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Collaboration between govt and private sector is essential for advancing efficient, sustainable agriculture
Pakistan’s agricultural sector has seen significant developments in mechanized farming, driven by the need to increase productivity and efficiency. Farm mechanization in Pakistan has led to a substantial increase in per acre yield and food availability. Farmers who have adopted full mechanization saw a 55% increase in farm performance and a 125% boost in food availability compared to those who use semi-mechanized farming methods. In 2024, Pakistan produced 36,304 tractors, marking a 60% increase from the previous year. This growth is largely attributed to the expansion of reclaimed agricultural land following floods.
Despite growth, Pakistan’s mechanization levels remain low, with approximately 0.9 horsepower (HP) per acre, falling short of the required 1.4 HP per acre. Electricity and diesel costs are significant expenses for farmers, prompting the government to allocate Rs. 30 billion to convert 50,000 agricultural tube wells to solar power. Many farmers also struggle to access financing for agricultural machinery, hindering the adoption of mechanization.
To address this challenge, the State Bank of Pakistan (SBP) has recently rolled out a landmark collateral-free digital agriculture financing scheme titled “Zarkhez-e”, aimed at empowering small and marginalized farmers, especially those in unserved and underserved regions. Under the program, 75 percent of the financing will be provided in in-kind disbursement to ensure farmers receive essential inputs such as quality seeds, fertilizers, pesticides, and diesel through registered agri-merchants. The remaining 25 percent may be issued in cash to cover additional farming expenses. In addition, farmers will have access to agri-advisory services to boost productivity and promote sustainable cultivation methods. Eligibility criteria set the landholding limit at up to 12.5 acres for Punjab and Khyber Pakhtunkhwa, 16 acres for Sindh, and 32 acres for Balochistan. Financing will be available up to Rs 100,000 per acre, with maximum limits of Rs 1 million for landowners and Rs 500,000 for tenants. Another key feature of “Zarkhez-e” is the introduction of life and crop insurance coverage. Every farmer availing loans under the scheme will receive life insurance equivalent to the loan amount disbursed and outstanding, while Crop Loan Insurance under the Crop Loan Insurance Scheme (CLIS) will be mandatory for five major crops. Through this initiative, the SBP aims to enhance agricultural productivity, promote financial inclusion, and support sustainable rural uplift by integrating technology into Pakistan’s farming finance ecosystem.
The integration of digital technologies, such as precision agriculture and data analytics, is expected to play a crucial role in enhancing farm productivity and efficiency. The government is promoting mechanization through subsidies, tax benefits, and research and development initiatives. Collaboration between the government and private sector is essential for driving advancements in mechanization and ensuring a more efficient and sustainable agricultural sector. In this connection, Unity Foods Limited has recently announced its advanced progress in securing long-term contracts worth $30 million to export sustainable and traceable biofuel feedstock to global biofuel producers, including those focused on Sustainable Aviation Fuel (SAF).
Biofuel feedstock refers to organic materials that are processed to produce biofuels like biodiesel, ethanol, and SAF. These materials are often agricultural by-products, waste oils, or specifically cultivated crops. Sustainable feed stocks are renewable, low in carbon emissions, and traceable, ensuring environmental and social compliance.
The development comes as the company positions itself to cater to growing global demand for environmentally friendly fuel alternatives. To bolster its capability, Unity Foods has achieved International Sustainability and Carbon Certification (ISCC-EU), a critical requirement for exporting biofuel feedstock to international markets. This initiative aligns with Unity Foods’ strategic focus on diversifying its revenue streams. Once finalized, these off-take contracts are expected to enhance the company’s exports to the European Union and Far Eastern markets, contributing to its growth trajectory.