| Zonal Review 1991 - 92 (Production)
Production on Punjab Zone has shown
remarkable increase in the production of sugar and the rate of recovery.
Rate of increase in this department was 8.41 % and 11 .66%
Cane crushing in Punjab was 11,745,525 tonnes against 12,094,630 tonnes
in 1990 - 91, which means a fall of 2.55 %. The industry recovered it
self by the Single Factor i.e. rate of recovery. While it is gratifying
and creditable to the industry, it is also an alarming situation to note
the regular decline in the cultivation and production of the cane crop.
Unless immediate and concrete steps are not taken to improve the cultivation
and improvement of sugarcane crop, with the commissioning of new mills
the situation in some areas of Punjab will not be viably economical for
the running mills who are already facing difficulties.
Sindh Zone contribution has been very high during 1991-92 season
It created a new record and laid a foundation offering new challenge to
the Industry and other concerned associated with it. Sindh Zone alone
produced 1,187,570 tonnes of sugar which itself is 51 % of the total production
of the country. There has been a remarkable achievement and increase in,
Cane Crushing 24.6%
Sugar Production 31.6%
Rate of Recovery 5.74%
There is still room for exploitation and improvement if the potentials
are
utilized and directed with prudence.
Production in NWFP also did not lack behind. Mills in NWFP have shown
improvement in,
Cane Crushing 20%
Sugar Production 33%
Rate of Recovery 10.76%
In a way the results are more favourable. Production though small as
compared to other Zones with inclusion of beet sugar was 125,834 Tonnes,
which has shown an overall increase of 30.92 %.
It is gratifying to see that the industry in the country inspite of several
restrains and hurdles has struggled towards improvement.
Improvement in Technology by Assistance of UNIDO and WAPDA
After 05-09-May 91, Workshop on the Asian Sugar Cane Industry with emphasis
on diversification, PSMA has been in constant touch with United Nation
Industrial Development Organization (UNIDO)'s based in Islamabad. UNIDO's
offer for expertise visits to Sugar Mills that wished to have UNIDO assistance
for improving efficiency was discussed number of times till a programme
was agreed that a seminar on art in ethanol manufacturing, energy management,
anti pollution measures including effluent treatment will be arranged
and a diagnostic visit to atleast eight Sugar Mills for efficiency improvement
etc. will follow.
For this purpose PSMA arranged a formal request from Government of Pakistan
to UNIDO, to enable UNIDO Vienna approve a project worth $ 141,000 for
input on behalf of UNIDO.
Arrangements are nearly completed to have the seminar is Serena Hotel
Faisalabad around first week of January 93 and diagnostic experts visits
to follow.
The scope of the project will- be implemented Jointly to transfer of
know how, management skills and healthy changes in overall efficiency
and productivity.
Similarly WAPDA through their USAID Resident Adviser Mr. Robert E. Grimshaw
and members of Executive Committee have done their best, for members to
avail the opportunity of study tour to Hawaii, which can provide useful
experience that can help plan expansion of Sugar Mills and gear them to
produce extra electricity and sell to national grid system.
The proposal is now matured and some members have agreed to join the
study tour likely to take place in March 93.
Review of PSMA (Centre) Performance:
This meeting gives us opportunity to revaluate our performance and gaps
that are to be bridged in light of future happenings and growth.
The Central Executive Committee with its multiple objective has put
in its best endeavour in identifying the problems faced by the industry
and provided 'feed back to the Federal Government at various occasions
and at different levels.
The PSMA Centre's new Office is now fully established, and in fact concerned
Federal Departments remain in regular touch and take benefit of this establishment.
We have been regularly in process of appraising Federal Ministers at
different forums on matters concerning the industry and have been getting
positive and enthusiastic response from them. Our approach has been logical
and based on experience, the results of which though positive but not
instantaneous.
PSMA did not miss any occasion in lodging its concern to Government functionaries,
wherever any discriminatory action is cropped up resulting to any loss
to the Industry.
PSMA has been able to engage Federal Finance, Industries, and Commerce
Ministers, Chairman Senate to PSMA and PSST functions regularly, which
gave them a chance for direct appraisals. As a result it is now clearly
understood that this agro based labour oriented industry is one of the
major revenue source for the country, and therefore the plea put in by
the industry gets dew consideration.
The recent directive by the Prime Minister for composition of Technical
Assistance Evaluation and Review Committee for the study of Sugar Industry
is a favourable step.
This high level committee has been formed to develop a long term policy
for Sugar Industry with reference to recovery of sucrose, area under cultivation
of cane crop, and possibility of export. In general term we can call this
an achievement of PSMA's efforts that we have been working hard since
long time. We have promptly reacted to this directive and have asked for
bigger participation of the members from Sugar Industry. It is hoped that
some long term policy would be accomplished and Sugar Industry will get
rid of the inconsistency in the policy which has been haunting us for
the past few years. For the time being it is an exciting change to see
that instead of studying import of sugar, due consideration is on its
wings for the export possibilities, for which necessary potential is there
provided objectives are supported by
re-modelled incentives on long term basis.
