By BR Research

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Ahmed Umair is the Prime Minister’s Coordinator on Agriculture, where he advises the federal government on national policy priorities, structural reforms, and market interventions shaping Pakistan’s farm economy.

He also serves as an Independent Director at the National Credit Guarantee Company Limited (NCGCL), Pakistan’s first purpose-built institution for risk-sharing in SME and agricultural lending. NCGCL is a public–private partnership between the Ministry of Finance and Karandaaz Pakistan, designed to unlock financing for SMEs and farmers in a credit system long dominated by collateral and concentration.

Umair is also a Director of PAMRA and continues his long engagement in academia, serving as Adjunct Faculty at the Lahore University of Management Sciences (LUMS), where his research focuses on agricultural value chains. Over the last two decades, he has also supported the CARE Foundation, one of Pakistan’s largest education NGOs.

At the entrepreneurial front, Umair is the founder and CEO of Vital Agri Nutrients Ltd and Vital Green Ltd, two pioneering agri-input and sustainability ventures that have contributed to modernizing agriculture in Pakistan.

Earlier this week, BR Research sat down with Ahmed Umair to unpack the challenges and prospects of agricultural finance reform, role of guarantees in agricultural finance, and structural disruption in a credit system long dominated by collateral, concentration, and caution. Edited excerpts and a conversation summary follow:

BR Research (BRR):Agriculture reform often gets reduced to abstract arguments around state intervention. In your view, what does a practical roadmap look like? Which areas should be prioritized, which require longer-term investment, and what enabling conditions are necessary for these reforms to take hold?

Ahmed Umair (AU): The federal government’s vision for agricultural reform rests on five foundational pillars. The objective is to move away from piecemeal fixes and establish a coherent framework that responds to the immediate needs of farmers while driving the sector’s long-term transformation.

First, regulatory reforms. The priority is to make it easier for businesses across the agricultural value chain, from inputs to outputs, to operate and expand. The focus is on reducing friction, enabling investment, and creating an environment where productivity-enhancing projects can scale.

Second, access to finance. Reform must widen the flow of credit and extend insurance products that cover both crops and livestock. Without financial depth and risk protection, resilience cannot be achieved.

Third, mechanization and infrastructure, particularly storage. Productivity gains will remain elusive without intensified mechanization, and profitability will remain constrained without productivity. Alongside, storage and logistics are glaring weak points. These gaps must be bridged decisively by the private sector.

Fourth, access to IT-enabled services and knowledge. Farmers need reliable broadband connectivity and access to area-specific advisory delivered through existing mobile networks. Information asymmetry is as damaging as a credit gap, and digital services can close it at scale.

Fifth, farmer capability and R&D. Pakistan has no significant formal training programs for farmers at either the federal or provincial level, and that deficit must be addressed urgently. At the same time, agricultural R&D requires a fundamental overhaul. Public funding should be allocated on a competitive basis, open to both public and private institutions. If climate-resilient seeds are a national priority, resources must flow to those with the competence and track record to deliver results, not by default to public entities.

BRR:Within regulatory reform, what is the specific area of focus?

AU: The primary challenge is that our laws and rules are not benchmarked to international standards. We operate with frameworks that may have been relevant decades ago but fall short of what is now considered best practice. That is why we have proposed aligning them with OECD standards. This means looking at how advanced economies design their regulations, how they structure compliance, and how they balance oversight with efficiency. Benchmarking to that level provides us with a reference point that is credible, transparent, and globally recognized.

The second area is disclosure and transparency. A system that hides its laws or makes access difficult only breeds uncertainty. We have proposed that all laws and rules be made easily and publicly accessible. Similarly, licensing requirements for private businesses must move entirely online. Every application, every approval, every rejection should be time-stamped from start to finish. That creates an audit trail, allows us to monitor performance, and provides the basis to evaluate and reduce bureaucratic delays. It also removes discretion from the process and gives investors the predictability they need.

This is not limited to agriculture. These are fundamental governance principles. Whether you are regulating agriculture, industry, or services, the standards should be the same: align with global benchmarks, ensure transparency, digitize processes, and eliminate unnecessary friction. That is how you create a system where investment decisions are based on opportunity rather than uncertainty.

BRR: Within access to finance and financial intermediation, do you believe the greatest impediment is in fact the lack of crop insurance, and that without solving it farm credit cannot be scaled sustainably?

AU: It would be incorrect to suggest that insurance alone is the silver bullet. Crop insurance is undoubtedly an important piece of the puzzle, but it cannot solve the financing challenge in isolation. The deeper issue is that most economic activity in the rural economy remains undocumented. Financial institutions do not have a clear line of sight into the revenues of a typical farm. At best there are rough estimates, but nothing with the accuracy required for reliable lending.

Equally critical is knowing who the grower sells to. Without visibility on transactions and buyers, the risk picture remains incomplete. This is where digital payment systems can be transformative. Both the federal government and the State Bank, supported by financial institutions, are rolling out digital payment solutions across different segments of the economy. As adoption increases, coupled with improvements in financial literacy and access to technology, these systems will begin generating valuable data.

