By Iqra Waheed ISLAMABAD, Mar 04 (INP-WealthPK): To assist the farmers, the State Bank of Pakistan (SBP) has launched Electronic Warehouse Receipt Financing (EWRF) for maize crop and also increased the credit limit for agriculture to improve per-acre yield. The SBP had allocated Rs1.5 trillion in 2021 for the agriculture sector loans, and managed to disburse Rs1.365 trillion. The target set for this year is increased to Rs1.7 trillion, reported WealthPK. The contribution of the agriculture sector is about 40-50% to Pakistan economy. Most of the farmers (90%) are small ones, and only 40% farmers get advantage from credit facility. The credit facility is limited to 2 million out of a population of 6.6 million farmers. Small farmers mostly rely on the informal sector for financing their requirements, as they are unable to pay collateral to the banks. In 2021, the credit needs of only 59% of farmers were fulfilled through banks. This proportion must be increased significantly. Dr Abedullah, Chief of Research at Pakistan Institute of Development Economics (PIDE), told WealthPK that farmers are mostly unable to adopt new technologies due to shortage of finance. “Farmers can be facilitated through expansion of credit facility. The EWRF is a good initiative to extend this facility to farmers. With this facility, more loans can be provided to small farmers who were reluctant to take financing from the formal sector due to lack of resources for collateral,” he said. “It will lead towards the use of better technology as more finances will be available, better-quality seeds will be used and also crops will be secured for a long period. It will help the farmers enhance the credit availability, secure financing from banks, minimise their loss of production of crops like rice, maize and wheat as they will be provided with well-maintained storage and also loans for their new harvest,” he added. The agriculture sector contributed almost 24% to the country’s GDP in 2020. The contribution is expected to increase from Rs2,502.18 billion in 2020 to Rs2,599.76 billion in 2021. It engages about 44% of labour force, and accounts for almost 30% of exports. [caption id="attachment_64446" align="aligncenter" width="696"] Source: Trading economics.com /SBP/WealthPK[/caption] The government aims to back the agriculture sector and also augment the scope of agri-financing through EWRF. In the EWRF system, crops can be kept as security to get loans. In this system, farmers can bring their crops to the warehouse, their quality is checked, and a receipt is issued to the farmer that specifies the quality and quantity of the crops. The receipt can be used as a collateral for accessing the loan facility from financial institutions. With this facility, they can also get benefit of selling their crops in market at the time when prices are high as their crops will be stored safely in the warehouse. Commercial banks will forward credits for infrastructure development of the warehouses on a mark-up of 6%. All the warehouses will be digitized for facilitating the farmers for keeping their crops safe to enable them to get the maximum possible price of crops in the markets, and get loans from any bank up to 70% of their production value within few days. Normally, 15 to 20% crops are wasted every year as there is no proper storage facility. Such a situation forces the farmers to sell their crops at low prices. But through the EWRF facility, there will be an increase in the credit facility to the farmers, and their crops will be secured. There is a need to expand this facility to all the crops to cover the entire credit of the agriculture sector and to secure the yields.