Challenges in agribusinesses
By: Amin Ahmed
Donor-assisted project aiming to create a competitive and
sustainable agribusiness in the country failed to take-off
due to a lack of ownership on the part of public sector
agencies as well as their unfamiliarity with fostering
private sector investment in the sector.
development project, for which the ADB provided $31m, was
aimed to increase the commercial value of agricultural
products, especially horticultural and dairy output, and
related exports. It sought to remove credit constraints,
introduce innovative practices and new varieties of
products, and upgrade the skills and competency levels of
farmers and entrepreneurs producing and marketing commercial
The project was also supposed
to support private sector businesses to provide wholesale
market data. But it failed as there was not enough interest
from businesses, and the implementing agency also lacked the
capability to promote this new business.
The projectís design also
underestimated the complexity of the data business, which
had to be preceded by the establishment of a good and widely
accepted product grading system.
There had been some success in building the capacity of the
agriculture and livestock product marketing and grading
department to establish export quality certification.
However, only two of the
planned seven testing laboratories were upgraded. None of
the revised new export standards developed under the project
was used because of a lack of regulatory support.
Agribusiness enterprises were
to finance $10.4m, and the remaining funds were to be
sourced from the government, private sector institutions and
At completion, the total cost
was only $21.6m or 44.1pc of the amount envisaged at
appraisal, as many of the envisaged activities could not be
completed. The ADB financed about $13m of the actual costs.
The government financed $4.3m
and agribusiness enterprises contributed $4.3m.
The ADB funded project failed as there was not enough
interest from the private sector, and the implementing
agency also lacked the capability to promote new businesses.
The ADB found in its project
validation that the project was overly ambitious and focused
on the value chain across the county. The project could have
first opted to pilot in one sub-sector in one province.
Upon succeeding, it could
then have been easily replicated, as policymakers would have
gained confidence in view of its performance.
Significant policy reform
decisions were either substantially delayed or could not be
implemented in time for the project. Prepared policy
frameworks and drafts were not processed or submitted for
the consideration of higher authorities.
The projectís management was
complicated and resulted in non-performance, even in routine
activities like submission of audited accounts and periodic
The executing agency could not ensure timely procurement of
consulting services, so an additional national consultant
had to be engaged to coordinate across consulting services.
The handling of the imprest
account was unsatisfactory, and when the ADB tried to
rectify the situation by suggesting that second generation
imprest accounts be established, the decision was not
Various project agencies
faced problems with availability of financial resources, as
counterpart funds were not released on time.
The experience showed that planned regulatory reforms often
take longer time and resources to be realised, as compared
with investment activities.
The validation also noted that the project attempted to work
along the entire value chain, which made tasks more
difficult than if it had concentrated only on a few key
The length of the value chain
necessarily involved a number of layers of decision makers
and did not only cut across the public and private sector
divide, but also entailed different government agencies and
local versus central governments.
Several players were required to synchronise their
activities so as to succeed in value-addition. Consequently,
coordination costs and risks increased exponentially.
Regarding the projectís complexity, the validation noted
that introducing and promoting such an ambitious and
transformative undertaking required substantial preparation
and investment to communicate the interrelation between the
projectís activities and outputs to raise buy-in among
project agencies and beneficiaries and gain their confidence
in the possible attainment of the projectís outcomes.
It suggested that the ministry of national food security and
research publish product quality standards. It recommended a
revision in the financial arrangements for the federal seed
certification and registration department so that it could
It also suggested putting in
place sustainability plans for the Livestock and Dairy
Development Board and the Pakistan Horticulture Development
and Export Company.
The validation report did not comment on the monitoring and
evaluation of the projectís design.
However, it did mention that
the baseline study that was to be prepared within the first
six months of the project, but it took more than three
years. In view of these facts, the ADB dropped its follow-up
on the project.