| I heartily welcome you to this 30th Annual General meeting of the
Pakistan Sugar Mills Association - Centre which, as all of us are fully
aware, is
being held at the most critical time and challenging atmosphere through
which our sugar industry is passing.
Indeed it goes to the credit of each one of our members to have faced
unitedly and courageously the host of problems confronting our sugar industry
which, at times, seemed to have crippled it and made its survival doubtful.
Without going into the detailed description of all these problems and
defining at length the efforts made by the PSMA in their resolution,
I would suffice myself to present a brief resume of the most important
issues.
Establishment of New Sugar Mills:
Despite the continuing advice of the Association for very cautious approach
in this regard, two new sugar mills were established during the year under
review, raising their total number to sixty-eight. in the country
and adding to the plethora of problems of the sugar industry. This, as
we all know, was done in an unplanned manner and without taking the PSMA
into confidence.
Sugarcane Prices and Cost of Sugar Production:
Your Association has been emphasizing the necessity of consulting the
sugar industry prior to the announcement of the sugarcane support price
by the authorities concerned. The factual position, however, is that as
per past practice, Government unilaterally made the highest ever increase
in the sugarcane price by Rs. 2.50 per 40. kgs during the last crushing
season. Again, for this crushing season, it has been further increased
by Rs. 1/- per 40 kgs. Cost of sugar is naturally bound to increase due
to this factor which accounts for fifty five per cent in working out the
cost of sugar production. After strenuous efforts by the Association
at the Ministerial level as well as in the meetings with high officials
in the Federal Government, PSMA has been able to convince them that the
price of sugarcane plays the major role in determination of the cost of
sugar production. With this end in view the PSMA was also able to prevail
upon the Federal Government to examine the cost of production of
sugar prior to forcing the Sugar Mills to sell sugar at below cost. Consequently,
the Agricultural Prices Commission of the Ministry of Food &
Agriculture was assigned the job of determination of the cost of production
of sugar. In the initial meetings of the Agricultural Prices Commission
the representatives of PSMA were also associated, of course on the insistence
of the Association, who forcefully presented the PSMA's point of view,
with facts and figures for working out the cost of production of sugar.
Although no decision in this regard has so far been conveyed to the Association,
it is hoped that its point of view would be taken into consideration by
the Commission.
Sugar Production:
The sugar production was 3 million tonnes during the crushing season
1994-95 which was 0.1 million more than the previous season. By the Grace
of Allah, in season 1994-95, Pakistan has exported about 285,000 metric
tonnes of sugar and earned about US$ 100 million in foreign exchange for
the country.
Domestic Price Increase of Sugar:
Mainly, due to the heavy increase of the price of sugarcane coupled with
the high rate of mark-up and the diminishing per value of Pakistan Rupee
vis-avis US Dollar, etc. the cost of sugar production naturally increased
thereby raising its price in the domestic market. This was the obvious
result of all these factors which were beyond the control of the
sugar industry. Notwithstanding the inter-play of all these factors in
the determination of the sale price of sugar in the free market regime,
the Government came with a very heavy hand on the sugar mills alone, leaving
aside the astronomical increases in practically all consumer items of
every day use. The Government adopted coercive measures to force the sugar
mills to sell their product at a price even lower than its actual cost
of production. By involving the F.I.A., our Members were harassed, their
sugar stocks were seized and, on some occasions, even sold at the Government-fixed
price in the local market. The dealers/ stockiest of sugar were also not
spared of such actions by the F.I.A. In face of such provocative and uncalled
for actions of the authorities, your Association was put to the severest
test of its existence. PSMA made hectic and all humanly possible efforts
to defuse the situation and also to restore the confidence of our respectable
Members, by approaching the Federal and Provincial authorities concerned
both personally and in writing. The mills were also forced to sell 50,000
tonnes of sugar to the Utility Stores Corporation at the subsidized rate
of Rs. 12.50 per kg. By the grace of Allah, PSMA was cable to normalize
the situation in as much as the harassment of our Members/dealers/stockiest
ceased and also their sugar stocks were de-seized. After forcefully presenting
its view point with factual statistics, the Association is awaiting to
hear about the cost of production of sugar as well as its sale price in
the domestic market being worked out by the Federal Government through
the Agricultural Prices Commission. We have invariably tried to keep all
our Members fully informed of all developments from time to time. I must,
however, plainly admit that the crisis is not yet fully over but it is
hoped that Insha Allah, through the continuing cooperation and support
of our Members, all these problems will be resolved.
Export of Sugar:
About 3.0 million tonnes of sugar is expected to be produced during the
current crushing season 1995-96 - more or less the same quantity as was
produced in the last crushing season - due to good crop of sugarcane.
Adding to it the last year's carry-over stock of 0.25 million tonnes,
the total comes to 3.25 million tonnes, out of which home consumption
is expected to be 2.7 million tonnes and 0.25 million tonnes has to be
kept as buffer stock. This leaves a balance of 0.30 million tonnes of
sugar available for export. Once the question of the cost of sugar production
and its sale price in the domestic market is finally decided with the
mutual agreement of both the Government and the manufacturers, the Association
hopes to take up the matter of sugar export with the Government.
Recovery By The Banks of Working Capital Loans Advanced To The
Sugar Mills And Rescission of These Orders:
Members are aware that, under the directive of the Federal Government"
the State Bank of Pakistan issued instructions to all scheduled Banks
to withdraw, by 31st August, 1995, the working capital loans advanced
to all the Sugar Mills. This was also one of the coercive measures to
force the industry to sell its product far below its production cost and
suffer huge losses. This measure, together with the total ban on
export of sugar, would have definitely crippled the industry if it would
have continued after the start of the current crushing season.
Of course through its constant and resolute efforts, the Association
was able to have these unjustified instructions rescinded, which, as all
of us know, was done at the level of the Economic Coordination Committee
of the Federal Cabinet.
Need For Improved Varieties of Sugarcane:
I would like to bring to your attention that the Sugar Mills are hostage
to the low yield and recovery as our per acre yield and recovery is extremely
low as compared even to our neighbouring country India where the climatic
and other conditions are almost similar to that obtaining in Pakistan.
To improve the situation, the Association had initiated exchange
of information with the Mauritius Sugar Industry Research Institute. I
now propose that the PSMA should undertake this job on behalf of all our
Members and proceed with the question of cooperation with MSIRI for the
cultivation of best quality sugarcane in Pakistan. I hope the Association
will approve the expenditure that might have to be incurred in this regard,
finalize other matters and negotiate with the MSIRI.
Protection of Environment:
We have been receiving communications from Pakistan Environmental Protection
Council and other concerned authorities regarding mass awareness about
environmental degradation and measures to control it. PSMA has been circulating
such information to our Members. I suggest that for this purpose also
a panel may be set up to study these issues and suggest appropriate replies
so that we are not burdened with arbitrary requirements of environmental
controls.
I fervently hope that all our Members will extend their fullest cooperation
and support to the Association in the future as well, because it would
not only be in their own interest but also in the interest of the growers,
shareholders, workers and above all in the national interest.
I sincerely thank all of you. |
