ISLAMABAD: Pakistan's top securities regulator on Thursday called for a sweeping overhaul of agricultural markets, proposing electronic warehouse receipts and a national spot market to reduce crop losses that he said cost the country tens of billions of rupees.
Dr. Kabir Ahmed Sidhu, chairman of the Securities and Exchange Commission of Pakistan, outlined the plan in an address to the "Mission $100 Billion" international conference hosted by the Pakistan Institute of Development Economics.
"Reforms in agricultural markets are crucial for the growth of the entire economy," Sidhu said.
Agriculture accounts for 23.44 percent of Pakistan's gross domestic product, he said, and the country's crops are worth about 8,800 billion rupees. But post-harvest losses are estimated at 20 to 40 percent, he said, with each 1 percent loss equal to roughly 88 billion rupees.
Sidhu said Pakistan produces about 55.7 million metric tons of storable dry agricultural commodities, yet approved warehouses can hold only 326,000 metric tons.
To close the gap, he said, the commission is working to promote a modern warehousing system based on electronic warehouse receipts. Under the proposal, agricultural markets would be linked to an online trading platform, and a national spot market would be established to provide safe storage, bank financing and transparent trade.
Wheat, rice, maize, cotton and sugar would be added to spot trading in phases, Sidhu said. Provinces would retain oversight of agricultural markets, while the commission would provide technical help.
He said farmers could use electronic warehouse receipts to obtain bank loans against stored crops, sparing them from having to sell immediately at low prices. Uniform standards for quality, weight and grading would help growers secure better prices, he added.
Registering brokers and traders and keeping a digital record of transactions would better protect both farmers and buyers, Sidhu said. He also called for a reliable system to ensure farmers are paid on time.
Modern warehouses, cold storage and transport networks could draw more investment into agriculture, he said, and better storage could reduce losses and improve access to export markets.
Sidhu said the rules, licensing, fees and commodity movement systems governing agricultural markets also need to be modernized.
