enterprise expansion. The Project will promote the development of information on private sector markets through outsourcing by DALPMG. An appropriate private sector provider will be supported to develop a system that will initially focus on the 11 major wholesale markets in the county, and Pakistan's major export markets for fruits and vegetables.
Export Quality Certification. Support will be provided to strengthen the capacity of DALPMG in export quality certification by (i) providing international training for key DALPMG staff; (ii) revising and updating national quality standards consistent with international standards; (iii) upgrading DALPMG's export certification centers; and (iv) introducing operating procedures of international standard for sampling, inspection, and quality monitoring systems.
Seed and Planting Material Certification. The Project will help strengthen the Federal Seed Certification and Registration Department (FSCRD) by (i) establishing and equipping nine regional testing laboratories; (ii) developing a systematic and quality-oriented approach to the production of fruit and vegetable propagation materials; (iii) introducing internationally accepted standards; (iv) training staff in field inspection techniques; (v) improving operating systems; (vi) training nursery producer's in improved production techniques, and better plant propagation and hygiene practices; and (vii) reviewing and updating existing vegetable seed and fruit tree seedling certification standards and legislation.
Training. The PHDEB horticulture unit training coordinator, supported by provincial training coordinators, will organize training to (i) develop curriculum and course content specific to agribusiness; (ii) build the capacity of private sector trainers and the institutions or service providers that will provide training to entrepreneurs; (iii) improve technical and managerial skills in agribusiness enterprises; (iv) improve product output, quality and uniformity, and continuity of supply at the farm level; and (v) provide agribusiness training to provincial and special area staff.
Pakistan Horticulture Development and Export Board. To develop more effective linkages between the public sector and private agribusiness, the Project will establish a horticulture unit within the private-sector-led PHDEB. The PHDEB unit will help implement project activities in the horticulture subsector, and facilitate interaction with agribusiness enterprises. PHDEB will undertake a proactive promotional campaign to stimulate awareness of project activities. PHDEB will (i) contribute to and support provincial and special area horticultural policy task forces; (ii) in association with provincial and special area project implementation offices (PlOs), identify potential recipients for ASF cost-sharing grants, and forward their applications to the ASF; (iii) identify enterprises, farmer group enterprises, and processors to determine training, extension, and research needs; and organize their training; (iv) identify farmer groups, exporters, packers, and processors that wish to become internationally compliant, and help them obtain project support; and (v) work closely with the project horticulture and hortibusiness consultants to support their activities. PHDEB will integrate these functions into its regular operations, to ensure sustainability after the Project.
Livestock and Dairy Development Board. The Project will support the establishment of a livestock and dairy development board (LDDB) as a corporate body, which will play a similar role to that of PHDEB in the livestock sector. The responsibilities of LDDB will be to (ii) coordinate national and provincial activities in livestock and dairy, (ii) promote investment in the sector, and (iii) promote livestock as the primary vehicle for poverty reduction among small and landless farmers, especially women.
4.Agribusiness Policy and Enabling Environment Development
This component will assist the Government to develop an appropriate policy and enabling environment for private-sector-led agribusiness development. This includes national and provincial interventions to redefine roles and responsibilities in the sector; strengthen the regulatory framework, in particular for alignment with international standards; and create effective public-private partnerships to promote sector development.
The Project will support the development of the regulatory framework, and establish quality and certification requirements for locally produced products to align with international standards. In particular, the Project will assist the WTO cell in MINFAL to formulate amendments to the legal framework to align with commitments made in regard to sanitary and phytosanitary measures in Pakistan's agreements with WTO. The Project will also help MINFAL develop programs to collate and disseminate information relating to international standards to relevant stakeholders in both the private and public sectors.
