Ensuring food security and nutritional equity is essential for Pakistan’s economic stability, yet climate change, lack of adequate financing, and supply-chain constraints continue to threaten agricultural resilience. To address these challenges, Karandaaz Pakistan (KRN) is leading a multi-faceted approach, leveraging equitable financing solutions and strategic investments to support Pakistan’s food system.

Bridging the Agricultural Financing Gap

Access to institutional credit plays a critical role in stabilizing and expanding agricultural production. Studies in Punjab have shown that a one-unit increase in institutional credit reduces food insecurity by 0.11 units. However, despite its importance, formal credit availability remains limited. The State Bank of Pakistan’s (SBP) mandated agricultural credit targets are frequently unmet, resulting in a significant gap between demand and supply despite the involvement of 47 financial institutions, including commercial, Islamic, specialized, and microfinance banks, in agricultural lending.

The credit gap stems from the absence of fit-for-purpose financing products e.g., climate smart financing, warehouse-receipt finance, Shariah compliant options, and flexible collateral requirements. Without these, many farmers default to informal lenders (Arthis) offering quick, relationship-based credit but on opaque terms. This reliance on non-institutional finance deepens vulnerability, prolongs debt cycles, and ultimately constrains productivity and food security.

KRN’s Role in Expanding Equitable Agricultural Finance

Deemed as a high-impact sector, KRN focuses on agriculture through direct and indirect investments to promote inclusive economic opportunity and growth that aims at building resilience against natural and climate related disasters and contribute towards food security. Risk Participation Agreements (RPAs) with banks represent KRN’s broader investment in small and medium-sized enterprises (SMEs) operating in multiple sectors, with considerable exposure to agriculture-related subsectors such as fertilizer and tractors/transport vehicles. On the other hand, direct financing is provided in the form of equity investments or loans for agriculture-oriented projects. By partnering with financial institutions and supporting targeted value-chain inputs, KRN is fostering a more equitable financial landscape, empowering farmers, and strengthening Pakistan’s food security.

All five KRN direct-financing projects operated to plan, with improved operations, business expansion, and jobs supported.  KRN also helped create markets by pioneering dealer finance in fertilizer (now scaled and endorsed by SBP) and unlocking fleet-financing viability through risk sharing. The RPA portfolio, which has reached over 700 agri SMEs remains stable and low-risk, anchored by repeat borrowers and supporting long-term sustainability.

Enhancing Food Security through Dealer Financing and RPA Initiatives

KRN’s RPA initiatives focus on dealer financing to improve access to essential agricultural inputs. By targeting fertilizer dealers, tractor loans, and fleet financing, KRN is directly addressing critical value-chain needs:

• Fertilizer and Tractor Financing: Accessible fertilizer and tractor financing has been shown to boost productivity, directly reducing food insecurity through improved yields. A one-unit increase in fertilizer consumption leads to a 0.02-unit improvement in food security, while a one-unit increase in tractor use results in a 0.08-unit increase in productivity, thereby contributing to improved food security.
• Fleet Financing: By increasing supply chain efficiency, fleet financing facilitates better market access and distribution, indirectly strengthening food security across the country. Fleet financing saves farmers from blocking large amounts of capital that can be used for inputs and other measures to improve productivity.

Together, these investments bolster Pakistan’s agricultural productivity, showcasing KRN’s pivotal role in value chain enhancement for food security.

Building Resilience through Climate-Smart Poultry Investments

Eggs serve as an affordable, protein-rich food staple, making poultry farming a critical sector for food security. However, climate-related challenges, such as disease outbreaks, fluctuating feed quality, and inconsistent production rates, threaten the sector’s stability. Recognizing these risks, KRN has strategically invested in climate-resilient poultry farming to enhance food security and economic growth.

KRN’s investments include:

• PKR 500 million in Wahdat Farms, which has doubled its production capacity.
• PKR 30 million loan to Super Bird, a woman-led enterprise, achieving a 20% increase in production.

Key Outcomes of Poultry Sector Investments

• Increased Nutritional Value: Supports Omega-3 and vitamin-enriched egg production, addressing nutrition gaps among youth.
• Climate Adaptation: Improved farm management, feed quality, and disease control, reducing antibiotic use and environmental impact.
• Women’s Economic Empowerment: Super Bird demonstrates the potential of mechanized poultry farming for women-led agribusinesses, reinforcing KRN’s commitment to gender-inclusive financing.

Driving Long-Term Impact

KRN’s commitment to equitable financing and climate-smart agriculture is transforming Pakistan’s food security landscape. By expanding access to financing for farmers, strengthening agricultural value chains, and investing in resilient food systems, KRN is playing a pivotal role in building a more food-secure, climate-resilient, and economically inclusive future.