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Farmers ‘unhappy’ with govt’s agricultural loan claims

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The farming community Wednesday demanded further measures from the government despite the State Bank of Pakistan (SBP) report revealing that a substantial amount of Rs1.78 trillion was disbursed by the financial institutions during the fiscal year 2022-23 under the outgoing Prime Minister Shehbaz Sharif’s initiate, ‘Kissan Package’.

The central bank, in its annual report released today, stated that the financial institutions achieved 97.6% of the agriculture credit target of Rs1,819 billion set by the SBP; however, the farming community painted a different picture.

Agriculture Republic Co-founder Aamer Hayat Bhandara, while speaking to Geo.tv, said: “Definitely, the money has poured into the agriculture sector but people faced issues when they sought loans.”

He elaborated that the youngsters, especially, were among those who faced challenges when they contacted banks for loans.

“Banks demanded papers of their land to mortgage the loan; however, mostly the lands are usually registered under their parent’s name as it is a culture here,” he said, adding that therefore, under the prime minister’s plan to encourage and facilitate the youth of Pakistan to adopt agriculture as their occupation has not fully been realised according to the spirit.

Bhandara lamented that under such circumstances the middleman becomes the beneficiary. The purpose of these loans was to enable the farmer to purchase inputs of the yield.

While the government aims to minimise the role of exploiters sitting in the market, their hold gets stronger because when farmers cannot get loans from formal channels, the banks, they go to informal sources, the middleman, who exploits them by applying higher interest rates, he highlighted.

“They exploit farmers and customers alike by first offering loans at higher interest rates and then selling the product at higher prices to the customers, even though they buy products way cheaper from the farmers,” he revealed.

It should be noted that according to the SBP report, the number of loans grew by over 25% compared to Rs1,419 billion disbursed in the fiscal year 2021-22. The outstanding portfolio of agriculture credit also registered a growth of 10% and reached Rs760 billion at the end of June 2023 compared to Rs691 billion at the end of June 2022.

The unprecedented performance in FY23, according to the central bank, was attributed to the collective efforts of the financial institutions and various initiatives taken in the backdrop of several challenges including the devastating floods of 2022, rising input costs and monetary tightening in recent years.

The SBP mentioned that among the various initiatives, SBP’s Champion Bank Model and Agriculture Credit Scoring Model played a key role in supporting financial institutions in extending agriculture financing, particularly in the underserved areas where significant growth was registered in FY2023.

“In addition, the strategic guidance of Agricultural Credit Advisory Committee (ACAC) coupled with rigorous monitoring of financing by SBP provided further support in accelerating agriculture finance,” the report read, adding that the last ACAC meeting, held in December 2022, brought the industry’s focus to the potential of Islamic banking for meeting the needs of the farming community. As a result, Islamic agriculture financing also grew significantly during the year.

Endorsing Bhandara’s views, Concave Agri Services President Muhammad Ali Iqbal told Geo.tv that the amount disbursed under the agri credit schemes by the financial institutions has not made a significant impact on the financial requirements of small and medium farmers.

It was learnt that under the Kissan Package, mostly credit facilities were provided against Agro-machinery with around a 7% interest rate to be paid by the farmers on a district-wise quota basis.

“This kind of facilitation did enable the large-scale farmers to reap benefits. However, due to the rupee-dollar parity the prices of machinery also escalated significantly,” he said.

Citing the report, Iqbal mentioned that the input products’ prices have also increased at least 50% making farming resources meagre for the small and medium farmers. In return, the financial credit requirements also surged outstandingly making it easier for banks to achieve the given target by the central bank.

“It is pertinent to mention that the average loan size for agriculture was around over one million per farmer, which is way beyond the requirements of the small landholders,” he maintained, suggesting that it is now better for policymakers to introduce micro and small credit facilities with concessional interest rates to make farming easy for small and subsistent farmers.

