CBEC for Development

Pakistan – A Major Grain Producer

Pakistan produces over 25 million tons of wheat annually. Rice output has steadily grown, reaching 7.2 million tons in 2019, valued at $2.7 billion. Rice exports were 1.45 million tons, earning $1.8 billion. Maize production has rapidly increased, hitting $1 billion in 2019 output. Overall, rice, maize and wheat were worth $9.1 billion in 2019.

Poor Post-Harvest Storage and Handling

Rice and wheat are staple crops, while maize supports poultry and industries. But antiquated sun-drying results in losses upto $343 million annually for these grains. Lack of scientific storage confines farmers to localized markets. They bear high risks but earn low profits, often forced to sell immediately after harvest when prices crash.

While government silos lose 1.5-3.5% of wheat, private sector and farm storage are primitive. Upgrading storage operations across provinces is imperative but long delayed.

Modern Grain Storage – A National Priority

The pandemic exposed flaws in agricultural supply chains. Pakistan desperately needs large investments in modern grain storage. This can reduce post-harvest losses while stabilizing commodity prices and availability.

Electronic Warehouse Receipts (EWR) Regime Brings Hope

The new Electronic Warehouse Receipt (EWR) system brings hope. The EWR accredited warehouses can issue tradable electronic receipts for crops meeting quality criteria. This enables integrated national markets via exchanges.

But few EWR warehouses exist currently. Though promising, private investment is hesitant due to lack of proven business models. Innovative solutions to expand accredited storage capacity are needed to leverage the EWR potential. There is a need to attract foreign investors.

Proposed Model to Build Integrated Storage Infrastructure

I propose interlinking small farmer silos with larger EWR integrated warehouses to enable efficient end-to-end grain handling.

Experts agree that scientific silo storage can greatly benefit farmers. But the government lacks capital for large projects, necessitating private investment.

In addition, farmers currently have no pricing control and are forced to sell at harvest time when prices are lowest yearly. Providing sophisticated storage can address this predicament. Farmers could store produce in such facilities and obtain EWR vouchers to redeem later when prices peak.

However, accredited EWR warehouse capacity remains inadequate presently. Building farmer-centric storage is constrained by high infrastructure costs and limited private sector interest so far.

This hurdle can be overcome by starting with large farmers who have the capital to invest in on-farm storage. In exchange for guaranteed produce over several years, they can be encouraged to install solar dryers and silos.

This establishes an initial modern storage network while promoting farmer buy-in. Large farmers benefit through better price discovery, lower wastage and assured future revenue.

Concurently, medium-sized EWR integrated warehouses can be built near great markets (mandis) by attracting foreign capital, especially from China. Investors recover costs by receiving fixed annual commodity shares over agreed timeframes. The government can offer incentives like guarantees. Banks can also participate.

The farmer silos would ultimately feed into the EWR accredited warehouses, establishing an interconnected pan-Pakistan storage grid. As overall capacity expands, smallholder farmers also get warehousing access.

In this manner, creative win-win solutions can help Pakistan overcome grain storage challenges. The integrated infrastructure model offers a financially viable pathway to modernize farm-to-market handling.