5.Project Management Support
Ministry of Food Agriculture and Livestock (MINFAL) is the executing agency for the project, a Project Management Unit has been set up in Islamabad which is responsible for project management and implementation of various project activities, coordinating consultant inputs, reporting, and monitoring and evaluation. In order to implement project activities effectively, seven project implementation offices have also been established in four provinces and Federally Administrated Northern Areas, Federally Administrated Tribal Areas and Azad Jamu and Kashmir. Read more
Agribusiness Development and Diversification Project
Ministry of Food, Agriculture and Livestock
38-West, Khalid Plaza, 4th Floor, Blue Area, Islamabad
Description of Project:
Pakistans economic situation has improved considerably since 2001. In particular, economic growth has rebounded, inflation has remained low, debt indicators have improved considerably, and foreign exchange reserves have increased sharply. Recent growth trends have been particularly favorable, and growth is expected to exceed the target and reach 6.4% in FY 2004. However, the improvement in economic performance has not translated into progress in poverty reduction, particularly in rural areas where nearly 39% of the population was below the official poverty line in 2003. Pakistans economy is ...agrarian based accounting for 25% of gross domestic product and remains a major source of exports (about 70%, including processed products), and employment (just under half of the labor force). About 66% of the population lives in rural areas and virtually all rural residents earn a livelihood from agriculture. Over 90% of farm output comes from irrigated land. Minor crops, which include horticultural crops, contributed 12% of agricultural GDP, but grew only 1.7% in FY 2004 compared to a target of 3.5%.
Pakistan is a major producer of fruit and vegetables, with most of the production consumed in the domestic market. The total area devoted to fruit and vegetable production has increased rapidly in recent years, reaching 1.5 million hectares (ha) in FY 2004, as has production of fruits and vegetables. Fruit production has recently been affected in several areas because of drought and restricted water supply. Nevertheless, production has increased for some fruit crops such as peach (103%), persimmon (76%), and pomegranate (67%), reflecting the strong domestic market demand for horticultural crops. Citrus, primarily the mandarin variety kinnow, is the largest horticulture crop group by volume, and is a major export revenue earner. Export volumes increases from 100,000 metric tons (mt) in FY 2003 to 150,000 mt in FY 2004, with total production of 2.1 million mt in FY 2004. Pakistan is the fourth largest producer of dates, with 11% of world production, and exported 77,471 mt in FY 2002. In FY 2003 1.1 million tons of mangoes were produced, accounting for 5.9% of global production, of which 5% was exported. Vegetable production slowly increasing, with 2.9 million mt produced in FY 2003. Floriculture, which is dominated by petal and cut flower production, is a relatively new horticultural subsector, and has grown at an annual rate of at least 10% over the past three years, with annual export earnings of about 2 million.
While many developing countries have seen a fairly rapid expansion in agricultural exports over the past decade, with China, Malaysia, Thailand, and India among the strongest regional performers, Pakistans share in total world exports has actually declined. By contrast, Indias total exports rose more than three-fold to over 70 billion between 1990 and 2002, with its share of world trade increasing from 0.5 to 1%. Pakistans exports have remained heavily concentrated in low value added goods, while other regional producers such as India and Sri Lanka have improved product technology and value addition. Even in the low technology segment, such as in fresh fruits, Pakistans exports have declined or stagnated in recent years. The stagnation in the export market is largely because of the demand in world markets for a better quality product and improved traceability, related to World Trade Organization (WTO) regulations and standards, and other increasingly stringent standards in developed markets.
The last comprehensive survey of the manufacturing sector estimated that there were 4,474 firms based across all sectors and that the food and beverages sector accounted for 984 firms. Sub classifying the food and beverage industries into those directly related or allied to the agribusiness sector, there were about 94 firms, or 10% of the food, beverage, and tobacco sectors; and 2% of all industries in Pakistan, which is minimal given the potential for value addition and processing provided by the large volume of horticultural crops produced. It is estimated that about 1.5 million people may be employed in small and medium horticultural enterprises. The enterprises engaged in hortibusiness are generally either micro-scale village based activities, or large-scale operations being undertaken by nationally recognized companies. There is a need to promote the growth of micro-scale horticultural enterprises and mini processing units to support the transition to small and ultimately medium-scale enterprises to develop a competitive agribusiness sector in domestic and international markets.