That data can then be mined to improve input quality and, most importantly, to build credible credit scoring models. Only when credit scoring is robust, reliable, and widely applied can private capital be crowded into agriculture on a sustainable basis. Without that foundation, farm credit will remain constrained regardless of what tools we deploy.

Insurance matters, but data is the real currency for unlocking farm credit.

BRR: When it comes to managing climate and weather-related risks in agriculture, credit scoring alone cannot be the answer. What other preconditions must be addressed first to create a system where finance can flow sustainably, particularly in relation to documentation and price discovery?

AU: If you map most agricultural value chains, you will see that almost all produce eventually ends up at a documented processor. What is missing is the layer just beneath that—the undocumented players. Take sugar as an example. Almost every sugar mill operates under a licensed regime, yet there is little clarity on actual sugar production, stock and flow data, or even farmer identity.

The same is true for paddy and rice. The crop cannot move forward unless it is processed by a sheller or a mill. Across the country there are several thousand such players, including shellers, processors, and millers.

The real point is this: the suppliers to these mills, i.e. the intermediaries and aggregators, must first be brought into the documented framework. Only then can we move backwards to document the farmer. Skipping the middle layer and trying to document the farmer directly will not work. That is step one, and it is foundational to any serious reform agenda.

Before finance can be unlocked, the middlemen must be visible. Without documenting the aggregators, you cannot document the farmer.

BRR: Do you believe that with the agricultural income tax now being enforced, the real silver bullet for bringing farm income into the tax net is documentation?

AU: This is a far more complex issue than it is often made out to be. If you look at the recently published agricultural census, more than 90 percent of farmers have landholdings of less than five acres. Yet these same farmers account for almost 70 percent of total output. On a typical farm of this size, revenues would hardly exceed one million rupees per year, assuming a topline of 200,000 to 300,000 rupees per acre.

There is certainly a very small segment, maybe less than one percent, with landholdings above 100 acres that must be taxed accordingly. Even if you bring the threshold down to 25 acres, those classified as large farms would not account for more than 7 to 8 percent of total output. The reality is that 90 percent of agricultural output is generated by micro-level farms, which by any reasonable standard are in no position to pay meaningful income tax.

The complexity goes further. Most of these small farms depend on household labor, often entire families, which is undocumented to begin with. Once you divide the modest revenue across the number of people working those farms, there is very little left to tax. In fact, if you applied strict accounting principles, you could well discover that agriculture, in aggregate, is a loss-making enterprise.

The question then becomes not how to tax agricultural income, but whether there is any income to tax in the first place.

BRR: If micro farms are, on balance, low-profit or even loss-making enterprises, are they really the future of farming in Pakistan?

AU: The Chinese model is one we must take seriously. That does not mean it should be copy-pasted, but it must be adapted to local conditions. Several important studies, including one conducted at Yale, have examined the minimum economically viable farm size in developing countries. Their conclusion is clear: it is no less than ten acres, and that is only if you are cultivating high-value horticulture. The same conclusion holds across regions, from West Africa to East Asia.

That defines the problem statement. The solution again points to China. The answer lies in moving toward a cooperative model of farming. Unfortunately, in Pakistan the very idea of cooperatives was tainted by the financial scandals of the 1990s. Even today, registrars hesitate to approve cooperative registrations because of that legacy. Yet the purpose of cooperatives is straightforward: to mitigate the risks of small scale and to enable productivity by pooling resources.

We need simple, clear rules that allow for the creation of genuine agricultural cooperatives. These can be supported through targeted incentives whether machinery provision, special incentives, access to financeetcthat reward authentic collective farming efforts. Most importantly, farmers must see tangible benefits from joining cooperatives. Without that, the productivity challenge will remain insurmountable.

Micro farms cannot carry Pakistan’s agricultural future alone. The future depends on scaling through cooperatives.

BRR: One of the most common perceptions in urban centers is that there is a wide gap between the farmgate price and the mandi price, and that middlemen pocket the difference by exploiting farmers. How accurate is this view?

AU: Price discovery cannot be discussed in isolation. It is inseparable from two other factors: transport and logistics costs, and intermediation costs. Too often these are ignored, and the middleman whether the arthi or commission agentis vilified under the assumption that the farmer is ripped off at the farm gate.

The reality is that transportation has become extremely expensive. There are costs of loading and unloading, fuel, and the capital required for vehicles and equipment. Farmers face a choice: sell at the farmgate or transport to the mandi. But transportation and storage are not their specialization. If a farmer tries to handle logistics himself, his sowing cycle can be disrupted.

This is where middlemen play a role. They have become specialists in transportation, intermediation, and storage. Even labor availability is now a serious challenge. Farming is not like a factory with steady, predictable output. At sowing and harvesting stages there is an intense surge in demand for seasonal labor, which then disappears just as quickly. That labor is often simply not available when needed. Middlemen help bridge that gap.

