SECP proposes national spot market to improve farmers’ access to finance

The Securities and Exchange Commission of Pakistan (SECP) has proposed establishing a national agricultural spot market to connect farmers with warehouses, banks and buyers through a digital trading platform, aiming to improve farm-gate prices, reduce post-harvest losses and expand access to financing.

SECP Chairman Dr Kabir Ahmed Sidhu outlined the proposal while addressing the Pakistan Institute of Development Economics’ international conference, “Mission 100 Billion Dollars”.

He said the proposed market would integrate standardised grading, transparent bidding and electronic warehouse receipts to modernise agricultural trade.

Provincial authorities would retain regulatory oversight of agricultural markets, while the SECP would facilitate the technological framework, Sidhu said.

Agriculture contributes 23.44% to Pakistan’s gross domestic product (GDP), while the estimated value of the country’s crops stands at around Rs8.8 trillion, highlighting the economic significance of improving storage, handling and marketing infrastructure.

Citing estimates that post-harvest losses range between 20% and 40%, Sidhu said every percentage point of crop losses represented approximately Rs88 billion. Better storage, handling and distribution could therefore help preserve substantial economic value while improving farmers’ earnings.

He highlighted the disparity between existing approved storage capacity and agricultural production. Approved warehouses have a combined capacity of approximately 326,000 metric tonnes, compared with annual production of around 55.7 million metric tonnes of dry agricultural commodities suitable for conventional storage.

Sidhu said investment in modern warehouses, cold storage facilities and efficient supply chains could reduce wastage, improve market access and help connect farmers with export buyers.

Under the proposed framework, electronic warehouse receipts would enable farmers to obtain bank financing against produce stored in approved warehouses. This could reduce pressure on growers to sell immediately after harvest and give them greater flexibility in choosing when to market their crops.

The spot market would initially seek the phased inclusion of wheat, rice, maize, cotton and sugar, supported by standardised quality grades. Uniform requirements for weight, quality assessment and grading, alongside transparent bidding, could improve price discovery and enable farmers to secure more competitive prices.

The SECP chairman also stressed the need to register traders and commission agents and maintain digital records of transactions and stocks. A reliable mechanism for timely payments, he said, would further strengthen accountability and protect farmers and buyers.

He called for modernising agricultural market regulations, licensing arrangements, fees and procedures governing commodity movement to make agricultural trade more efficient.

Separately, Sidhu outlined the SECP’s broader capital market reform agenda, including a target of increasing the number of stock market investors to 2.5 million.

He said the commission planned an ambitious financial awareness campaign to encourage young people to participate in capital markets. Improving financial literacy would help prospective investors understand financial products and make informed investment decisions, while reforms to simplify stock market account opening would make participation more accessible.

Sidhu said the Pakistan Stock Exchange continued to offer investment opportunities despite regional uncertainty, emphasising that stronger financial markets depended on consumer protection and investor confidence.

He also called for improvements in audit oversight, noting that reliable financial reporting was essential for credible securities valuations and informed investment decisions.

Advocating a separate, independent legal framework for overseeing audit firms, Sidhu said the supervisory system needed to keep pace with the requirements of modern financial markets. Stronger oversight, he added, would improve confidence in corporate disclosures and reinforce investor protection.