Commercialisation of agriculture



By Muhammad Khalid Bashir

SOME unique and new innovative ideas are needed to improve resource allocation and productive efficiency of agriculture. Now when agriculture is turning into a business, it is the need of time to take this as any other businesses.

It is time to look at the business incubators (BIs) which nurture the development of entrepreneurial companies, helping them survive and grow during the start-up period when they are most vulnerable. These programmes provide their client companies with business support services and resources tailored to young firms.

In the international market the BIs have already started the work for agricultural sector for which they are known as agribusiness incubators. It is time to introduce agribusiness incubators for Pakistan’s agribusiness sector so that our farmers can have a little more help to break the vicious circle of ‘grow-eat-grow’ by removing financial constraints and accelerating the adoption of new technologies with the help of these agribusiness incubators.

The most common goals of incubation programmes are creating jobs in a community, enhancing a community’s entrepreneurial climate, retaining businesses in a community, building or accelerating growth in a local industry, and diversifying local economies.

There are about 4,000 BIs worldwide. The incubation model has been adapted to meet a variety of needs, from fostering commercialization of the university technologies to increasing employment in economically distressed communities and serving as an investment vehicle.

The BIs can be private or public. Private incubators are for-profit firms that take equity or receive a fee for the business services they provide to their clients. In essence, they are a consulting firm that is specialized in new firm creation.

In the last 20 years, many developed and developing countries have started large systems of public business incubators to encourage and assist entrepreneurship. In many cases, public incubators are designed to stimulate the development of new products and services in high-tech industries. For science-based business incubators, an effective collaboration with universities and research institutions is essential to motivate researchers into taking the risk of initiating a company.

Incubators can have many partners in addition to universities. Since new firms require finance to grow, incubators can have close relationships with many kinds of investors. Banks can provide most of the seed and start-up capital for incubated companies.

Since BIs have proved to be a powerful economic development tool, they collaborated actively with regional and national government agencies, from which they often received financial grants in many countries.

Evaluations of business incubators in Europe and the US suggest that 90 per cent of incubated start-ups were active and growing after three years of operation which is a much higher success rate than that observed in start-ups launched without assistance.

Science-based business incubators are thought to be particularly useful from a policy perspective because they can simultaneously promote knowledge diffusion, technology transfer and high-tech firm creation.