Pakistan’s agricultural marketing system is a complex but functional ecosystem that supports both rural livelihoods and national food supply. At its core are traditional wholesale markets (mandis), intermediaries such as commission agents (aarhtis) and aggregators, and a nascent layer of formal market institutions including warehouse receipt systems and exchange-based trading. While this system is resilient and solves critical problems such as liquidity access, market linkage, and informal enforcement, it also generates inefficiencies, including weak price transparency, inconsistent quality valuation, and limited risk management options for farmers.

Most farmers operate under constraints such as small volumes, lack of storage, and immediate cash needs, often tied to informal credit arrangements with intermediaries. As a result, their bargaining power is limited, and sales decisions are driven more by urgency than price optimization. In mandis, price discovery occurs through rapid, opaque bargaining rather than transparent mechanisms, leading to discrepancies between reported wholesale prices and actual farmer earnings. Intermediaries persist because they bundle essential services—credit, aggregation, logistics, and settlement—which are not yet adequately provided by formal systems.

Market dynamics vary significantly by crop type. Perishables, due to their time sensitivity and lack of cold storage, expose farmers to sharp price volatility and distress selling. In contrast, storable crops such as wheat and rice offer greater potential for improved outcomes through storage and delayed sales, especially when supported by financing mechanisms. Government policy plays a particularly strong role in staple markets like wheat, where procurement and stock management influence price expectations. However, recent shifts toward reduced public procurement and greater private sector participation require credible and stable policy frameworks to succeed.

Efforts to modernize the system have introduced tools such as Electronic Warehouse Receipts (EWRs), enabling farmers to store produce in accredited facilities and access bank financing using stored commodities as collateral. While promising, this formal layer remains limited in scale due to gaps in infrastructure, grading standardization, and financial inclusion.

Key structural challenges include weak price discovery, lack of standardized quality grading, widespread distress selling, reliance on intermediaries, and limited access to formal storage finance. Addressing these requires a phased and integrated reform approach. Priorities include improving transparency and infrastructure in mandis, establishing reliable grading and testing systems, scaling accredited warehousing, expanding EWR-based financing, and reducing policy uncertainty to encourage private investment.

Ultimately, modernization should focus on integrating, rather than replacing, existing systems by unbundling and upgrading the core functions currently performed by intermediaries. A gradual, commodity-specific approach—anchored in better storage, finance, and transparent price signals – can enhance farmer incomes, reduce volatility, and create a more efficient and resilient agricultural market system.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 100) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. 

Cold chain infrastructure is a critical missing link in Pakistan’s agricultural transformation. Agriculture contributes around 24% to GDP and employs 37% of the labour force, while livestock alone accounts for nearly 60% of agricultural GDP. Within this system, horticulture (fruits and vegetables) represents a strategically important but underdeveloped segment, with a market size of approximately USD 15 billion and strong export potential. Despite this scale, Pakistan continues to export low-value, raw commodities due to severe post-harvest inefficiencies and the absence of an integrated cold chain system.

Post-harvest losses (PHL) are the most significant constraint in the horticulture value chain. Estimates suggest that 30–40% of fruits and vegetables are lost annually, equivalent to $700 million to over $1 billion in economic value. Losses are especially severe for mangoes, kinnow, tomatoes, and potatoes, while dairy losses reach 15–20% of total production, amounting to 10–12 billion litres of milk wasted annually. These losses directly reduce farmer incomes, who typically capture only 15–20% of final retail value, and contribute to recurrent market gluts and distress sales. The absence of cold storage is therefore both a food security challenge and a structural driver of rural poverty.

Pakistan’s cold chain infrastructure remains highly underdeveloped. Total cold storage capacity is below 1 million tons against annual fruit and vegetable production of 13–14 million tons, resulting in coverage of less than 8%. Existing infrastructure is uneven and largely commodity-specific: potato-optimized cold rooms dominate, controlled atmosphere (CA) facilities are extremely limited, and farm-gate cold storage is virtually absent. Transport infrastructure is similarly weak, with minimal penetration of refrigerated trucks and heavy reliance on open transport systems that compromise product quality. Dairy cold chain coverage is also fragmented, with only around 5% of milk entering formal, temperature-controlled supply chains.

Three structural constraints explain persistent underinvestment. First, fragmented value chains prevent any single actor from capturing sufficient returns to justify cold chain investment. Second, cyclical price volatility discourages storage investment, as actors sell during high-price periods and avoid storage despite its long-term benefits. Third, investment patterns are geographically concentrated and imitation-driven, leading to clustering in a few commodities (notably potatoes) while high-value crops remain underserved. Policy failures, including ad hoc import responses and weak market coordination, further exacerbate volatility.

