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Key elements
No specific sugar
price policy portrait but partial package covering sugarcane has been the root cause of
current malady. A promising industry, (a) with great potentials to energise rural
Pakistan, (b) to contribute substantially to socio-economic growth and development and (c)
able to earn handful of forex remains stuck up with uncertain future.
The sugar industry's dilemma is:
a) lower level of capacity utilisation.
b) limited scope in economies of scale.
c) problems in events of shortfall and surplus production of sugar.
d) cost/price disequilibrium in domestic and export markets.
Structural mechanism for research
(a) Augmenting
sugarcane supplies:
Research and development is overdue for cultivation of high quality sugarcane, having 72
tons/hectare yields and sugar recovery at 11%. This work needs to be undertaken
expeditiously.
(b) Research and development:
Evolving of proper structure, system and procedures for research work is prime need of the
hour. The PSMA-SZ suggests an outline to adopt, as follows:
i) Sugar research institute be set up in each division of the province. Board of each such
institute may consist of three representatives each of the PSMA-SZ, sugarcane growers
bodies and government functionaries, concerned with sugarcane research and development.
ii) Funding of research activity shall be from the cess fund being recovered on sugarcane
and from part of the sales tax on sugar. Part of the sugarcane cess contribution as
earmarked for research be deposited by the sugar industry directly with the SRIs (Sugar
Research Institutions) and these be competent to formulate their budgets and spendings.
iii) Close coordination among SRIs be formalised so as to prevent over-lapping of efforts
and for benefit by consultation. Similarly, the SRIs shall have coordinated working with
sugarcane growers and sugar mills in each province.
Assessment of the funds collected so far on sugarcane cess account with their past
spendings and status of the balances needs to be made known to those contributing it.
These funds be transferred to the proposed SRIs on the divisional and provincial levels
for utilisation.
Sugar trade policy measures
a) It is imperative
that proper advance planning is made before advent of each season in consultation with
PSMA for smooth functioning of sugar industry and sugar supplies.
Pakistan has, A1-Hamdolillah, gained good experience in sugar exports. This perfor- mance
deserved effective promotion, so as to earn scarce forex for the country. So is the case
of preventing import and saving on forex spendings. In view of this, it is important that
sugar production is fairly estimated well in time, latest by the commencement of the
crushing campaign. In case of production felt short of domestic requirement, such
shortfall be overcome by import of raw sugar and save forex. This may pave way for setting
a firm foothold in sugar export sphere in time to come.
The PSMA-SZ have all along ardently advocated its learning from the past practical
experiences, crystallized in the concept. It is the sugarcane farm sector which retains
its core feature in good or bad patch of performance by the sugar industry in the national
economic scene. Sugar is produced in the farms and processed in the factories. This fact
deserves placement in sharp focus to guide at all times and events with a view to
keep sugarcane and sugar production in good stead. No other clue becomes a remedy for good
going of the growers, the industry, the consumers and the government, four strong
stakeholders to share equitably of their efforts and contribution in making sugar show
superb.
b) The strategy to achieve the above goal will prevent import of sugar and some other
products coming out of its process and save forex spending. For these objectives to attain
sugar production needs a fair estimation well in time, before the odd tides proverbially
sweep away. Fair determination of the sugarcane crop volume and its quality latest by the
commencement of the crushing season is inevitable. In case of no alternative-to import of
refined sugar, the system be rationalised on lines with levies on domestic sugar
production at (i) federal (ii) provincial and (iii) local levels and in consonance with
the sugar production cost framework in the country.
c) Sugar industry deserves a fair market price keeping in view its production cost plus
economic return on equity, as sugar production cost is influenced to the extent of about
85% by the government policy framework. Sugarcane cost and sales tax account for as much
as 67% of the cost of sugar production.
Pending problems
The PSMA-SZ have
persistently approached the top echelon of the Sindh government, inviting its attention to
plathora of problems being faced by the Sindh sugar industry, their becoming unbearable
and impressed the need for their redressing in a priority, so as to save the sugar
industry of Sindh from becoming sick, in the process disrupting the rural economy of Sindh
in general and of its southern tip in particular, latter being the best suited for
cultivation of sugarcane crop. Several issues were identified as awaiting attention,
action. Dialogue has been on-going about them and hopefully, good result of it, by mutual
understanding, would arrive at shortly. Some of the major issues in this regard relate to:
1. Regularisation of the agreement about the rate of sugarcane cess fund contribution.
2. Doing away ab-initio with the surcharge on sugarcane cess.
3. Exempting sugar industry from market committees collection of fee.
4. Constitution of sugarcane control/promotion board.
5. Revision of the Sugar Factories Control Act/Rules, 1950 having become outmoded, by new
effective lines so as to promote sugarcane growers and sugar industry's interests, seen as
common and indivisible.
6. Creating sound marketing mechanism for sugarcane supplies to the sugar mills so that
coordinated harvest and crushing take place as it will improve sugar recoveries, avoid
sucrose losses and curtail unproductive transport costs of long hauls.
Some issues which relate to the federal government to attend and solve are as follows:
1. Proper policy package for sugar industry's efficient functioning.
2. Adequate provision of working capital for sugar industry having 120 days working.
3. Evolving linkage of sugar prices with sugarcane prices.
4. Evolving of sugarcane development plan and sugar industry's functional format.
5. Setting goal of permanent foothold for sugar and increasing its by products exports.
6. Diversifying the sugar industry on steady but firm note.
The dialogue on these and allied subjects has been in progress. Its results would have
soothing effect on the sugar economy of Sindh where it has acquired a cardinal place in
the overall industrial structure.
SHUNAID QURESHI
Chairman
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