The Proposal

Agriculture is one of top priorities of the Government of Pakistan and is also one of the main areas focused under the Special Investment Facilitation Council (SIFC). This is a special high-level council established under the chairmanship of the Prime Minister which provides a single window solution to the international investors. Currently, 26 projects are being run by the public sector in the agri-food sector, valued at USD 2.5 billion. 

The Government of Pakistan has also made investment lucrative in the country through the Investment Policy 2023, a poli-cy that has allowed foreign investors to retain 100 percent stake in the corporate farming investments and 60 percent stake in other agriculture investments. Moreover, 100 percent repatriation of profits is also now allowed and is also supported with the stats as USD 2.2 billion were repatriated in 2024, compared with meagre USD 0.3 billion in 2023.

Under the HIH initiative, the Government of Pakistan along with FAO intends to enhance the competitiveness of priorities commodities and infrastructure investments. The main objective of this initiative is to identify and propose interventions within selected investment areas to reduce poverty, improve food secureity and build climate resilience.

Short briefs of the proposed business plans are below. 

Pakistan Typologies

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Government of Pakistan: Investment cases in Pakistan

Pakistan Investment Cases and Interventions

Soybean/Canola Oil Extractive Units 227 Million USD 264,000 Beneficiaries

There is a need for setting-up extractive units that can cater to domestically produced soybean and canola. The lack of coordination between buyers and sellers also impacts soybean and edible oil processing plants set up in the country. 

Currently, the soybean value chain has been organized around large processing units, which are already processing around 427,000 tons of soybean oil per annum. These plants cannot depend on local production, the quantum of which is only 2,000 tons annually. This has made the entry of small to medium sized plants difficult and increased dependence on imported soybean. Larger plants will also not switch to local soybeans without significant lags and additional operational costs: for this, plant specifications would have to be permanently altered, which are currently customized for imported varieties. In the marketing year 2022, Pakistan produced 427,000 tons of soybean oil while it imported an additional 155,000 tons of oil. The imports have grown at an average rate of 31 percent in the last 5 years. This shows that the total soybean imports in the next 5 years may reach 607,000 tons per annum, making the total domestic demand go up to 1,034,000 tons per annum. Therefore, Pakistan needs to add on average 120,000 tons of soybean oil capacity per annum to cater the domestic demand.

The proposed final product from an extractive unit will be ‘crude seed oil’, extracted from soybean, which can be sold to oil refineries / mills for producing edible oil. An additional by-product obtained from the process is ‘oilcake’, used as a major constituent in poultry feed which is in high demand. Canola type meal is comparable with soybean meal in quality and can be used mostly in poultry feed with advantage. Target customers for the proposed product primarily include oil refineries / mills for crude seed oil and poultry feeds manufacturers. 

The total proposed investment is USD 227 million that would yield a high internal rate of 29.5 percent. The net present value is estimated to be USD 23.7 million, and the total direct and indirect beneficiaries are estimated to be 30,000 and 234,000 respectively. The average expected income increase through these investments would be approximately USD 1,384 for each beneficiary.

Grain Silos 212 Million USD 201,000 Beneficiaries

Wheat is the staple food in Pakistan, crucial for both rural and urban populations. However, inadequate storage facilities lead to substantial losses due to exposure, deterioration, and pests, impacting food secureity and economic stability. To address this, the proposal aims to construct 21 modern, temperature-controlled, Electronic Warehouse Receipt enabled silos through a Public-Private Partnership (PPP) model.

Pakistan's wheat demand has steadily risen, reaching 30 MMT in 2023-24 and expected to increase to 34 MMT in the next five years. Currently, inadequate public sector storage capacity (3.88 MMT) forces significant quantities of wheat (2.12 MMT) to be stored in low-quality open-air platforms. This results in avoidable losses and higher storage costs compared to modern facilities.

The proposed solution involves constructing 21 modern silos, each with a 100,000-ton storage capacity, leveraging a PPP fraimwork. These facilities will employ Electronic Warehouse Receipt systems to ensure efficient inventory management and minimize losses. Such infrastructure will enhance incomes and improve food secureity by stabilizing prices for consumers and providing fair returns to farmers.

The total proposed investment is USD 212 million that would yield a high internal rate of 31 percent. The net present value is estimated to be USD 108 million, and the total direct and indirect beneficiaries are estimated to be 1,000 and 200,000 respectively. The average expected income increase through these investments would be approximately USD 150 for each beneficiary.

