Zulfikar Thaver stresses the need for access to finance from banks as finance from arthis is proving very costly

Karachi, September 01, 2016 (PPI-OT): The meeting between the Union of Small and Medium Enterprises (UNISAME), the Small and Medium Farmers Association (SMEFA) and Asian Development Bank (ADB) team agreed that access to bank finance, coupled with insurance and logistics is the key to farmers survival in the wake of commodities downtrend in global markets.

President UNISAME Zulfikar Thaver stressed the need for access to finance from banks as finance from arthis is proving very costly leaving the SME farmers without profit and deprived of the benefits of hard work. Thaver at the very outset said it is the duty of the world organizations to facilitate the farmers who are feeding the world population. He stressed the need for modern farming and modern banking with collateral management. He appreciated the interest of ADB to make life easy for the SME farmers in Pakistan.

Muhammad Saeed chairman SMEFA stressed on low premium insurance for crop and cattle and convinced the participants of huge potentiality of the farm sector in making the country self sufficient and also capable of exports. There is urgent need for powdered milk plants and the investors need to set up milk powder factories to meet the growing need for healthy milk powder with long shelf life. He also explained the scope of potato farming which if financed at affordable rates could prove a source of employment for many SMEs in farming, processing and manufacturing potato related items.

Saeed also complained of lack of industries for dairy products like cheese and cottage cheese, curd and other items which come in the SME radius. Habib Channa representing FMC said agriculture is truly the backbone of the country and unfortunately the farmers are left at the mercy of the arthis for finance and pay almost 40% of their profit to the arthis.

Analyst Aadil Jillani, Omair Saeed and other participants were keen that the commercial banks need to play an important role in farm credit for financing agriculture, livestock and dairy farming for supporting the SME farmers, agri based industries with affordable finance which could make the farm sector competitive. If the farm sector becomes competitive it will reflect in growth and investments.

Rodolfo Wehrhahn the ADB team head meaningfully questioned as to why the farmers seek finance from the arthis and the reasons given were that there are no documents involved, it is prompt, the arthis do not need references or guarantees as they know the borrowers and their families since long, the system of arthis financing is traditional, there is no haste from the arthis in recovering as they know the reasons for delay being in the vicinity.

The arthis facilitate the farmers with buying their yield and in fact bind them for the entire crop even if the financing is limited. The drawback is that the arthi financing is very costly and becomes non affordable and as a result makes the produce non-competitive. The arthis are controlling the farms and in fact referred to as the farm owners in rice, wheat, maize, vegetables and fruits and the farmers are compelled to borrow from them and pledge their crops due to lack of interest of bankers in financing them.

This menace of the arthi domination has to be done away with if the farm sector is to be made competitive as the arthis take the cream of the profits. Rodolfo expressed keenness to facilitate the farmers with affordable finance and low premium insurance to minimize their sufferings and said the ADB was working on this on priority.

He said in other countries the farmers had access to information and could convey what was available to prospective buyers on their cell phones. There was competition and no buyer could pressurize them. Secondly he was surprised to learn that in Karachi which is such a big city there was only one wholesale market for the farmers. Unlike other countries the farmers could reach several markets. There is also need for cold storage facilities and refrigerated transport to improve the selling abilities of the farmers he concluded.

For more information, contact:
Union of Small and Medium Enterprises (UNISAME)
75/1 3rd Commercial Street,
Phase IV, D.H.A., Karachi, Pakistan
Tel: +92-21-35884225-6
Fax: +92-21-35380642
Cell: +92-300-8245307, +92-321-8245307
Email: unisame@gmail.com