International evidence, particularly Morocco’s Plan Maroc Vert, demonstrates that coordinated public investment, aggregation mechanisms, and anchor buyers can successfully trigger private cold chain expansion. Pakistan’s own potato and dairy sectors confirm this dynamic, where integrated processors have enabled the development of functioning storage networks.

The brief proposes a National Cold Chain Development Program anchored by a dedicated financing facility, fiscal incentives, and geographically targeted agri-clusters. Priority interventions include farm-gate solar cold rooms, controlled atmosphere storage expansion, milk chilling coverage targets, and a demonstration CA facility for horticulture. Critically, the strategy emphasizes attracting anchor investors and enabling first-mover projects that can trigger wider private sector participation.

Cold chain investment is among the highest-return opportunities for Pakistan’s agricultural economy, with the potential to significantly reduce losses, stabilize prices, improve farmer incomes, and unlock export diversification.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 100) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. 

Pakistan’s agricultural sector, contributing 24% to GDP and employing 37% of the labour force, produces adequate quantities of major crops such as wheat, rice, and maize. However, recurring grain shortages, price volatility, and import dependence stem not from production shortfalls but from systemic inefficiencies in storage and distribution. Post-harvest losses exceed $1.3 billion annually, highlighting structural weaknesses that undermine food security, fiscal stability, and farmer incomes.

The storage ecosystem is fragmented and outdated. Around 60% of wheat is stored at the farm level using traditional methods such as jute bags, mud bins, and open-air ganjis, exposing grain to pests, moisture, and contamination. Public-sector storage, managed by PASSCO and provincial food departments, is both insufficient and deteriorating, with limited capacity for modern practices like temperature control and effective fumigation. While modern silo storage exists, it is largely confined to private processors and remains inaccessible to farmers and small traders.

A key structural inefficiency lies in the bag-based supply chain, where grain is repeatedly packed, unpacked, and transported. This leads to high handling costs and losses, estimated at $1.5 billion annually in Punjab alone. Transitioning to bulk handling and modern warehousing could reduce these costs by up to 65%, offering significant efficiency gains.

Smallholder farmers, who dominate the sector, bear the greatest burden. Lacking storage and access to finance, they are forced into distress sales immediately after harvest when prices are lowest. This dynamic shifts value to intermediaries, particularly aarhtis, who provide credit and storage at high implicit costs. The absence of formal storage and financing mechanisms limits farmers’ ability to benefit from price fluctuations.

Efforts to modernize the system through Electronic Warehouse Receipts (EWRs) present a viable solution. EWRs allow farmers to store produce in accredited facilities and access bank financing, reducing distress sales. Institutional progress, including PMEX’s acquisition of Naymat Collateral, has strengthened the link between commodity markets and storage. However, expansion remains constrained by regulatory risks, especially anti-hoarding laws, and the limited inclusion of wheat in the EWR system.

The shift from a government-led storage model to a market-based system has been uneven. Historically, public procurement under the minimum support price regime dominated but proved fiscally unsustainable. Its withdrawal, without a developed private storage market, has increased price instability. Proposed hybrid models involving private participation in strategic reserves have yet to materialize due to policy uncertainty.

Addressing the storage gap requires an estimated 7.9 million tons of commercial warehousing capacity. Reform priorities include expanding EWRs to wheat, leasing public storage to private operators, and integrating aarhtis into formal systems. Medium-term measures should focus on developing aggregation hubs with drying facilities, improving grading systems, and attracting large-scale private investment.

International experience, particularly India’s NBHC model, demonstrates that aligning commodity exchanges with warehouse receipt systems can drive rapid transformation. Pakistan has established foundational elements but requires stronger policy support, legal protections, and investment.

Ultimately, Pakistan’s storage challenge is institutional rather than technological. With the right policy framework and sustained commitment, a modern, efficient storage system can reduce losses, stabilize markets, and improve farmer welfare.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 100) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. 

Agricultural mechanization in Pakistan has grown over time but remains uneven, fragmented, and well below global benchmarks, limiting its contribution to productivity and farm incomes. With farm power at just 0.09 horsepower per acre – far below the recommended 1.4–1.8 hp – there is a clear structural deficit in mechanical capacity. While tractors are widely used and operations like land preparation and threshing are largely mechanized, key stages such as sowing, transplanting, and harvesting remain inefficient or manual in many areas. This partial mechanization constrains yields and contributes to significant post-harvest losses.

A major issue is the widespread use of outdated and poorly maintained machinery. Combine harvesters, often averaging around 40 years old, are typically imported near the end of their lifecycle and kept running through temporary fixes. Although this reduces upfront costs, it leads to inefficiencies, including grain losses of 10–15% in major crops like wheat and rice—equivalent to about USD 1.5 billion annually. The use of mismatched machinery, such as wheat combines for rice harvesting, further reduces quality and increases losses. Regional disparities also exist, with Punjab relatively more mechanized, while Sindh relies heavily on manual harvesting due to unsuitable soil conditions for heavy machinery.