Agribusiness sector has the potential to be a source of economic growth and income generation with small farmers as major beneficiaries. There is a need for implementation of a project that will help to enhance the quantum of export especially of horticulture and floriculture items as well as value addition. Asian Development Bank (ADB) agreed to provide technical and financial assistance to explore the potential of agribusiness sector. A technical assistance proposal (PC-II)/feasibility study costing Rs. 52.7 million was prepared which was approved by the CDWP on 04-09-2003. The basic purpose of the TA was to assist the Government in designing a private sector lead agribusiness development project. Detailed survey of the potentials and constraints of the agribusiness sector was carried out. Data, facts and figures were collected. Consultative workshops and strategy Group Work Sessions were held. The facts and figures thus gathered, were analyzed to present the findings and give recommendation in the form of a report. The consultants submitted their report in July 2004. The present project is based on this feasibility study. There is a firm commitment from ABD to finance this major project. A series of meetings have been held with the ADB in this regard. Preparation and approval of the present PC-I are some of the conditionalities of the loan effectiveness. The consent of the provinces and allied agencies has already been obtained for the implementation of this project. Aide memoir of the ADB has been approved by the concerned agencies. A copy of the Aide memoir is attached for ready reference. Final Loan Agreement will be signed in the first week of March, 2005.
To tackle all problems and issues of agribusiness, a comprehensive approach is required. As it is a multidimensional sector, of rural economy, it will be dealt in thoroughly and deeply under the present project. The project components have been carefully designed to tackle all issues and deal all aspects of agribusiness sector. It will emerge as a full fledge sector in the rural economy.
The justification of the Project is based on an overall assessment of the Project components and interventions, and financial analysis of model budgets of indicative agro-enterprises, mainly in the horticulture, livestock and dairy sub sectors, that could be supported under the Project. Through ASF cost sharing grants the project will support agro-enterprise business development, agro-enterprise start-ups, farmer group enterprise formation, demand driven research programs, private sector led extension service, and BDS providers to enhance their capacity in the agribusiness sector.
In the short run, qualitative improvements with reasonable monetary incentives are envisaged. In the medium term, it is expected that an environment for encouraging various stakeholders to invest in the sub sector and adopt good practices will be in place. It is also expected that farmers will be able to realize reasonable increases in income by minimizing post harvest losses. Without these improvements, it will not be possible to realize comparative and competitive advantages. These advantages are due to nearness to markets with increasing demand for quality products, ability to supply during the off-season, and the sub sector being labor intensive. Given the overall nature of project interventions that are mainly geared towards realizing quality improvement and achieving higher value added, justification has relied on the assessment of non-quantifiable benefits. In the long run, seven years after project completion, it is envisaged that traditional agribusiness practices will have matured to a more commercialized approach.
The Project will cover all four provinces of Pakistan and the Special Areas of FATA, FANA and AJK. The provinces of NWFP and Balochistan and the Special Areas grow a large variety of temperate, semi-temperate and dry areas deciduous and other fruits as well as vegetables, spices, medicinal and culinary herbs and plants and ornamental plants and flowers. The provinces of Punjab and Sindh are besides suitable for growing a number of tropical and subtropical fruits, vegetables, spices, herbs, ornamental plants and flowers. Cultivation is normally done in clusters in different areas. Some fruits such as oranges, mangoes, apples, stone fruits, pip fruits, soft fruits and likewise some vegetables like potatoes, tomatoes, onions and chilies are produced abundantly with big surpluses and shortages from year to year responding to market prices. It is assessed that between 30 40 % of fruits and vegetables are lost post harvest. Moreover, margin for producers are minimized because of market exploitation by intermediaries and lack of processing facilities. The cooler provinces and areas are also suitable to grow non traditional and of season horticulture product/crops. Orchards and vegetables cultivation is done mainly by large farmers in Punjab and Sindh with several of them marketing their own produce. In the Special Areas and in Balochistan and NWFP small farmers are involved in horticulture production.
