Pakistan Sugar Mills Association (PSMA) Punjab zone delegation, headed by Chairman, Javed Kayani, has submitted plan to Jehangir Khan Tareen, Advisor to the Chief minister, Punjab, to seek remedy for the industry.
The plan focuses on six areas. These are surplus commodity and the role of the Trading Corporation of Pakistan (TCP), commodity prices and market indicators, the government role in industrial inputs, estimated production for 2003-04 and anticipated shortfall, option available to the industrialists in Sugarcane Act regime and payments to the growers.
The delegation reminded of the Advisor about its call on with him, held on January 2, and said that its addition submission should be taken in the context of the proposals made during the meeting.
It said that as per legislative constraints, sugar industry was required to crush entire sugarcane and therefore surplus sugar was not made by choice.
It maintained that about 90 percent of inputs of sugar industry were regulated by the government in one form or another and hence it has least to do with cost of production.
It noted that cost of sugarcane fixed by the government was Rs 40 whereas the commodity ex-factory rates were as low as s 16.80 per kg which can not grantee recovery of even production cost to the mill owners.
The plan indicated that in the existing situation, the industry could recover only partial payment of sugarcane after defraying the sales tax and the same would be the case with the mode of payment to the growers of their crop.
The delegation reminded that the federal government had taken belated decision to procure 200,000 tonnes of commodity to facilitate commencement of crushing season 2003-04, which was already late.
The delay may adversely affect wheat crop as the area under cultivation for it this year was less than the last year.
It recalled that the TCP has so far committed only 100,000 tonnes for which the majority of successful bidders are yet to get payments. The PSMA argued that the process of purchase of commodity from the mill-owners through the TCP needed to be expedited so that it could meet the purpose of clearing outstanding dues of the growers.
It said the failure in bringing the industry to break-even could have serious repercussions for all the stakeholders of sugar sector.
The PSMA said that "Its our apprehension that if the current state of affairs was allowed to continue it would have very serious repercussions and the industry in total disarray- a situation wherein it would not be in a position to discharge its liabilities towards growers, banks and the government such as taxes and duties.
It proposes that the process of procurement through the TCP be made effective to stabilise commodity prices to Rs 19 per kg.
The association wants that the government should pick-up another 300,000 tonnes of sugar besides immediately floating tenders for 100,000 tonnes agreed with the millers.
It also recommended that the government should maintain buffer stock of 0.5 million tonnes of commodity to meet anticipated shortfall in 2004-05. It gave switch over of the growers from sugarcane to cotton a reason of less crop next year.