Consider harvesting. Until very recently, it was inconceivable that farmers would move away from manual harvesting of wheat. Today, more than 90 percent of wheat in Punjab is machine-harvested. That transition required both investment and coordination in precisely those areas—logistics, labor, and equipment—that farmers on their own could not have managed.

The spread between farmgate and mandi prices is not evidence of exploitation. It reflects the hidden costs of moving, storing, and delivering the crop, costs that someone must bear, and middlemen are equipped to manage.

BRR: Given the micro size of most farms in Pakistan, is the smallholder the right primary user of Electronic Warehouse Receipts. Can farmers realistically take an investment position and carry price risk. If not, what is the sensible sequencing for rollout.

AU: Start with where value actually accrues in the chain. If the largest gains sit with intermediaries who are better at post-harvest handling, there is little sense in tilting the system against them or creating artificial advantages elsewhere. Farmers are unlikely to take that bet or have the appetite for it.

The initial rollout was also too compressed. When EWR was pushed post Covid, global prices were highly volatile. If a farmer had to pay storage, insurance, certification, and interest, the economics did not clear.

The way forward is step by step. Begin with simple storage solutions to dampen shocks. Work with aggregators who already achieve scale. A five acre farmer bringing 125 maunds to an EWR facility with multiple intake steps and a 5,000 ton capacity shows the mismatch.

Farmers will join when they see clear benefit.

EWR should follow the value. Start with storage and aggregators, prove the gains, and farmers will adopt.

BRR: There is a clear business case for storage worldwide. Even if we set aside wheat’s controlled regime, why has storage not emerged in Pakistan as a formal, specialized line of business for other major grains.

AU: The core problem is taxation. Once you become a formal processor and enter the storage business, you face a very high corporate income tax burden. That creates a strong disincentive to formalize storage operations.

The result is predictable. Operators keep activity to a minimum and avoid scale because scale invites the tax net. Most storage-linked trading volume therefore remains in the informal sector.

Fix the policy and the capital will follow. If taxation is reviewed and the formalization penalty is removed, investment will move into storage.

BRR: On seeds, are we finally closer to regulatory reform that opens the door for biotech, specifically genetically engineered high-yielding varieties?

AU: The issue is close to resolution. The seed policy is near final and has gone through extensive consultations with national and international experts. Industry is on board. We have reviewed a wide range of practices and views. The emphasis is on benchmarking processes and screenings against international best practice, with full attention to potential risks to human health. This is one of the first items slated for announcement in the very near term.

The policy is essentially ready to move, and it will open biotech with clear, internationally benchmarked safeguards.

BRR: Labor availability varies by geography. In some regions of Sindh, daily wagers during peak harvest are reportedly paid well below the minimum wage, and the workforce is seasonal. As long as such low-priced labor exists, does it hold back mechanization in any meaningful way.

AU: Mechanization has been at a disadvantage because it operates in the formal sector and is taxed, while most human labor is neither taxed nor documented. That asymmetry has tilted incentives against mechanization.

Where mechanization has taken root, the progression has been organic. The pace has not always been what it should be, but in some areas the shift has been dramatic, especially in wheat and rice harvesting. In the next few years, corn harvesting will move from negligible to significant mechanization. Over the next five to ten years, sugarcane harvesting, which is currently almost entirely manual, will also become mostly mechanized.

One reason for the lag is that global mechanization has historically catered to large farms, so the equipment was designed for scale that does not match our typical farm size. That is changing. Modern machinery tailored for small farms is now entering the market and will make its way here.

Cheap informal labor and tax asymmetry have slowed mechanization, but small-farm machines will tip the balance.

BRR: Given the micro size of most farms, rising weather variability, and weak bankability, are cereals and other cash crops really the best choice for the typical Pakistani farm. Or does the economics point elsewhere.

AU: The value potential lies elsewhere: in horticulture. Do the math. On a canal-irrigated, good-soil acre, a five-acre farm’s monthly income is typically under 150,000 rupees. By definition, these are low-income households, which limits their ability to afford quality education and a better standard of living.

You cannot achieve higher profitability with grains. Grains are a volume play. Consider the contrast. In India the gross tonnage of grains and horticulture is roughly equal, close to 300 million metric tons each. In Pakistan, grains total about 50 to 60 million metric tons, while horticulture is no more than 12 million metric tons. India is roughly 1 to 1. Pakistan is closer to 1 to 5.

Wherever agronomy and markets allow, Pakistan should pivot to horticulture. Some of the difference reflects dietary habits, but a major part is weaker horticulture processing at home and the strength of SME-led agri exports in India. The state of Kerala alone exports more than two billion dollars of shrimp. Pakistan remains fixated on grains, both in policy and in the kitchen.

Grains keep farms busy, not prosperous. The pathway to income growth is a strategic shift toward horticulture wherever soil, water, and market access align.