The Asian Development Bank (ADB) on Tuesday signed a $31 million loan agreement with Pakistan for "agribusiness development project" to help develop a competitive and sustainable agribusiness sector in the country. Ministry of Food, Agriculture and Livestock (Minfal) secretary Ismail Qureshi and ADB's country director for Pakistan Marshuk Ali Shah signed the loan agreement on behalf of their respective sides.
According to the bank, the project is aimed at establishing market-based approaches to agribusiness development and enhanced technical and managerial capacity in the sub-sector. It will also dismantle barriers to entry for new enterprises and promote expansion of existing ones into new markets.
However, main interventions were focused on removing constraints the agribusiness is facing: from production by small-growers to marketing and finally export of the product. Besides, the project aims at increasing productivity and quality of agribusiness sector.
The project will focus on horticulture and horti-business. It will also take actions to improve the livestock and dairy institutional framework. Support for selected enterprises will also be provided.
The bank declared that commercial agriculture and agribusiness development was constrained by poor infrastructure, policies and governance practices. Limited access to modern technology, financial and business development services further hampers development.
The main objective of the project was to support economic growth and employment generation. Besides, it will also focus on the development of competitive and sustainable agribusiness sector, improving agribusiness enterprise access to business development services (BDS), strengthening BDS providers to enhance skills throughout the agribusiness sector, expanding access to agribusiness finance and developing institutional capacity.
Marshuk Ali Shah, on the occasion, said: "Constraints the agribusiness sector is facing are present throughout the production chain: from input supply to processing and exports, leading to low productivity and value-addition. During designing of the project, five major components were included to tackle constraints facing the sector.
Firstly, through the project, an agribusiness support fund would be established to provide farmers, farmer groups, and entrepreneurs with demand-driven technical and managerial services on a matching grant basis to improve their productivity and competitiveness.
Secondly, it will increase access to agribusiness finance available from financial institutions to agro-enterprises.Thirdly, it will ensure provision of capacity building for horticulture and horti-business agribusiness; streamlining collection and dissemination of market information; strengthening agribusiness technical training capacity; upgrading testing and certification facilities for seeds, nurseries, and crops; and building awareness of the need to comply with international agricultural product standards and practices.
Fourth, the project would help in revising and updating agribusiness regulatory framework and formulate a national agribusiness policy and provincial horticulture policies, and lastly, it would provide project management support. According to the bank, about 2,000 agro-enterprises were expected to benefit from the agribusiness support fund operations spanning over five years.
Further, a handful of institutions were 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 $49 million, to which the government will contribute $6.9 million, agribusiness enterprises, $10.4 million, private sector institutions, $600,000, and beneficiaries, $100,000.
However, the ADB would provide the amount from the Asian development Fund (ADF), as being a concessional head of the bank financing, it would directly contribute to the poverty alleviation.
The loan has a term of 32 years maturity, including a grace period of eight years with an interest rate of one percent per annum during the grace period and 1.5 percent per year, thereafter. The estimated project completion date is September 30, 2010, they added. Minfal is the executing agency for the project.
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