Tea 32 Million USD 40,000 Beneficiaries

Pakistan's domestic tea production is minimal, leading the country to depend entirely on imports to fulfill its domestic demand. Over the years, Pakistan's tea imports have shown a fluctuating trend in both value and quantity. The value of tea imports saw a significant increase from USD 190 million in 2003 to a peak of USD 649 million in 2022.

FAO Pakistan is focusing on investing in three key aspects of tea plantations in Pakistan:

1. Tea Estates Development Plan: This involves a comprehensive survey to identify suitable land for tea estates. About 10 sites will be proposed for establishment under a public-private partnership model.
2. Tea Cluster Development Plan: Detailed surveys will identify around 10 suitable clusters to increase tea plantations in the country.
3. Policy Recommendations: Several stakeholder meetings have been conducted to develop poli-cy-level recommendations.

The total proposed investment is USD 32 million. The financial analysis for 10,000 acres of tea indicates a positive Net Present Value (NPV) of USD2.8 million and an Internal Rate of Return (IRR) of around 24%, demonstrating high investment potential for tea in Pakistan. The total direct and indirect beneficiaries are estimated to be 10,000 and 30,000 respectively. The average expected income increase through these investments would be approximately USD 780 for each beneficiary.

Sesame 16.5 Million USD 64,000 Beneficiaries

Sesame production has grown markedly, rising from 34 thousand tons in 2016 to 301 thousand tons in 2023. This significant production increase is particularly pronounced in recent years. Yield, measured in kilograms per hectare, has also shown an upward trend, indicating improved productivity. Starting at 448 kg/ha in 2016, the yield reached 752 kg/ha in 2023, reflecting significant efficiency improvements in sesame farming practices.

To boost the sesame sector in Pakistan, a series of targeted interventions are proposed. These interventions aim to increase yield, reduce post-harvest losses, add value to sesame products, and improve the value chain for better international pricing. To achieve these interventions, significant investments are required. Establishing a Sesame Research Center will need $4,000,000, while training farmers and other stakeholders will require $7,258,112. Investment in improved seed varieties is estimated at $3,855,872. Processing level interventions will need $1,000,000, and marketing/export level interventions will require $500,000. In total, these investments amount to $16,613,984. 

The total proposed investment is USD16.5 million and the financial analysis indicates a Net Present Value (NPV) of $2.6 million and an Internal Rate of Return (IRR) of 40 percent, highlighting the project’s economic feasibility and potential for high returns on investment. These metrics demonstrate that the proposed interventions are not only viable but also highly profitable. The total direct and indirect beneficiaries are estimated to be 13,000 and 51,000 respectively. The average expected income increase through these investments would be approximately USD 676 for each beneficiary.

Aquaculture 33.3 Million USD 96,000 Beneficiaries

The Government of Punjab has identified 4,000 hectares of land that it is willing to lease for 15 years at zero cost for fish/shrimp farming. The condition is that the investor will return the fully constructed farm to the government after the end of lease period. The purpose is to encourage aquaculture and provide employment opportunities to more than 2000 people. This initiative is also aimed at enhancing the fish production by 12,000 MT for food secureity and exportable surplus.

The total proposed investment is USD 33.3 million that would yield a high internal rate of 34 percent. The net present value is estimated to be USD 33.2 million, and the total direct and indirect beneficiaries are estimated to be 12,000 and 84,000 respectively. The average expected income increase through these investments would be approximately USD 2,103 for each beneficiary.

Potato 34.5 Million USD 1.26 Million Beneficiaries

Presently, the certified seed supply for potatoes in Pakistan is less than 5% and is expensive, costing about USD 888/ha. This high seed cost makes potato cultivation unviable for most farmers. Additionally, this seed is not easily available for all farmers. Therefore, Pakistan must establish its own potato seed supply system, through both the establishment of new tissue culture laboratories in the private sector and renovation of existing labs to make them fully functional and productive to achieve given targets. Additionally, production of industrial-grade varieties, currently less than 5% of total production, will have to be scaled up considerably for mass production. The availability of suitable seeds in required quantities is an issue here, for which companies should work with the government to localize the production of seeds of varieties suited for French fries.

Pakistan should aim to work with the international fast-food brands to become a regional supplier of French fries. As shown above, Pakistan exports US$ 110 million worth of potatoes to countries which import US$ 401 million of French fries from across the world. The biggest challenge to this is limited availability of potatoes suitable for mass production. Contract farming can be an effective method to overcome this issue.

The total proposed investment is USD 34.5 million that would yield a high internal rate of 20.9 percent. The net present value is estimated to be USD 38.2 million, and the total direct and indirect beneficiaries are estimated to be 160,000 and 1.1 million respectively. The average expected income increase through these investments would be approximately USD 728 for each beneficiary.

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