Pakistan’s smallholder-dominated farm structure means most farmers cannot afford to own machinery and instead depend on rental services. These service providers are central to mechanization access but face challenges such as inconsistent demand, limited scale, and peak-season shortages. As a result, timely availability of machinery remains a persistent issue.

The mechanization ecosystem involves government programs, private suppliers, and development partners. Public initiatives, such as the successful promotion of laser land levelling in Punjab, show that targeted support and private sector engagement can drive adoption. However, weak standards, limited testing, and poor after-sales services continue to undermine equipment quality and reliability.

Several interconnected constraints hinder progress. High machinery costs, exchange rate volatility, and limited access to credit push farmers toward cheaper but inefficient equipment. Tax and duty structures further raise costs and discourage formalization. Additionally, shortages of skilled operators and mechanics, weak repair systems, and poor suitability of machines to local conditions reduce efficiency.

Going forward, the focus should shift from simply increasing machine numbers to building a reliable mechanization services ecosystem. Strengthening rental markets, promoting service hubs, improving standards, and enabling better access to finance are critical. Integrating mechanization with sustainability, particularly through better residue management, can also create economic value. Overall, a coordinated, system-wide approach is essential to unlock productivity gains and improve farmer incomes.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 100) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. 

Pakistan’s agriculture sector—home to over 8 million farm holdings—faces persistent challenges: low productivity, fragmented markets, limited access to finance, and growing climate stress. Agri-tech holds real promise in addressing these issues. Startups and larger agribusinesses are now experimenting with tools that range from satellite-based crop intelligence and remote irrigation control to digital payments, input marketplaces, and smart warehousing.

This policy brief maps the current agri-tech landscape in Pakistan, highlighting the areas where innovation is gaining ground: digital platforms for market access, smart irrigation and water management, precision agriculture, financial inclusion, and real-time advisory services. Drawing from in-depth case studies—including Farmdar, RemoteWell, Godaam Tech, and Engro’s UgAi platform—the brief examines what’s working, what’s scalable, and where bottlenecks remain.

The findings are clear: while innovation is alive and growing, scaling remains difficult. Most adoption is still concentrated among large, progressive farmers. Hardware-based models face high transaction costs. Farmer trust is built slowly, often through repeated exposure and word-of-mouth. And without foundational infrastructure—like rural connectivity, digital land records, and interoperable data systems—most solutions remain local and fragile.

The brief offers targeted recommendations including strengthening digital payments and warehouse receipt financing, investing in shared infrastructure, co-funding demonstration plots, clarifying regulatory roadmaps, and supporting ecosystem builders with long-term capital. A standout insight is that agri-tech adoption in Pakistan is often driven not by information, but by finance—and not by promotion, but by proof.

Agri-tech is not a silver bullet, but it can be a catalyst. With the right enabling environment, it has the potential to improve yields, reduce losses, expand financial access, and strengthen supply chains. The opportunity now is to move from pilots to platforms—and to ensure that digital agriculture works not just for the few, but for the millions who need it most.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 100) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. 

Pakistan’s edible oil sector presents both a long-standing vulnerability and a major untapped opportunity. The country remains heavily dependent on imports, with edible oil imports regularly crossing USD 3 to 4 billion annually and meeting over 85% of domestic consumption. This import dependence exposes Pakistan to global price shocks, foreign exchange pressures, and supply risks.

Historically, oilseed development in Pakistan has faced multiple challenges: limited institutional capacity, lack of policy continuity, poor seed quality, weak farmer-market linkages, and an underdeveloped value chain. Oilseed crops such as rapeseed-mustard, sunflower, soybean, and cottonseed have been cultivated in varying degrees, but their productivity remains below potential. Farmers have often favored wheat and other Rabi crops due to government price support and greater income certainty.

Despite these challenges, Pakistan holds significant opportunities to scale domestic oilseed production. With improved seed systems, better agronomy, and market linkages, yields for rapeseed-mustard and sunflower can be significantly improved. Soybean, while still at a small scale, holds strong potential to serve Pakistan’s expanding poultry, livestock, and feed sectors. One of the most promising frontiers is oil palm cultivation in Pakistan’s coastal belt, particularly in Balochistan. Favorable climatic conditions, alluvial soils, and controlled irrigation provide a rare opportunity to develop a high-yield, year-round oil palm industry near Karachi’s processing and export hubs. Intercropping options, such as ginger, can further enhance returns.

Pakistan’s growing olive oil sector is also gaining traction, with over 5 million olive trees planted across multiple provinces. Supported by international partnerships, modern processing mills, and growing export activity, olive oil offers an emerging complementary pillar to Pakistan’s broader edible oil strategy.