Moreover, the central bank — in a statement released along with the report — highlighted that the state bank’s efforts were further bolstered by the prime minister’s Kissan Package, which provided stimulus to revive the flow of agriculture financing especially in the flood-affected areas. Under the Kissan Package, various measures were implemented to strengthen the agriculture sector in flood-affected regions, which included a waiver of markup on outstanding small loans, interest-free loans for small and marginalized farmers, and risk coverage for banks.

It should be noted that the SBP has also released the annual ranking of banks under the Agriculture Credit Scoring Model to bring transparency and competition among the various agriculture credit providers.

SBP’s scoring model gauges the agriculture credit performance of banks against a multi-dimensional criterion with a particular focus on regional and sectoral performance. Introduced in FY22, the model facilitated the banks to focus on areas where improvement is required to achieve their targets, particularly on improving qualitative aspects.

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Minister of Finance Reaffirms Unwavering Support for APM Terminals Group in Effort to Strengthen Bilateral Cooperation

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Senator Muhammad Aurangzeb, Pakistan’s Minister of Finance, has promised the APM Terminals Group his full support in creating an environment that is both business-friendly and conducive to investment.

In Islamabad, he met with a group of APM terminals who had come to hear him speak. Keith Svendsen, CEO of APM Terminals, was in charge of the group.

Muhammad Aurangzeb, a senator from Pakistan, expressed his approval of APM Terminals’ investment plans.

Following last month’s signing of a memorandum of agreement to strengthen bilateral cooperation, the meeting’s emphasis was on the actions taken to date.

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Pakistan’s gold prices are declining.

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Ten grams of 24 carat gold also had a price decrease of Rs. 1,115, from Rs. 239,026 to Rs. 237,911, while ten kilos of 22 carat gold saw a rise in price from Rs. 219,107 to Rs. 218.085.

The cost of ten grams of silver and one tola of silver stayed at Rs. 2,829.21 and Rs. 3,300, respectively.

As stated by the Association, the price of gold fell $13 to $2,670 on the global market.

On Monday, November 11, 24-karat gold prices fell to 3,771 Saudi Riyals (SAR) per tola in Saudi Arabia.

The price of 24-kar gold is SAR 10,067 per ounce, while 10 grams of the metal are being sold for SAR 3,237 in the kingdom, according to forex.pk.

Note: Since the prices were updated at 10:15 am on November 11, 2024, there may be some discrepancies in this post due to the dynamic nature of the gold market globally, especially in Saudi Arabia.

As the markets anticipate the Federal Reserve to take a cautious stance under U.S. President-elect Donald Trump’s administration, gold prices fell for a second session on Monday due to a stronger dollar and heightened risk appetite.

As of 09:27 GMT, spot gold was down 0.6% to $2,666.48 an ounce. The price of US gold futures dropped 0.8% to $2,673.20.

“A stronger U.S. dollar, rising Treasury yields, and increased risk appetite in financial markets are the main reasons why gold prices have declined — a trend that has gained momentum since Donald Trump’s victory in last week’s presidential election,” said Ricardo Evangelista, senior analyst at ActivTrades.

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Prices for cooking oil and ghee have increased in Pakistan.

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Details show that although the price of ghee increased to Rs 550, the price of cooking oil increased by Rs 30 to Rs 560.

The market vendors said that the cost of Karachi-branded ghee had increased by an astounding Rs 120 over the past month, to Rs 500.

The Sensitive Price Indicator (SPI), which measures weekly inflation, increased by 0.28 percent for all consumer categories during the week ending October 17, according to a report released by the Pakistan Bureau of Statistics (PBS) on October 18.

In the aforementioned group, the SPI for the week under review was 319.79 points, compared to 318.91 points the previous week, according to the PBS statistics.

In the week under examination, the SPI for the combined consumption group increased by 15.02 percent compared to the same week last year.

51 important goods for all expenditure groups and 17 urban centers are covered by the weekly SPI with base year 2015–16 = 100.

Additionally, the SPI for the lowest consumption category, which is up to Rs 17,732, increased by 0.27 percent from 312.91 points last week to 313.74 points.

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