Agri-Based Entrepreneurship in Rural Pakistan

Rural Pakistan is located in the heart of economic, social, and food security situation in the country. The agricultural sector of the economy is an important factor in the national GDP, and it employs almost 38 percent of the labor force, most of whom live in the countryside (Government of Pakistan, 2023). Although this is important, the rural livelihoods are still limited by poor incomes on farms, under employment, incomplete land tenures and growing vulnerability to climate variability. Pakistan has traditional agricultural activities, which are mostly geared towards production and sale of raw materials like wheat, rice, cotton, sugarcane, fruits and livestock products, with little prospects of value addition and growth of income. Agri-based entrepreneurship has in this regard become a very important issue in the lives of rural economies whereby it has been observed to be a critical means of revitalizing the rural economies, increasing productivity and ensuring inclusive and sustainable development.

Agri-based entrepreneurship can be defined as the creation and development of businesses associated with the agricultural value chain, such as the input supply, production, processing, storage, transportation, and marketing (FAO, 2021). Contrary to subsistence agriculture, agri-entrepreneurship focuses on market orientation, innovation and risk-taking. Agri-based entrepreneurship allows rural families to reap more economic benefits, create jobs and enhance resilience to economic and environmental shocks by combining agriculture with business values and principles.

The Pakistan Agri-Based Entrepreneurship Requirement.

The agricultural system in Pakistan is characterized by small and medium sized farmers most of whom have small landholdings which do not give them a chance to enjoy economies of scale. These market limitations are aggravated by poor market connections and massive losses that occur after harvests especially in horticulture and animal products. According to research, it is estimated that at least 25 and up to 40 percent of fruits and vegetables like mango, citrus, and tomatoes are spoiled during their storage, processing, and transportation, which result in post-harvest losses (FAO, 2021).

Agri-based entrepreneurship provides a proactive solution to these problems by providing an agricultural activity outside main production. The model of value addition to improve the rural incomes significantly is demonstrated by small-scale agro-processing units that produce rice flour, edible oil, dairy products, and packaged food items in Punjab and Sindh. On the same note, the growth of milk collection and processing businesses in areas like Sahiwal, Okara, and Kasur has helped small milk farmers to gain entry into formal markets, stabilizing the prices and decreasing the fluctuation of incomes (IFAD, 2022).

In addition to the revenue-generating activity, agri-based entrepreneurship is associated with livelihood diversification and alleviation of poverty. Agribusiness enterprises can absorb the surplus rural labor (especially youth) by creating off-farm employment opportunities that cut off the distress migration to urban centers (World Bank, 2022).

Major types of Agricultural-based entrepreneurship in Pakistan.

Agri-based entrepreneurship in Pakistan occurs in various forms in the agricultural value chains. One of the most notable is the Agro-processing enterprises which include the processing of rice milling, flour, and fruit pulping, meat processing, and dairy product processing. A good illustration of how agro-processing increases the potential of exports and decreases post-harvest wastes is the mango processing units in Multan and Rahim Yar Khan which produce pulp, juices, and dried products (Tripoli & Schmidhuber, 2014).

The other dimension that is crucial is input and service-based entrepreneurship. The production of certified seeds, the distribution of fertilizers and pesticides, veterinary services, and the rental of farming machinery have been rural enterprises which have occupied key gaps in the agricultural support systems. Tractors, harvesters, and laser land-leveling services have been extensively adopted in Punjab by facilities known as custom hiring centers where smallholders can access modern machinery without necessarily having to invest high capital (Government of Pakistan, 2023).

The livestock based entrepreneurship is one of the pillars of rural livelihoods in Pakistan. Dairy farming, poultry production and meat processing businesses present consistent sources of income and also job opportunities especially to land-poor households. Women are the core of livestock business, and women are involved in milk production and backyard poultry systems, which they use to earn incomes and supply food to the household (UNDP, 2021).

Over the last few years, agri-tech and digital agribusinesses have started to transform the rural entrepreneurship. Start ups run by the youth that provide mobile-based advisory services, weather forecasting, digital input markets, and farm to market logistics applications are making the market more accessible and informative. These innovations can explain that technology also can close traditional discontinuities in the agricultural value chains in Pakistan (OECD, 2020).

Economic and Social Effects of Agri-Based Entrepreneurship.

Agri-based entrepreneurship brings great economic and social impacts in rural Pakistan. Among the most direct effects is that it impacts a higher profitability of farms through value addition and better market access. The farmers who process, brand, and sell the products directly are considered to receive much better margins than raw produce sold in the traditional channels (FAO, 2021).

The other important result is employment generation. The agro-processing facilities, cold storage units, transport services, and rural retail outlets provide employment opportunities at a variety of value chain activities. These jobs are specifically valuable to the rural young people, as they will ease the unemployment and demand of rural-urban migration (Lowder et al., 2021).