To fully realize this potential, the brief recommends a set of targeted actions:

• Strengthen institutional capacity and coordination across federal and provincial levels.
• Improve seed development for improved access to good quality seeds.
• Deliver oilseed-specific farmer extension and agronomic advisory services.
• Invest in post-harvest infrastructure and modern oilseed-specific machinery.
• Develop oil palm clusters in Balochistan’s coastal belt.
• Scale up direct procurement models to improve farm-level prices.

With sustained commitment, oilseeds can become a national success story — reducing Pakistan’s import dependence, improving rural livelihoods, expanding exports, and building a more resilient agri-food system.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 100) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. 

Pakistan’s poultry sector is one of the fastest-growing segments of the country’s agricultural economy, contributing significantly to food security, rural livelihoods, and economic resilience. With an annual output of 1.8 billion broilers and growing at an average rate of 8–10% per year, the sector has undergone notable modernization in breeding, feed milling, and farm management. It supports over 1.5 million jobs, absorbs more than 11 million metric tons of agri-residues annually, and provides the most affordable source of animal protein for consumers across all income groups.

Despite these gains, the sector faces a range of challenges that threaten its long-term sustainability and competitiveness. Price volatility, driven by fluctuating demand and frequent supply shocks, is exacerbated by the dominance of the informal market, which accounts for the majority of poultry sales but operates outside the tax net and regulatory framework. Meanwhile, formal processors bear a disproportionate tax burden, discouraging investment in value addition. Experiences from the milk sector illustrate how excessive taxation on the formal market can lead to decreased sales and a consumer shift to unregulated alternatives.

At the same time, high energy costs, unstable input prices—especially for feed—and heavy import dependency on soybean further erode profitability. Additionally, Pakistan’s lack of a comprehensive disease control program and outdated regulations block access to high-value export markets such as the EU and GCC. Although efforts have been initiated to harmonize food safety standards through the Pakistan Standards and Quality Control Authority (PSQCA), implementation has been delayed due to turf issues between the concerned federal and provincial regulators and the absence of a digital, integrated regulatory platform.

This policy brief recommends a multi-pronged reform agenda:

• Streamline food regulation – digital integration between federal and provincial authorities
• Reduce taxes on essential feed and processing inputs and restore zero-rating to support formalization
• Promote poultry processing and cold chain development to absorb market shocks and create an exportable surplus
• Expand domestic soybean production to reduce foreign exchange pressure and ensure feed supply security
• Develop a robust disease eradication strategy to lower mortality rates and open up new export markets

With targeted interventions, Pakistan can unlock the full potential of its poultry sector, enabling it to become a more resilient, competitive, and export-oriented industry that supports both economic growth and nutritional security.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 100) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. 

Pakistan’s seafood sector stands at a critical crossroads. Despite having a 1,050-kilometer coastline along the Arabian Sea, extensive inland water bodies, and favorable conditions for aquaculture, the industry remains underperforming and contributes less than 0.4% to national GDP. With global seafood demand rising — particularly for shrimp, tuna, and value-added products — Pakistan has an opportunity to transform its seafood industry into a high-growth, export-oriented sector.

However, decades of unregulated marine fishing, overexploitation of fish stocks, weak governance, and underinvestment in infrastructure have severely depleted marine resources and limited export competitiveness. According to recent stock assessments, 60% to 90% of Pakistan’s marine fish stocks are already overfished. Widespread use of illegal fine-mesh nets results in large-scale juvenile fish catch, further threatening future stocks. Poor enforcement and an informal trade structure dominated by middlemen have reinforced systemic inefficiencies.

Inland aquaculture offers Pakistan its most viable path for sustainable growth. Successful examples from pilot shrimp clusters show how saline or unproductive lands can be converted into productive shrimp farms using a cluster-based approach. Similar models have transformed aquaculture industries in countries like Ecuador, Saudi Arabia, and Iran. Under this approach, creek-by-creek inland aquaculture clusters can be developed in Sindh and Balochistan, with government investing in land preparation, canals, and shared services while private partners handle operations, logistics, feed supply, and market access. Such models not only reduce pressure on marine fishing but also create stable, high-income livelihoods for smallholders.

Despite moderate growth in seafood exports — which reached $496 million in FY2022–23 — Pakistan remains highly dependent on limited markets like China. Export volumes have hovered around 200,000 metric tons in recent years but remain far behind competitors like India and Vietnam, whose seafood exports exceed $7 billion and $9 billion, respectively. Pakistan’s inability to meet international quality, certification, and traceability standards has blocked access to premium markets such as the European Union.

Pakistan can reposition its seafood sector by pursuing a dual-track strategy: (i) developing a long-term, science-based roadmap for sustainable marine resource management, and (ii) aggressively expanding inland aquaculture using a cluster-based public-private partnership model. With coordinated policy reform, public-private investment, and strong governance, Pakistan’s seafood sector has the potential to not only expand exports and earn foreign exchange, but also create inclusive rural employment, reduce pressure on marine resources, and build long-term sustainability.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 100) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. 

