The agriculture sector faces the unique challenge of meeting a year-round demand with crops that have a limited harvesting window, often as short as a month. This intricate balance becomes even more crucial for perishable crops like onions, potatoes, garlic, and dates. The availability of these crops must be sustained beyond the short harvesting period to ensure domestic consumption and potential export demands.
Effective storage practices are essential to achieve this delicate equilibrium. Value chain analysis reveals that stocks of various crops are managed by different players, including farmers, processors, exporters, intermediaries, and stockists. This is particularly evident for grains, pulses, oilseeds, and horticultural crops. Wheat stands out as a notable exception, where strategic reserves are maintained by federal and provincial governments to ensure food security.
In recent years, a remarkable trend has emerged in the form of informal stockists. Thousands of small- to medium-sized stockists have entered the market, ranging from individuals with a few tonnes of storage capacity to those with significantly more. This surge can be attributed to a combination of factors.
The global disruption caused by the Russia-Ukraine conflict has led to increased food price volatility, accentuated by climate change-induced uncertainties in food production. Small investors are drawn to the potential of storing agricultural commodities as a profitable opportunity.
Additionally, the hike in the state bank's policy interest rate to 21 percent has driven up borrowing costs for businesses, making it less feasible for processors to maintain high inventory levels. This void is being filled by the influx of stockists.
The low returns on bank deposits coupled with high inflation rates and currency depreciation have prompted individuals with disposable income to explore alternative avenues for generating passive income. Storing agricultural crops has become an attractive option due to its relatively low-risk nature.
This surge of stockists is not just about profit; it's also about addressing market dynamics and the needs of farmers. By storing crops, stockists contribute to stabilizing market prices during periods of oversupply, ultimately benefitting both consumers and farmers. However, their significance is often underestimated, and they are sometimes unjustly criticized.
Warehouse receipt systems (WHRs), adopted by countries like the United States, Poland, Argentina, and Ghana, have successfully created liquidity and enhanced credit access for farmers. This system allows farmers to store their produce in licensed warehouses and obtain receipts that serve as collateral for bank loans. While WHRs are still relatively new in Pakistan, they hold great potential to minimize post-harvest losses and promote stable pricing.
Despite the criticism, small stockists play a pivotal role in maintaining crop availability and pricing stability. They have become an additional source of demand during times of oversupply, thereby preventing market prices from plummeting. Moreover, their frequent rotation of stocks helps avoid artificial shortages in the market.
Their role extends to reducing post-harvest losses, which currently range from 10-20 percent due to inadequate storage practices. With proper training and support, these stockists can contribute to reducing losses by maintaining optimal moisture levels and ensuring suitable conditions to deter pests and diseases.
In conclusion, the rise of informal stockists is an important development for Pakistan's agriculture sector. They play a vital role in stabilizing prices, enhancing farmers' income, and reducing post-harvest losses. Recognizing their significance and supporting their growth could contribute to a more resilient and sustainable agricultural system.
On the forefront of promoting climate-smart agriculture stands Wattoo, a respected figure who has dedicated his prominent career to mitigating the adverse effects of shifting weather patterns on farmers' productivity. His endeavors revolve around highlighting the importance of innovative technology, policy reforms, and grassroots interventions to ensure an adequate food supply amid escalating challenges. Khalid Saeed, not merely a researcher, actively engages with both private and public sectors to bridge knowledge gaps and implement transformative changes. His contributions transcend the ordinary.
In Pakistan, Khalid Saeed is renowned for his insightful articles published in esteemed outlets such as Dawn. His works concentrate on the pressing contemporary issues within the country's agricultural sphere. By offering his expertise and demonstrating unwavering dedication, Khalid pursues the objective of catalyzing positive transformations, fostering inventive solutions, and nurturing resilience. While these efforts are concentrated in the agricultural sector, their ultimate impact will contribute to the prosperity and well-being of the nation and its farming communities.
To read the full article visit: https://www.dawn.com/authors/9955/khalid-saeed-wattoo