Livestock sector represents 11.4% of the GDP, involves 6 million farms families or 38 million of the population for their livelihood. Pakistan is the 5th largest producer of milk in the world but only 2% of this is processed against 40% in India. Health safety aspects are totally absent in informal milk marketing. The Idara-e-Kisan in Halla Punjab has evolved a highly successful milk collection, processing and marketing and dairy production activities under a participative arrangement. This offers extremely promising prospects and the President of Pakistan himself has desired its expansion. The local market for meat is growing by 5% annually while demand for meat and live animals both organized and illicit in the neighboring countries is drawing down on availability of live animals and resulting in explosive meat prices. Pakistan has a large buffalo population in Punjab and Sindh. Small ruminants predominate in Balochistan, NWFP and the Special Areas. Highly recognize breeds of cattle both local and crossbred are available. Livestock sector like horticulture sector offers promising prospects for agribusiness both for milk and dairy production and for meat of all types to the benefit of the local economy, consumers and millions of small livestock farmers.
Institutional capacity to back stock agribusiness and carryout promotional activities are generally limited all over the country though the Province of Punjab is somewhat batter endowed. Business entrepreneurship lacks likewise in the different areas. The two resource deficit provinces and the special areas besides lack the technical capacity and financial resources to build up their support services, capabilities and entrepreneurships. The project is based on the concept of a private sector lead project with the public sector involved in a facilitating, coordinating and supporting role. It is proposed to bolster the existing Pakistan Horticulture Export Promotion Board and to create a new Livestock and Dairy Development Board in conjunction with an Agribusiness Support Fund and Business Support Finance Program through Participatory Financial Institutions. Within these parameters the provinces would have flexibility to operate in tandem their own programmes. The project would support the provinces and special areas on both initiatives. Besides the project incorporates a lump sum provision of Rs.1 billion out of Government of Pakistan funding for financial support of provincial and special areas programmes. Rs.800 million out of this amount shall be earmarked for agribusiness finance programmes identified by the provinces (for 80% of this amount on NEC formula basis) and 20% for the programmes of the special areas. The balance Rs.200 million would support capacity building and support services for agribusiness in the special areas and provinces of Balochistan and NWFP. The fund would be used based on the project strategy and priorities and identified priorities by the provinces and special areas. The input of various research and investigative studies perceived in the project will be kept in view. The identified proposals by the provinces and special areas after endorsement by the concerned Provincial/Special Areas Coordination Committee shall be reviewed and approved by the Project Steering Committee. On this approval the concerned provinces /special areas shall process project proposals for approval under the normative process.
OBJECTIVES OF PROJECT
The objective of the Project is to support economic growth and employment generation through agribusiness development by:
-creation of an enabling environment
-provision of appropriate support services for agribusiness.
-The re-structuring and strengthening of institutions to facilitate development of agribusiness,
-capacity building and enhanced coordination,
The project purpose is to develop a competitive and sustainable agribusiness sector.
As such the project design focuses on key interventions to create an enabling policy and institutional environment, based on strong public/private sector linkages, to catalyze private sector agro-enterprise development.
The project components are directed, in particular, to provide the policy framework and enabling environment for agribusiness, capacity building for the necessary agribusiness support and the provision of business support services to agro-enterprises to enhance entrepreneurial skills throughout the value chain (from the field to the consumer) and to provide the opportunity for demand driven research and extension. The aim in this regard is to create a flexible service delivery mechanism that is responsive to private sector demand within the provinces. The components will not be directly linked to specific provincial interventions or pre-set financing limits for each province. It will be on the basis of first come first served with requests for support being bottom up and demand driven.
The primary focus will be on the horticulture and the hortibusiness, livestock and dairy development sub sectors which is in line with the countrys development strategy of diversification into intensive high value crop production that will lend itself to value addition and labor intensive cultivation for the creation of rural employment and increased rural incomes. Emphasis has been placed on germplasm and raw material supply by improving production and yields and enhancing product quality and uniformity. Without a quality raw material base the countrys produce will be at a severe disadvantage when the national market has opened up fully.
The livestock for meet production and dairy for milk collection are also included in the project.
The project will help in:
increasing the production of agriculture sector as a whole.
exploiting potentials of non-conventional sub-sectors of agriculture sector such as horticulture, hortibusiness, vegetable production and floriculture.
enhancing income of the farmers.
improving production of livestock sector.
arresting rural-urban migration by creating employment opportunities in agribusiness sector.
poverty alleviation.
skill enhancement in horticulture, hortibusiness, livestock, dairy, floriculture and in vegetable production.
Formulation and re-orientation of national policies with regards to above sub-sectors of rural economy.