The case studies showcase plays across the agricultural landscape by players from across the corporate and financial sector:

• field crops (wheat, cotton),
• horticulture (tomato, potato),
• condiments (sesame),
• dairy,
• poultry,
• fisheries (fish, shrimp),
• insurance,
• services to farmers,
• and regenerative agriculture.

• They cover Pakistan’s largest food converter National Foods opting for import substitution of tomato paste through tomato cultivation;
• Fatima Group’s work on seed development for Pakistan’s leading field crops (wheat and cotton); PepsiCo’s leadership in maintaining potato farmers’ loyalty for its production of Lays crisps;
• K&N’s long history of spearheading the development of Pakistan’s poultry industry from breeding of chickens all the way to retail of poultry-based consumer products;
• HBL Zarai’s end-to-end service provision model to benefit farmers;
• rice export leader Garibsons and agro-chemicals/high-efficiency irrigation services giant Jaffer Brothers teaming up to invest in fish and shrimp seed;
• textile conglomerate AlKaram investing in a huge shrimp farming and processing facility for exports;
• Chinese conglomerate CMEC’s successful development of sesame exports to China using CPEC,
• dairy giant FrieslandCampina Engro’s empowerment of women dairy farmers;
• the development of robust and reliable crop insurance by TPL Insurance;
• and the shining example of regenerative farming by agri-processor Thal Industries

Advantages and Challenges of Vertical Farming

Vertical farming optimizes land use, conserves water, reduces reliance on pesticides, and allows for year-round crop production. This method can significantly mitigate the impacts of climate change and resource scarcity on agriculture. However, high initial capital costs, significant energy consumption, technical complexity, and the need for specialized knowledge are major barriers. Additionally, the current market infrastructure, high costs of imported materials, and consumer awareness in Pakistan are not fully supportive of this agricultural model.

Countries like the Netherlands and regions such as the Gulf have successfully implemented vertical farming, driven by advanced technology, favorable policies, and a focus on sustainability. These examples highlight the potential for similar success in Pakistan with the right strategies. Despite the current challenges, vertical farming can help Pakistan reduce its dependency on imports and enhance its agricultural exports by producing high-quality, high-value crops.

Conclusions and Recommendations

Vertical farming in Pakistan shows promise, particularly for the high-end market, but faces significant challenges. Many initiatives have struggled to establish themselves locally due to competition with traditional farming prices, high capital requirements, and major financing challenges. Additionally, a lack of research and knowledge on system adaptability to Pakistan’s climate has led to numerous failures. It is essential for the government or a neutral body to collect and share information on the successes and failures of these ventures to support future efforts. Subsidized financing and the elimination of customs duty on imported greenhouse equipment are critical to making vertical farming commercially viable.

A ready market for high-quality produce is also crucial for the success of vertical farming. There is a growing domestic market willing to pay a premium for consistent supply, which some hydroponic farms have failed to deliver due to improper location and equipment. Integration with processors in horticulture value chains can ensure a stable supply and price, aiding business planning and reducing susceptibility to supply shocks. Vertical farming offers an alternative pathway to sustainable agriculture in Pakistan, providing economic opportunities and a means to secure supply and stabilize prices for various industries. Lowering the barriers to entry through targeted government interventions and facilitating the setup of vertical farm facilities is essential for realizing its potential.

Vertical farming presents a promising solution to Pakistan’s agricultural challenges, with the potential to enhance food security, reduce environmental impact, and boost economic growth.

Pakistan is currently a small exporter of pulped products like orange juice and mango derived products, and an importer of pulps for industrial use, primarily tomato pulp for making ketchup. To boost exports and reduce dependency on imported pulps, Pakistan needs to enhance product quality and utilize spare capacity for pulp production which complies with international standards and fulfills local demand. Only three percent of Pakistan’s fruits and vegetable produce is processed into value-added products. Furthermore, industry experts estimate that of Pakistan’s total pulping capacity of around 100,000 tons per annum, only 30 percent is currently being utilized.

Pulping presents an opportunity to increase farmer income by utilizing low-grade fruits, reducing wastage, and promoting fruit and vegetable cultivation. It is also worth noting that horticulture is relatively more water-efficient and offers higher productivity per unit of water.

The industry relies mainly on imported machinery, as locally fabricated equipment fails to meet international standards. Import duties on pulping machinery hinder technological advancement, calling for reforms to reduce costs and promote local manufacturing. Rationalizing the duty structure can help promote the use of advanced and internationally accepted technologies. For example, the availability of advanced technologies such as aseptic packaging and freezing can enhance product quality and global competitiveness of pulped and packaged products made by Pakistan.