PROBLEMS FACED BY THE INDUSTRY YET TO BE RESOLVED
1. Sugar Cost Price Disparity
Mill-gate support price has been in constant increase for the past five
years within average increase of about 13% annually but corresponding
increase in the selling price of sugar has not taken place.
It was hoped that there will be no increase in the support price for
1992-93, but surprisingly while the sugarcane crushing has already started
in Sindh, sudden increase of 75 paisa per 40 Kg. was decided and announced
on 18th October. With such increase what does the country expect. Can
the sugar Industry even try to keep the price of the sugar low or Government
will ignore the dump quantity of the sugar in -the mills and find another
excuse to import sugar.
2. Working Capital Constrants
The Sugar Industry is seasonal by production spell, while sugar is consumed
evenly throughout the year. A recent policy to curb working capital loaning
would delay in payment to sugarcane growers and could have negative effects
over an already delicate economic equilibrium of the economy, particularly
to wholly Agro-based sugar Industry.
3. Turn Over Tax.
This new tax is payable by the new industrial units, having no taxable
profits. This is a reverse turn from the Government's policy to encourage
industrial growth in the country, specially in the rural areas. Industries
in the rural areas are given incentive of the tax holiday of various durations
depending on location. New industries which run in to tax losses due to
initial depreciation allowance are entitled to income tax exemption. Turn
over tax negates the basic concept of industrialization, specially the
rural areas.
4. Mark-up on sugarcane Crop Loan.
Credits for sugarcane crops are treated in absolute discrimination with
all other crops as treated by the Banks/Lending Institutions as commercial
on flimsy grounds that such loans are to be guaranteed for recovery by
the sugar mills. This arrangement which was meant to insure loans recoveries
has changed the character of the credits. Such loans should have been
treated as agriculture loans because the purpose is crop's promotion.
We support the provision of loans for the sugarcane crop growers at concessional
rates as been done for the other crops, and after dezoning loan guarantees
by the sugar mills are no more feasible.
5. Full Crushing Season
The period of sugar cane crushing, known as season or campaign, depends
upon volume of sugarcane available vis-a-vis aggregate, crushing capacity
held by the industry at a given point of time. Both these features are
variable and not determinable in advance.
Size of sugarcane crop could be higher, depending on several uncertain
factors. It could vary from year to year. Conversely, the crushing capacity
would be higher each year in succession. By interaction of the two, the
crushing season would normally get reduced year after year, unless crop
size exceeds the growth in crushing capacity at a given time.
The two basic elements in determination of a crushing season further
depend on the following additional variable features.
i) Size of sugar cane crop and the
ii) Quality of the crop.
Area under the crop would vary, depending upon seasonal returns from
several competing crops. Quality of the crop depends upon soil and climatic
conditions, inputs including water supply, and the human care factor.
With host of unpredictable number of days to qualify as a "full crushing
season" in not judicious.
Crushing capacity of the sugar industry is bound to increase with time.
The increase takes place due to the following reasons:
iii) Horizontal expansion, through emergence of new factories.
iv) Vertical expansion, by balancing, modernization, replacement (of process),
extension (addition of tandem) etc.
These are regular pursuits for ensuring economic viability. The sugar
being a process industry, expansion in the capacity has been found to
be imperative.
6. Import Policy On Sugar
Throughout the year the availability of sugar has remained comfortable.
The performance of the industry during the year as discussed earlier left
no doubt that production is capable of meeting national needs of the sugar.
It was ordeal to see import of sugar during the peak production period
and later import of 36,000 tonnes more during the end of crushing season
when stocks at Sugar Mills were showing 400,000 tonnes in balance. The
total consumption of the country was estimated at about 2.4 million tonnes,
and whereas the production was so close to the requirement such imports
were not justified. PSMA has invariably been expressing its doubt over
the objectivity of such decisions, and received assurances at different
levels that local industry's interest will not be jeopardized. The concerned
Ministries have been asked to consider ban on import of sugar and save
annually foreign exchange worth of $ 36.0 million that has be spent during
1991-92 season.
During this season about 117.000 tonnes of sugar was imported at the
cost of Rupees equivalent of about 915.0 million. I am sure today at this
moment when new crushing season has already started stocks held by the
Sugar Mills alone is more than the sugar imported.
Unplanned and untimely Sugar Imports have created intricate problems
for the National Sugar Industry. It is earnestly hoped that with some
more efforts object will be accomplished and a wisely and timely decision
of ban on import of sugar will come through.
The PSMA have represented these cases vigorously and hopes the government
would consider and rescind the decisions. With our Islamabad office now
established and spade work done, the sugar Industry is looked upon with
better understanding. I think we still need to do a lot, because when
we look at our achievements, we find that on problems we just discussed,
Government functionaries were not justified and considerate.
Islamabad centre office needs more, proper and in time feed back. Our
members need to co-operate more promptly and keep in touch with Zonal
and Centre offices. PSMA centre office even sometimes faces problems on
ordinary returns and statements due to lack of response. It is earnestly
hoped that this gap will by your co-operation close steadily to strengthen
the association. |
