Agriculture 4.0: A Better Tomorrow through Green Banking

There is a famous proverb, “A Chain is as Strong as the Weakest Link.” This holds true for Pakistan’s agricultural sector, which has always been plagued by inconsistencies in terms of economic sustainability throughout the various value chain points. Pakistan is an agricultural country with agriculture contributing approx. 19% of the country’s annual GDP and providing direct and indirect labor to a large part of the country’s population. The agriculture sector serves as an integral part of Pakistan’s economic chain, but the declining state of this critical link subsequently weakens the whole economy. All around the world, the agricultural sector is being plagued by reduced incomes, disrupted supply chains, chronic and acute hunger due to various factors, including adverse socio-economic conditions, environmental degradation, natural resource shortages, climate change, and pests. According to research, approx. 25% of the global farmlands have already been highly degraded due to unsustainable agricultural practices. Almost 80% of global deforestation is being led by agricultural concerns. The greenhouse gas emissions due to agricultural practices have doubled over the past 50 years approx. The investment amounting to US$ 1 trillion is required for the development of sustainable irrigation systems until the year 2050 in developing countries.

Developing countries like Pakistan are weighed down with agricultural challenges, including deforestation of unsuitable land; overcutting vegetation; unsustainable irrigation system and practices; overgrazing; improper crop rotation; unbalanced fertilizer use; inequitable distribution of wealth across the supply chain, usage of agricultural land for housing societies and much more. As a solution to these problems, countries have started placing strategic importance on developing sustainable agricultural practices. The future of agriculture is the synergistic blend of Precision Agriculture, the Internet of Things (IoT), and Big Data in the form of Agriculture 4.0. It has revolutionized every aspect of the agricultural value chain through new techniques such as Hydroponics, Bioplastics, Desert agriculture, Seawater farming, Vertical/Urban farming, 3D-printing, Drone technology, Data Analytics, Nanotechnology, and Artificial intelligence. The goals of Agriculture 4.0 and Sustainable Agriculture are mainly increasing the productivity of the crops while ensuring higher environmental sustainability. However, the most important aspect of Agriculture 4.0, the agricultural revolution, is that it must be a green one with science and technology at its heart.

Pakistan, a predominantly agriculture-based economy, is currently facing a rapidly economically and environmentally deteriorating agricultural sector. It is suffering from severe inequalities in terms of economic returns obtained by various value chain partners. Climate change is undoubtedly one of the most daunting challenges confronting society today. The effects of climate change are increasing rapidly, requiring all the stakeholders to do their share of protecting our planet. Banks can play a critical role as an intermediary between economic development and environmental protection through promoting environmentally sustainable and socially responsible investment in the agricultural sector. Green Banking, a paradigm shift in the banking ideology, is the solution to Pakistan’s agricultural woes. The digital revolution in any sector requires investment, which is where the banking industry comes into play. Banks can finance various digital farming or sustainable agricultural solutions under the umbrella of Green Financing to facilitate the sustainable and equitable transformation of this sector. Green financing schemes, with low-interest rates, can be launched for various precision farming techniques, equipment, and processes such as solar-powered tube wells, usage of drone technology in crop maintenance, minimization of water wastages through sustainable irrigation systems, development of agricultural waste management systems, etc. Banks should educate and facilitate all the value chain partners, including farmers and other supply chain partners, about the various environmentally and economically sustainable agricultural products and processes available, which will increase per acre yield and minimize the adverse environmental impacts.

The adoption of Agriculture 4.0 in Pakistan can be achieved through the combined efforts of the banking industry, Ministry of National Food Security & Research, and Ministry of Science and Technology. The successful adoption of digital agriculture through Green Banking can play an instrumental role in the attainment of a number of UN-SDGs 2030, such as UN-SDG # 1 (No Poverty), UN-SDG # 2 (Zero Hunger), UN-SDG # 3 (Good Health & Well Being), UN-SDG # 12 (Responsible Consumption and Production), and UN-SDG # 13 (Climate Action). The Prime Minister, Mr. Imran Khan, has taken steps towards advancing the country’s agricultural sector and has encouraged the cultivation of olives, avocados, and Saffron for wealth creation. The Prime Minister has recently launched the “Kissan Card” for supporting and facilitating small farmers. However, there is a lack of any clear-cut policy that connects Green Banking with sustainable agricultural initiatives enabling the agricultural sector to simultaneously achieve economic and environmental sustainability. Framers should be trained in sustainable agricultural techniques and products. Digital agricultural loans can be a way of fulfilling the Good Governance agenda. It educates the farmers to be environmentally friendly by emphasizing sustainable agriculture practices. It can inculcate a great sense of responsibility to adopt such an initiative to be a part of those who want to save our planet from further deterioration. The agricultural sector cannot flourish until the farmers reap the benefits of their hard work as much as the other value chain partners. In Pakistan, farmers suffer from low income and low awareness regarding alternative agricultural methodologies. Green Banking initiatives aimed at nurturing a sustainable agricultural sector can ensure more efficient farming practices reducing wastage of natural resources and maximizing economic returns by providing sustainable loans. Green Banking as a concept is a proactive and smart way of thinking with a vision for the future sustainability of our only Spaceship Earth. This will create a win-win situation for both sectors, i.e., agricultural and banking. Any economy cannot enter the Era of Industry 4.0 without an Agriculture 4.0 sector.

 

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