The decline of investment in the pulping sector due to waning demand highlights the importance of maintaining policy stability and favorable business conditions for industrial growth. The imposition of additional taxes has created uncertainty and deterred investment, hampering the sector’s potential for expansion and innovation. Addressing policy issues such as high tax rates and regulatory hurdles is crucial for fostering a conducive environment for the sector’s growth. Policy recommendations include rationalizing local taxes and import duties, providing financial incentives, promoting local demand, strengthening quality regulations, and enhancing border controls.

Artificial Insemination: An Overview

Artificial insemination (AI) involves the introduction of semen from selected male animals into the reproductive tract of a female to achieve fertilization. AI offers numerous advantages over natural breeding, including enhanced genetic diversity, better control over breeding outcomes, increased productivity, disease control, and genetic preservation. Despite these benefits, AI requires specialized knowledge, infrastructure, and technical expertise for successful implementation.

Benefits of AI for Dairy and Meat Production

AI can significantly enhance livestock productivity by improving genetic traits such as milk yield, weight, meat quality, and disease resistance. It allows for precise timing and control of breeding outcomes, leading to higher conception rates and reduced reproductive diseases. Economically, AI offers substantial returns on investment by increasing farmer incomes through higher productivity and better-quality livestock.

Challenges and strategies

The adoption of AI faces several challenges, including inadequate infrastructure, lack of trained personnel, and limited awareness among farmers. To address these issues, the following strategies are recommended:

• Strengthening AI Infrastructure: Invest in semen production and service delivery units, expand AI services, and upgrade existing equipment.
• Incentivize private sector to play a leading role in the delivery and spread of AI services and knowledge to farmers
• Import bulls and establish local semen production units to promote cross-breeds that enhance milk and meat productivity with a focus on increasing milk and meat production for local consumption and exports
• Capacity Building and Training: Implement comprehensive training programs for inseminators, veterinarians, and farmers, in conjunction with private sector players.
• Awareness Campaigns: Launch nationwide campaigns to educate farmers about AI benefits and proper breeding practices, and develop targeted extension materials in local languages.

Conclusion

Artificial insemination holds immense promise for transforming Pakistan’s dairy and meat production sectors. By addressing infrastructural gaps, enhancing capacity building, raising awareness, and implementing supportive policies, Pakistan can fully leverage AI to improve livestock productivity, meet local demand, and expand its export potential. The strategic adoption of AI will enhance food security, increase farmer incomes, and drive economic growth, ensuring a sustainable and resilient agricultural sector for Pakistan

Policy interventions should prioritize formalizing milk collection systems, promoting dairy cooperatives, enforcing safety regulations, and educating consumers about milk quality. Investing in milk collection centers holds promise but faces obstacles such as high operational costs and limited financing. Addressing these challenges requires improving access to financing and tackling operational hurdles.

Encouraging the formation of dairy cooperatives, inspired by successful models like Amul in India, can empower farmers and reduce milk wastages. Regulatory reforms, including enforcing pasteurization laws and deregulating milk prices, can streamline the dairy industry, ensuring fair returns for farmers and safe dairy products for consumers.

A collaborative approach involving all stakeholders is crucial to formulate and implement a comprehensive dairy strategy in Pakistan. Prioritizing initiatives such as implementing pasteurization laws, improving milk quality, and supporting the establishment of collection centers and cooperatives can drive sustainable growth in the dairy sector and contribute to overall economic development. Leveraging export opportunities and strategic partnerships can further enhance Pakistan’s position as a competitive player in the global dairy market