Socially, agri-based entrepreneurship has helped women to be empowered in the economy. Dairy processing, food preservation, seedling nurseries and kitchen gardening which are operated by women have increased in most rural regions. The rise in income control leads to greater participation of women in decision-making in the household and also increases the results in terms of nutrition, education and health (IFAD, 2022).

At the community level, agribusiness enterprises that thrive well trigger economic linkages in the locality. Due to high demands in packaging materials, transport services, veterinary services and activities at the retail level, multiplier effects are being created which are boosting the economic standing of the rural economies.

Limitations to Agri-Based Entrepreneurs in Pakistan.

Although it has potential, agri-based entrepreneurship in Pakistan has a number of structural and institutional constraints. There is still a lack of access to finance. Agribusiness ventures are usually viewed as risky by the formal financial institutions since they lack collateral and uncertain incomes. Despite the growth of microfinance institutions in reach, loan amounts are often too small to make capital-intensive investments in agro-processing (World Bank, 2022).

Lack of infrastructure is also another limiting factor to the growth of enterprises. The lack of good rural roads systems, unreliable electricity, lack of good cold storage systems, and poor infrastructure in the market make transactions more expensive, and less competitive, especially when it comes to perishable goods. Those difficulties are particularly acute in remote parts of Balochistan and inner Sindh (Government of Pakistan, 2023).

The other significant limitation is the capacity and skills gap. Agricultural entrepreneurship is a business that would need business management skills, quality standards skills, marketing skills, and regulatory compliance skills besides technical expertise in agriculture. The lack of access to combined training and extension services inhibits enterprise performance and scalability (OECD, 2020).

The entrepreneurial environment is also complicated by policy and institutional fragmentation. The uncoordinated interaction between agricultural, industrial, and trade institutions and the intricate licensing system poses uncertainty to the rural entrepreneurs (Ellis, 2000).

Institutional, Educational, and Policy Support Role.

The agri-based entrepreneurship in Pakistan is to be supported by institutes. The role of agricultural universities, research institutes and extension systems in technology transfer, innovation and human capital development is extremely important. Market-focused attitudes in future farmers and agripreneurs could be developed through introducing agribusiness and entrepreneurship education in the agricultural curriculum (UNDP, 2021).

Smallholders are especially interested in collective institutions like producer organizations and farmer cooperatives. Coupled with production and coordination of marketing, these organizations enhance economies of scale, bargaining power, and access to finance (IFAD, 2022).

On policy front, a combined agribusiness development policy is very important. There can be credit schemes that are specifically designed to help reduce the barriers to entry through subsidized loans in agro-processing, crop and business insurance and incentives on value-added exports. Rural infrastructure, cold chains and digital connectivity investments are also needed in order to facilitate agri-entrepreneurship (World Bank, 2022).

The Future of Agricultural-based entrepreneurship in Pakistan.

Technological innovation, the need to be sustainable, and evolving consumer preference will determine the future trend of agri-based entrepreneurship in Pakistan. Under the conditions of climate change, climate-smart agribusiness models which are instrumental to encourage efficient water consumption, renewable energy, and sustainable production practices will become more significant (FAO, 2021).

The digital platforms will increase the market accessibility, price transparency, and financial inclusion. The increase in safe and traceable and value-added food products opens up a new opportunity to certification, brand, and export-oriented agribusinesses (Tripoli & Schmidhuber, 2014). The solutions to lasting rural change and innovation will be the involvement of the youth in agri-tech startups.

Conclusion

Agri-based entrepreneurship is a strong solution to change the rural Pakistan and resolve the endemic issues of low farm incomes, unemployment, and economic vulnerability. Agri-entrepreneurship facilitates the rural communities to quit subsistence-based agriculture by enhancing the value addition, market connection, and innovativeness.

Nevertheless, to achieve this potential, a concerted action is needed to overcome financial limitations, infrastructural limitations, institutional limitations, and capacity limitation. The right environment to agri-entrepreneurs requires supportive policies, good extension services, availability of finance and facilitating market institutions.

Agri-based entrepreneurship, in a climate of uncertainty, population increase, and growing food demand, has the potential to make agriculture a dynamic source of rural prosperity. It has the potential to guarantee food security, economic and sustainable livelihoods among rural population in Pakistan when properly enabled.

References: Ellis; FAO; Government of Pakistan Economic Survey; IFAD; Lowder et al.; OECD; Tripoli & Schmidhuber; UNDP; World Bank.

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

The writer is affiliated with the Institute of Business Management Sciences, University of Agriculture, Faisalabad, Pakistan and can be reached at ayesha_noreen@uaf.edu.pk.

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