AN EXPLORATORY STUDY ON THE PERCEPTION, CHALLENGES, AND STRATEGIES FOR AGRICULTURE FINANCING IN PAKISTAN: STAKEHOLDER’S PERSPECTIVE

Abstract

Agri-financing faces challenges due to a variety of factors that are still uncovered in the context of developing countries. This study aims to explore the challenges from the perspective of stakeholders specifically bankers, farmers, and regulators to boost agriculture financing by channelizing it through commercial banks in Pakistan. The study used interviews through open-ended semi-structured questions from stakeholders. The study capitalizes on the purposive sampling technique for conducting interviews with the 16 conventional and Islamic Agri-bankers. A stratified random sampling design is used to conduct interviews with 30 farmers from the Potohar region. The study used ATLAS. ti version, 8 for thematic analysis of qualitative data. The study finds that the bankers and farmers weigh the challenges such as high-interest rates charged, lengthy and cumbersome documentation, collateral requirements by commercial banks, and socio-demographic factors of farmers (illiteracy, religiosity, poor communication skills) and exploitative role of middlemen (Aarthies). Moreover, a lack of awareness for the use of innovative ways to improve productivity by farmers inhibits the agri-equipment financing from banks. Stakeholders suggest that introducing customized regional farmers’ financial literacy programs and platforms for linking farmers with value-added companies, centralized farmers' data portal (landholding/record-keeping system) and digitalization of agriculture loan processes (one window operations) can improve the agri-financing situation in Pakistan. This study has significant implications for the policymakers of the agricultural sector to incentivize farmers and provide strategies to overcome the challenges for facilitating stakeholders in Pakistan.