1. Shift from being a victim of high global agri-commodity prices to a beneficiary. For Pakistan to achieve 4 percent real GDP growth in agriculture, it needs to improve crop yields to transition from being a food importer to a food exporter.
2. Amend Seed Act to encourage private sector investment. Better seed is at the core of the long-term growth prospects in Pakistan’s agriculture. The main hurdles to seed development is the legal and regulatory regime that discourages the private sector to invest. Therefore, the Seed Act must be amended to encourage reputable private seed companies to invest and the approach to seed regulation must shift from controlling the seed sector to maximizing benefit to the farmer. Furthermore, local production of hybrid seed must be encouraged to achieve scale.
3. Expand cultivated land of fruits and vegetables from 5 percent to 15 percent to save water and to achieve more growth in agriculture. If global players in this trade can be attracted to Pakistan for off-take of fruits and vegetables for export, serious investment into cold chain infrastructure can be justified. Farmers are ready to respond to an assurance that their fruit and vegetable will be guaranteed off-take and the certainty that this produce will not die on the way to end-consumers. This shift is only possible with an increase in yield.
4. Build stronger linkages between processors and growers to meet the global buyers’ demand for traceability and sustainability. Pakistan’s own examples of excellence in agriculture are found where processors have done backward integration with farmers. Processing of agri-commodities into higher value products is what drives agriculture to the next level. Investment in agro-processing in the production areas is a priority for Pakistan to multiply its agriculture GDP.
5. Invest equity capital in modern agri-technology to achieve growth in agriculture. Upgrade in agri-technology like, modern farm machinery, silo storages, cool chains for fruits and vegetables, controlled sheds for poultry, high efficiency irrigation systems, etc, is difficult to achieve through debt alone, therefore, equity needs to be invested at scale through corporate farming.
6. Upgrade Pakistan’s irrigation system to increase agricultural exports. Precision agriculture is not possible without precision water delivery. Furthermore, the unpredictability of water from Pakistan’s irrigation system harms not only the transition to mechanization, it encourages flood irrigation causing enormous on-farm wastage of water.
7. Pakistan’s irrigation system needs to be fixed to reduce massive loss of water in the irrigation system and the uncertainty associated with water delivery. The Indus Aquifer has a slower source of re-charge and it now constitutes half of the water available to Pakistan’s farmers. Therefore, it must be preserved. This requires Pakistan’s irrigation system to be fixed by adopting better water accounting and better water governance—both are politically charged activities but also essential for building trust. Additionally, the quality of water is also essential for growth in agricultural exports.
8. Use the available risk transfer mechanisms to protect farmers from the impacts of climate change and biological perils. The devastating heatwave and biblical floods of 2022 have highlighted the need for strong, globally accepted institutional mechanisms to address these risks. There is a critical need to use the risk transfer mechanisms available at a predictable cost to shift this burden to the insurers.
9. Livestock has driven growth in Pakistan’s agriculture sector but it has plenty of further potential for growth. As the growth trajectory of the poultry sector has shown, modern feed is necessary for animals with modern genetics. Better surveillance and management of disease outbreaks can protect animals’ health and economic value. Disease-free zones with a complementing vaccination regime can be pillars of livestock-based exports.
10. As crop yields and animal yields rise, the price at which each grower breaks even falls. This bears the great promise of agricultural growth regarding lower inflation, higher profitability for growers, and better competitiveness for exporters. Coordinated action by the business community, the financial sector, governments, donors, and growers is required to achieve this.
11. Wealth generation from growth in agriculture is the main route to prosperity in rural Pakistan where most of Pakistan’s poverty resides. The introduction of technology can create better-paying jobs in the rural landscape. But those whose jobs get displaced will also need to be accommodated into the industry.

In addition to this report, as part of the “Grow More/ Grow Better” theme of its Make-in-Pakistan thrust, the Pakistan Business Council has previously published a number of studies on the agriculture sector of Pakistan to highlight significant opportunities to increase value addition, exports and employment in the sector. The studies on horticulture, bovine meat, dairy, olives, honey and potato examine the value chain and highlights factors impeding productivity and quality, and identify potential global markets for export. These reports propose a set of recommendations to enable agricultural growth.

During the FY 2023, The Pakistan Business Council plans to publish four policy briefs on the selected thematic areas in the agriculture and livestock sector that are critical for sectoral improvement and growth. These are:

1. Fruit pulping,
2. Green house/ vertical farming,
3. Artificial insemination for dairy and meat, and
4. Milk collection networks/co-operatives based around large farms.

The policy briefs will highlight the existing gaps/constraints and recommend measures for improving efficiency and sustainability to promote agricultural growth. The briefs will enable PBC to advocacy policy actions with the relevant federal and provincial departments for improving the sector performance.

Video: Reforming Agriculture in Pakistan | Why is there food inflation?

Pakistan’s surplus potato crop and its globally competitive price makes it an ideal destination for processing potato-based products. The country has the potential to convert potato into value-added products, increase exports, and create manufacturing jobs. Pakistan primarily produces potato crisps and french fries on a large scale, while manufacturing of potato starch and other value-added potato products is limited. The entry of PepsiCo with Lay’s crisps has boosted cultivation and distribution channels for industrial-grade potatoes. French fries present an opportunity for Pakistan to increase exports; as its domestic demand is growing, there is potential to build scale locally, and to cater to the available global demand.  The international market for crisps is smaller as compared to french fries, making crisps a less attractive product for export. Pakistan’s potential for growth in other value-added potato products like starch, flour, and flakes is limited due to lower returns.

One of the key limitations facing potato processing in Pakistan is the lack of suitable potato varieties. Only a small percentage of potatoes harvested in Pakistan belong to industrial-grade varieties. The suitability of a potato variety for processing depends on factors like dry matter content, color, length and shape. Lady Rosetta (LR) is the most commonly used variety for industrial processing in Pakistan, suitable for making crisps.  Because of the lack of demand, knowledge and access to capital, farmers do not grow other industrial varieties. Farmers in Pakistan, other than those who work with reputed processors, rely mainly on seeds sourced from the informal sector, hence resulting in low quality harvests. They also practice flood irrigation, which lowers the output and quality of the produce. Import of potato seeds has increased in recent years, which further accentuates the need for local production of high-quality seeds.

