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12
Jul
2010

Business Development Discussion for Agriculture of Pakistan

I shall not start by talking Pakistan’s ability in agriculture neither I put industrialization second. But my concise point is simple that in given situation we can not aggressively go for industrialization (high end - capital asset productive industry). We need a lot of time to stable ourselves enough to bear the cost of industrialization. Even we can start now in term of planning activity.

What we have at the moment is our high potential agriculture sector. It is the sector that is somehow bearing the hit of our ignorance but even viable. Pakistan’s 25% of land area is under cultivation that is powered by one of the largest irrigation system of the world. Pakistan is the country that irrigates three times more acres than Russia.

Agriculture counts 24% of GDP and employs 44% of our labor force. As per the statistics of FAO of UN & FAOSTAT (2005) Pakistan ranks 2nd in Chickpea, 4th in Apricot, 4th in Cotton, 4th in Sugarcane, 5th in Milk, 5th in Onion, 6th in Date Palm, 7th in Mango, 8th in Tangerines, 8th in Mandarin Oranges, 8th in Clementine, 8th in Rice, 9th in Wheat & 10th in Oranges.

After a brief preamble that help me to define that where we stand in term of agriculture performance I want to clarify one point to start. This post of mine is not discussing technology aspect of agriculture neither how we can increase our per hector production. I just keep myself to the discussion of business development in agriculture and its marketing aspects.

Some days before I was attending a conference connected to commodity exchange, its performance in last year and its future prospects. It was clearly noticed that NCEL (National Commodity Exchange Ltd) derived second highest returns after stock market. The reasons behind this success myth are various but one of these is shinny prospects of commodities as increasing population of the world cause excessive demand of commodities.

A diversified mining company Xstrata’s CEO Mick Davis said in his recent interview that the supply side of the industry is fractured and incapable of rapidly increasing supply. Demand for commodities will rise significantly, meaning supply will not be able to match demand over the medium term, reversing a multidecade trend of falling commodity prices.

We can restrict the discussion to the extent of agricultural commodities. This consists of wheat, cotton etc and on other hand milk, live stock etc.

The biggest problem in rural areas is unequal distribution of land. The land is being possessed by big landlords and the farmer’s motivation level is pissed of due to the culture of oppression. Those who are farmers of small level face the problem of finance for their crops. This indeed is the biggest challenge whereby we see a clear demand for those commodities and even the government is purchasing commodities like wheat on handsome fixed rates.

I have seen many people in big cities like Karachi that venture for gas business like CNG pumps. They create the pool of money and one skillful partner run the business. It is really a good way to multiply their principal via hardcore business that offers them attractive returns in comparison to alternative investments. This is the same thing that can be done in order to create rural urban partnership in agriculture.

One can create a pool of money to buy a land in any rural area of Pakistan and we can find hardworking farmers that can turn the land in performance. Yes I know the risks in this. Even our rural areas are being dominated by Feudal Landlords but here government has to play a role. Even SECP has to promote companies dealing in the business of cultivation and ministry of interior has to support the cause on implementation level. These companies have to carry business of buying land and start cultivation on it. This can start a new era of corporate agriculture in Pakistan.

The role of Trading Corporation of Pakistan has to be redefined. We need to give one assurance to our farmer and cultivator that their output shall be sold anyways. Here we are talking about the product that is much demanded or even by our poor management is not enough sometimes to meet our local demands. We need to find good market for our agriculture products overseas so our government and farmers both can make money.

We also have to ensure that marketing of our agriculture has to be on top. I am sure that I can not cover a comprehensive discussion on Business Development measures of Pakistan agriculture in one post. So due to its importance and significance I shall continue it in next piece.

I anticipate your participation in this discussion with me because now it is a time to discuss that worth and work for our national prosperity.

Click for Part-2

http://www.bizomer.com/bd-in-agriculture-part-2.html


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Mr. Omer

Mr. Omer [1982 born] started  his professional career as a commercial / investment banker after achieving Gold Medal in Finance at master level from University of Karachi in 2006.

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