Agribusiness Development and Diversification Project Brief
Agribusiness Development Project (Assisted by ADB), Agriculture & Livestock Products Marketing and Grading Department, Government of Pakistan. The project activities will be carried throughout Pakistan including special areas (FATA, FANA and AJK). All the relevant stakeholders, i.e. farmers, traders, small and medium entrepreneurs, researchers, extension workers, policy makers and experts of agriculture sectors will be involved. The administrative headquarter will be at Islamabad.
Realising the potential of agribusiness sector, the government of Pakistan with the help of Asian Development Bank has initiated Agribusiness Development and Diversification Project which will be implemented over next five years. The project aims to address constraints that impede development of the sector, and exploit domestic and export market opportunities in the agribusiness sector, thereby contributing to increased economic growth and rural employment. The Project will promote the realization of these opportunities by (i) improving the managerial; production, and processing skill levels of entrepreneurs and farmers to ensure the production of good quality raw material, and uniform and high standard products; (ii) supporting participating financial institutions (PFIs) to increase agribusiness lending to allow stakeholders to exploit market opportunities; (iii) reorienting government institutions to become facilitators of agribusiness development, using public-private partnerships; (iv) improving the policy, regulatory, and financial environment to make it more responsive to private sector needs, and encourage producers and entrepreneurs to invest in agribusiness; and (v) establishing the framework and standards to comply with increasingly stringent international standards.
Project objectives and focus
The Project objectives are to support economic growth and employment generation through agribusiness development and to develop a more competitive and sustainable agribusiness subsector. The project interventions focus on increased productivity, product quality, and value added by removing constraints facing agribusiness that occur throughout the product value chain from production and input supply to processing and exports. Constraints will be addressed using a comprehensive and systemic approach throughout the value chain to remove market and institutional failures and rigidities that impede the development of the agribusiness sector, and promote demand-driven development with maximum participation of the private sector.
Project Components:
The Project comprises following five components:
1.Agribusiness Support Service Provision
The Project will facilitate increased access to Business Development Services (BDS) through agribusiness enterprises by financing eligible services for capacity building, including technical, managerial, financial, and marketing skills. The Project will establish an agribusiness support fund (ASF) to provide funds to eligible agribusiness enterprises, farmers, research and extension service providers, and BDS providers. Eligible services for ASF finance include (i) capacity-building and related assistance to existing agribusiness enterprises and for enterprise start-ups, but excluding the financing of capital equipment; (ii) support to individual farmers and farmers' groups for the formation of legally registered agribusiness enterprises that can then obtain ASF support for other eligible services; (iii) demand-driven research by private or public sector research institutions leading to increased and better quality production and improved production processes, or to meet an identified market demand; (iv) development of private sector extension services to be provided to small-scale farmers proposing to supply raw materials to agribusiness enterprises; and (v) support for private sector BDS providers to enhance the availability and quality of services provided to agribusiness enterprises.
2.Agribusiness Finance Development
The Project will support the development of financial services, particularly credit, to agribusiness enterprises that do not have ready access to such services. The Project will support PFIs to develop their understanding of the potential agribusiness finance market, and subsequently, to enhance their capacity to undertake agribusiness lending. Cooperation with PFIs will be implemented using the services of international consultants, first through awareness building, and second, through specific in-house consulting services provided to PFIs.
3.Agribusiness Capacity Building
Capacity building for agribusiness will focus on horticulture and hortibusiness, but will also support project activities to be undertaken in the livestock and dairy subsector. The component will seek to increase the private sector participation in the provision of services currently provided by public sector institutions. To facilitate agribusiness development and international compliance, the Project will support the rationalization, restructuring, and coordination of relevant Ministry of Agriculture, Food and Livestock (MINFAL) agencies and offices concerned with alignment with WTO regulations and international product standards.
Market Information. The Project will improve the availability of market information, identified as a significant constraint to agro-enterprise expansion. The Project will promote the development of information on private sector markets through outsourcing by DALPMG. An appropriate private sector provider will be supported to develop a system that will initially focus on the 11 major wholesale markets in the county, and Pakistan's major export markets for fruits and vegetables.
Export Quality Certification. Support will be provided to strengthen the capacity of DALPMG in export quality certification by (i) providing international training for key DALPMG staff; (ii) revising and updating national quality standards consistent with international standards; (iii) upgrading DALPMG's export certification centers; and (iv) introducing operating procedures of international standard for sampling, inspection, and quality monitoring systems.
Seed and Planting Material Certification. The Project will help strengthen the Federal Seed Certification and Registration Department (FSCRD) by (i) establishing and equipping nine regional testing laboratories; (ii) developing a systematic and quality-oriented approach to the production of fruit and vegetable propagation materials; (iii) introducing internationally accepted standards; (iv) training staff in field inspection techniques; (v) improving operating systems; (vi) training nursery producer's in improved production techniques, and better plant propagation and hygiene practices; and (vii) reviewing and updating existing vegetable seed and fruit tree seedling certification standards and legislation.
Training. The PHDEB horticulture unit training coordinator, supported by provincial training coordinators, will organize training to (i) develop curriculum and course content specific to agribusiness; (ii) build the capacity of private sector trainers and the institutions or service providers that will provide training to entrepreneurs; (iii) improve technical and managerial skills in agribusiness enterprises; (iv) improve product output, quality and uniformity, and continuity of supply at the farm level; and (v) provide agribusiness training to provincial and special area staff.
Pakistan Horticulture Development and Export Board. To develop more effective linkages between the public sector and private agribusiness, the Project will establish a horticulture unit within the private-sector-led PHDEB. The PHDEB unit will help implement project activities in the horticulture subsector, and facilitate interaction with agribusiness enterprises. PHDEB will undertake a proactive promotional campaign to stimulate awareness of project activities. PHDEB will (i) contribute to and support provincial and special area horticultural policy task forces; (ii) in association with provincial and special area project implementation offices (PlOs), identify potential recipients for ASF cost-sharing grants, and forward their applications to the ASF; (iii) identify enterprises, farmer group enterprises, and processors to determine training, extension, and research needs; and organize their training; (iv) identify farmer groups, exporters, packers, and processors that wish to become internationally compliant, and help them obtain project support; and (v) work closely with the project horticulture and hortibusiness consultants to support their activities. PHDEB will integrate these functions into its regular operations, to ensure sustainability after the Project.
Livestock and Dairy Development Board. The Project will support the establishment of a livestock and dairy development board (LDDB) as a corporate body, which will play a similar role to that of PHDEB in the livestock sector. The responsibilities of LDDB will be to (ii) coordinate national and provincial activities in livestock and dairy, (ii) promote investment in the sector, and (iii) promote livestock as the primary vehicle for poverty reduction among small and landless farmers, especially women.
4.Agribusiness Policy and Enabling Environment Development
This component will assist the Government to develop an appropriate policy and enabling environment for private-sector-led agribusiness development. This includes national and provincial interventions to redefine roles and responsibilities in the sector; strengthen the regulatory framework, in particular for alignment with international standards; and create effective public-private partnerships to promote sector development.
The Project will support the development of the regulatory framework, and establish quality and certification requirements for locally produced products to align with international standards. In particular, the Project will assist the WTO cell in MINFAL to formulate amendments to the legal framework to align with commitments made in regard to sanitary and phytosanitary measures in Pakistan's agreements with WTO. The Project will also help MINFAL develop programs to collate and disseminate information relating to international standards to relevant stakeholders in both the private and public sectors.
5.Project Management Support
Ministry of Food Agriculture and Livestock (MINFAL) is the executing agency for the project, a Project Management Unit has been set up in Islamabad which is responsible for project management and implementation of various project activities, coordinating consultant inputs, reporting, and monitoring and evaluation. In order to implement project activities effectively, seven project implementation offices have also been established in four provinces and Federally Administrated Northern Areas, Federally Administrated Tribal Areas and Azad Jamu and Kashmir. Read more
- Address38-West 4th Floor Khalid Plaza , Blue Area Islamabad
- City/RegionIslamabad
- CountryPakistan
- Phonenumber+092-051-9206199
- Faxnumber+092-051-9210145
- Emailaddress
- Homepage