In Pakistan’s agriculture sector, which is currently lagging behind similar nations, farmers must apply agricultural inputs like seed, fertilizer, and pesticide in recommended quantities, at the right times, and with guaranteed product quality in order to increase crop yields and overall productivity.
Since more than 90% of Pakistani farmers own less than 12 acres, their limited resources frequently force them to employ inferior and insufficient amounts of inputs. Because of this, everyone involved has been fervently supporting the creation of a simple, low-cost agricultural financing system in the nation that is devoid of exploitation and formalities.
With a budget of Rs9 billion for FY25, the Punjab Government’s recently introduced “Chief Minister’s Kissan Card” plan has been warmly greeted by the farming community, and many farmers have jumped at the chance to participate. With the card, smallholders can easily buy agricultural products worth Rs30,000 per acre from authorized retailers. The maximum amount that can be purchased is Rs150,000, which must be paid after six months.
The Punjab Government would pay the markup portion of these short-term, interest-free agricultural loans, which will total about Rs50 billion (during a crop season) and be provided by the Bank of Punjab.
Since Kissan Card money is now only available for FY25 and has no plans for the future, sustainability is a big worry.
There used to be a limited number of production credit options available to individual farmers (operating a finance facility). Zari Tariqati Bank Ltd. was the main choice in the formal sector, although farmers usually complain about how difficult, time-consuming, and corrupt its loan processing procedures are. Commercial banks, which have exorbitant interest rates, were the second choice.
Due to their incapacity to furnish the necessary collateral and the relatively small loan amounts, which raise administrative costs as a percentage of the loan amount for banks, smallholder farmers still have limited access to agricultural credit, which makes them unappealing customers.
On the other hand, microfinance organizations provide comparatively easy and farmer-friendly processes, but their average loan amounts are negligible and their interest rates are unreasonably exorbitant. According to a number of studies, one of the main factors contributing to the development of a poverty trap is the interest-based lending system. Given the climate-related uncertainties that make agricultural harvests more unpredictable, farmers who take out such loans face significant risks.
The Kissan Card gives smallholders a useful new way to obtain quick, easy, and interest-free agricultural finance in the current agricultural credit market. Sustainability is still a big issue, though, because the Annual Development Program’s money for this project is only available for 2024–2025; there are no plans or predictions for subsequent years.
Farmers are also worried that if a new political party takes power in Punjab, this program would be scaled back or stopped, similar to the highly acclaimed health card program implemented by the previous administration. Therefore, business circles and development experts think that political parties should agree on a core policy agenda, which is crucial for the nation’s economic and social development, irrespective of party manifestos and personal or political prejudices.
The scheme’s restricted reach—it is now limited to 500,000 farmers on a first-come, first-served basis—presents another major obstacle for policymakers. Over four million farmers in Punjab, who own landholdings ranging from one to twelve acres, are the target of the program (Agricultural Census 2010). Just 12.5% of farmers will profit from the existing goal.
In order to guarantee fair access for all members of the farming community and to make a significant impact while staying within financial limits, the government must thus come up with a practical plan to assist the remaining farmers.
Reducing the landholding restriction from 12 acres to 5 acres, with a focus on subsistence farmers, is one way to improve outreach. Negotiating volume discounts (5–10%) with producers of agricultural inputs, especially seeds, insecticides, and micronutrients, whose goods are approved for sale under the Kissan is another sustainable way for the government to partially finance this program.