Potato cultivation in Pakistan has seen significant growth over the past decade, with an increase in both production and the total cultivated area. The total production of potatoes in Pakistan has doubled in the last decade, primarily due to increased cultivated area rather than higher yields per acre. Pakistan’s yield per acre is lower as compared to countries like Turkey, Iran, and Egypt. To improve output, Pakistan needs to focus on adopting better seed varieties and improving on-farm management. Punjab, the largest province, accounts for over 85 percent of annual potato production, followed by the Gilgit Baltistan region. Punjab’s potato clusters contribute a significant share of total potato production and supply crops for domestic consumption, industrial processing, and exports. Gilgit Baltistan provides off-season potatoes for commercial and domestic utilization, and has potential as a seed multiplication region. The availability of fresh potatoes throughout the year is supported by investments in cold storages. A few districts in Sindh like Badin, Sanghar, and Tando Allah Yar also have potential for potato cultivation, especially for varieties suitable for french fries. Investments in new varieties and regions may be important to cater the challenge of rising global temperatures which pose a threat to potato yields.

Pakistan has the potential to position itself as a french fries exporting country. The domestic market for french fries has grown, and companies like Opa and Panda Fries have increased their production capacity. Regulatory duties on imports and the devaluation of the Pakistani rupee have created market space for domestic production. However, to be globally competitive, local manufacturers need to build a supply chain of potatoes suitable for french fries and work with farmers. The global market for french fries has been growing, with increasing demand from developing countries, and the trade volume reached USD 8 billion in 2021. Industrial-grade potatoes are preferred for producing the right size and quality of fries. The global import market for french fries is dominated by developed economies like the United States, France, and the United Kingdom. Pakistan should aim to become a regional supplier of french fries by working with international fast-food brands. Contract farming and local seed production can help overcome the limited availability of suitable potatoes for mass production. With improvements in seed quality, farming practices, and collaborations with international partners, Pakistan can capitalize on its resources and meet the increasing demand for potatoes and french fries both domestically and internationally.

The potato crisps market in Pakistan is primarily dominated by PepsiCo, which holds over 70 percent of the domestic market share with its brand Lay’s. The second leading brand is Snack City with about 10 percent market share, followed by Oye Hoye with around 5 percent market share. Other companies such as Triple Em, Lotte Kolson, and Dalda Snacks also have a presence in the market. Additionally, there are smaller companies and cottage industries producing unbranded crisps for local markets and bakeries. The manufacturing process of potato crisps involves slicing the potatoes into thin cuts, frying them at high temperatures, and then seasoning and packaging them. In the global market, the crisps industry has experienced growth, with trade reaching USD 2.76 billion in 2021. The top importing countries for crisps include the United States, France, Germany, Canada, and the Netherlands. These countries also have significant domestic manufacturing capabilities, indicating that the import figures only capture a portion of the market size. Among the top exporting countries are the Netherlands, Belgium, the United States, Poland, and the United Kingdom. Pakistan has limited opportunities for exporting potato crisps due to several factors. The domestic market is primarily served by PepsiCo, and smaller companies struggle to achieve scale and lack the infrastructure and brand power for international expansion. Exporting crisps would require significant investments in manufacturing facilities, packaging, and brand development. The high transportation costs associated with shipping crisps further discourage smaller companies from exporting. The best chance for Pakistan to have significant exports in the crisps segment would be if PepsiCo gears its production in Pakistan for export.

Pakistan currently relies on imports to meet its domestic demand for potato starch. The potential for localized production of potato starch exists, but the opportunities for exporting potato starch are negligible. Potato starch is used as a binding agent and thickener in the food industry and as a binder and adhesive in paper making. Globally, around 60 percent of potato starch is used in the food industry, while the remaining 40 percent is primarily used in the paper and paperboard industry. Pakistan’s cheap potato supply presents potential for substituting imports and generating limited exports of potato starch in the future.

By improving the availability of affordable and high-quality potato seed, Pakistan can enhance potato yield and compete with other countries. Currently, most farmers in Pakistan rely on seeds passed down through generations, making their crops susceptible to diseases and blight, resulting in lower overall output. The high cost of procuring certified seeds makes them unaffordable for many farmers, who often opt for cheaper informal seeds. The government’s in-vitro labs and seed multiplication centers have limited production capacity and lack commercial viability. Encouraging formal seed multiplication companies and providing a supportive regulatory environment can help meet the local seed demand. Improving technology adoption in potato cultivation, such as implementing drip irrigation to replace suboptimal canal water flooding, can enhance productivity. The government can collaborate with the private sector to develop financing mechanisms that promote the adoption of better technologies and seeds, leading to an increase in farming efficiency and higher potato yields.

The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 89) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness.