PAKISTAN’S economy is heavily dependent on agriculture, as our country is primarily an agricultural one. It contributes significantly to our national economy. Small farmers are the backbone of agriculture, yet they face difficulties due to a lack of financial resources. It is no secret that the middleman’s monopoly negatively impacts the healthy competition in the agricultural market and the determination of prices. Farmers often remain deprived of the rightful rewards of their hard work. By offering small, easy loans, not only can their problems be alleviated, but the country’s agriculture can also be developed. In Pakistan, approximately 93% of farmers own less than five acres of land and their access to financial institutions is negligible to prevent such situations, it is essential for an institution to provide small loans to farmers so that they are not exploited by the market mafia. In this context, the importance of microfinance becomes critical. A farmer’s micro finance bank is a specialized financial institution aimed at meeting the unique financial needs of small-scale farmers and rural agricultural communities. Its primary focus is to support agriculture by providing accessible, affordable and sustainable financial services that empower farmers, improve productivity and reduce poverty in rural areas.
The bank offers small, affordable loans specifically tailored to the needs of farmers, such as loans for purchasing seeds, fertilizers, pesticides and other agricultural inputs. The bank can equipment leasing programs for items such as tractors, irrigation systems and processing machines, enabling farmers to use the equipment for specific seasons or purpose without a large upfront payment. To help farmers manage the risks associated with agriculture, like crop failure due to drought, floods or pests, the bank can provide crop insurance and other risk mitigation products. The bank offer savings accounts to raise the savings after harvest or livestock sales. Farmer’s micro finance banks often conduct training program, can create group lending models, provide market access support and promote sustainable and Climate-Resilient Farming.
Developing and underdeveloped countries face the challenge of providing food for large populations, especially when natural resources are scarce. Issues such as extreme poverty, rapid population growth and environmental degradation are worsening day by day. In developing countries and especially in Pakistan, there is a dire need to provide people with education and training related to agriculture, horticulture, food production and the relevant technologies. Moreover, there is an urgent need to educate people in fields like Economics and Management with a focus on agriculture, food and related industries.
The poverty rate in rural areas is increasing and in my view, microfinance institutions are a key weapon to combat poverty, helping reduce its rate. For farmers, microfinance is nothing short of a blessing. Our farmers have land and agricultural skills, but they lack capital, so microfinancing can help them. Not only will microfinance be provided, but training will also be offered on how to add value through grading, packaging and other methods. Training in horticulture, floriculture and how to connect with markets can also be provided. In this way, farmers will receive capacity-building support and they can be encouraged to engage in agribusiness, which will lead to agricultural and economic growth, ultimately making agriculture more sustainable. Non-resident Pakistanis (NRPs) can play an important role in this regard. If we convince them, they can not only provide microfinance to farmers but also assist in modernizing agriculture by connecting with global agricultural experts.
—The writer is contributing columnist, based in Faisalabad.
