Note: T/H stands for tons per hectare.
M/T stands for million tons.

Sound plan for sugarcane production, with supervised and managed cultivation culture is eagerly awaited. For this objective to attain, a three year plan be designed to achieve reasonably increased sugarcane yields. This pursuit shall prove really rewarding and no crutches of support price structure, in vogue for the past many years at a stretch, would be needed. The current malady of high cost of sugar production created by the existing structure can also be addressed by executing this strategy.

The PSMA have always pointed out the system in vogue as a fallacy in assessing cost of sugarcane production and deciding increase in support price of sugarcane out of proportion. This malady has carried adverse influence on the cost of sugar production. After setting the sugar marketing to free price system during 1984, the system of deciding sugarcane price alone has become out of tune.

Without concern about the cost of production and cost of sales of sugar and price that must give a surplus on equity, atleast equal to economic rate of return, the successive governments have identically shown a tendency of anxiety about sugar prices. Sugar needs not be seen in isolation. Sugar has direct link with sugarcane cost/price and with general price trend in the economy.

The PSMA continues to plead for considering the case of cost-price disequilibrium dispassionately so as to set an equitable mechanism in place to allow sugar industry play its role in the national economy. Alternatively, suitable mechanism be arranged for sugar price find its level for survival of the sugar industry.

Sugar industry is plagued by several problems and they are piling up. Removal of identified and agreed upon hardships remains awaiting for regularisation and rectification. As a result, problems keep on compounding and this implies financial stress. It is still to be realised in the officialdom. For an instance, the number of taxes and its cumulative burden placed on sugar, a food item and a vital ingredient of several other food items and consumer products. Some other major problems are discussed briefly below so as to place them in sharp focus.

a) Market committee fee
Levy of fees by the market committees on sugar mills bears no justification. It implies an extortion. It is persisting despite a number of representations made by the PSMA-SZ against its rationale. The government attitude about it has been positive, in line with PSMA's rationale. Yet no amendment is carried to exempt the sugar industry from this stress. Fee and tax bear different connotations. Fee is chargeable for specific service/s. MCs have no role, whatsoever, in marketing of sugarcane being supplied to sugar industry. Sugarcane supply and prices are supervised by Cane Commissioner under a separate statute, being Sugar Factories Control Act, 1950. Sugarcane prices are announced by the provincial government under advice by the federal government. Recovery of market committee fee has no reason. It is, as such, coercive in effect. Two sets of acts for a single product and purpose, besides charging fees without services, continues to erode resources of the sugar industry. This bad patch is persisting as usual. Sindh provincial government's directives to dismantle deep rooted corrupt practices and consequent malaise, need to take care of this ghost roaming around, eating up sugar industry's vitals.

b) Sugarcane/Road cess
Road cess is being recovered since 1964 for the two specific purposes, (a) construction/reconstruction, repairs and maintenance of roads network linking sugarcane farms with sugar factories and (b) undertaking varietal research and development for sugarcane. The cess fund rate in Sindh has been increasing over the years. The accounts of the fund's "utilisation" have not been seen, due perhaps to its being quite questionable. Ignoring this, increase in the rate was notified on February 19, 1995 and Act for it was passed during March 1995.

A phenomenal escalation in the rate has certainly been burdensome, inequitable, untimely, besides bearing no reason for enhancement. It is laudable that the then Chief Minister, Chief Secretary, Secretary Agriculture, Secretary Industries and other officials of Sindh government appreciated the problem, its nature and its bidding for odds. They have directed for implementing the agreement hammered out on June 20, 1996 by the PSMA-SZ with Advisor Finance to the then Chief Minister. It needs to be implemented.

The PSMA appreciates formation of millswise committees to take care of roads building/rebuilding in a bid to ensure effective utilisation of the cess fund. We hope, this step will create efficient roads network connecting farms with factories.

The PSMA, however, holds a considered view of (a) giving moratorium for a couple of years on cess levy and in this period (b) to arrange and present yearwise accounts of its collection and utilisation, (c) to remobilise the cess fund already collected and earmarked for its appropriate utilisation, (d) to create institutional structure for undertaking R&D on sugarcane with the unutilised funds in the accounts. This matter deserves prompt regularisation as agreed to. Its remaining open will bring financial stress on the sugar mills under the Income Tax Act provisions.

c) Local taxes
The government of Pakistan deserves commendation for the courage of doing away with the obstructive nature of multiple forms, rates and levels of local taxes which, by and large, were going elsewhere and not in the exchequer. It was just creating excess burdens on business and promoting corruptive practices all at the cost of the consumers. It is hoped that this evil chapter will never be reopened as its distaste to all has been well known.

d) Sales tax on bagasse
Assurances to the PSMA given on all government levels and at all times by recognizing inadvertence in demanding sales tax on bagasse used in-house as fuel in generating power during 1996-97 but did not end on to a positive note. Some sugar mills, preferred to file suits as a precautionary remedy, did not pursue it as vigorously as was otherwise desirable. It was by way of putting confidence in assurances for administrative remedy. The entire industry had to suffer enormously on this count. It has shaken confidence in the consultative process to be a remedy, particularly where the revenues were involved. This matter is being pursued by the sugar mills in the Supreme Court. Except such sales tax demand for 1996-97, bagasse used in-house as fuel, substitute of otherwise costly imported fuel, has always been, before and later, exempt from sales tax on valid reasons for it. Same treatment be provided for 1996-97, to make it equitable.