Will Punjab return to cane zoning system?

Post Source: Dawn Economic and Business Review

By Ahmad Fraz Khan

IT is time for the country, especially Punjab, to review its sugarcane policy. A powerful lobby of millers has kept intact a policy regime that suits the industry and, to some extent, the cane growers, and induces them to cultivate the crop. Unfortunately, all this is being done in total disregard to national and provincial ecological endowments. Despite the crop giving a negative competitive advantage, when compared to other crops like rice, cotton, wheat and maize, the country is sticking to sugarcane through a regime of protective duties, subsidised inputs including loans etc.

It also causes a serious misallocation of agricultural resources like land, water, finances, and labour inputs into low productivity and sub-optimal output. But still, no one is ready to take a holistic view of the crop.

Take the example of Punjab, had it not been for political patronage, no saner farmer would have dared sowing cane for ecological reasons. It has been sowing cane extensively in semi-arid climate with less than 15 inches average rainfall per annum and with humidity less than 30 per cent for 75 per cent of the crop cycle. Sandy soil of south Punjab does not retain water in the root zone either.

Precisely for these reason, the average production of Punjab is just over one-third of the world average and almost half of what Sindh produces. Punjab recovers nine per cent sugar against 11 per cent by Sindh. But still, it is not ready to hand over the responsibility to Sindh which is better placed to produce cane.

To make provincial priorities more confusing, the Punjab government, of late, has started considering steps to make the crop more attractive for farmers. In some recent meetings, the government started considering returning to the zoning system: allowing each mill an exclusive area of 10-kilometres radius for collaborating with farmers, run its development programme and become only legal buyer of the crop.

The Punjab government thinks that the zoning system can develop integrated areas for cane crop, which would help create humidity in the area and help better growth of the crop. By developing such areas, it could also take other crops like cotton out to other areas and save it from sucking pests that thrive on cane crop.

The entire debate is being carried around extent of radius: whether it should be 10 kilometres or five. Because taking cane, being a very heavy commodity, some 20 or 30 kilometres away could be a problem for farmers, and its yield should thus be reduced to half. Another proposal was to create a no-man’s land between two mills, so that farmers have a choice of selling. The meetings are thus looking for designs to keep and enhance fiscal attraction of the crop.

In a major policy shift, the Punjab government has also decided to turn cane procurement receipts (CPRs) into a financially negotiable document – considering it equivalent to a bank cheque. If it happens by next crushing season, as promised by Punjab Minister for Law and Parliamentary Affairs Rana Sanaullah on the floor of the Punjab Assembly, it would meet the longstanding demand of the farmers, and add to attraction of the crop.

Farmers have to run after the millers for years to encash their CPRs, Turning them into a negotiable financial instrument should help farmers and cane crop, at least psychologically.

Punjab’s fascination with the crop, which it cannot produce beyond a certain average due to natural compulsions, is now taking a bizarre proportion. Currently, it is developing a policy framework to encourage maximum production, without considering larger national picture.

Given the water stress, if nothing else, the country should not be sowing cane in semi-arid areas, which the Punjab largely offers to the crop. The crop requires 60+ acre inches of water over two seasons while cotton and maize are below 20 acre inches. Its yields range between 50 and 55 tons per hectare, whereas the world produces 100-130 tons per hectare.

With that kind of average production and 11 per cent recovery rate, the world produces one killogramme sugar with 1,500 litters of water. In Punjab, water consumption is more than triple one-third of production and 2.5 per cent less sugar recovery.

It has 45 odd operational sugar mills. All these mills run below their capacity during their 130-day season because production and its pattern do not allow them going beyond a certain limit. Punjab roughly sows cane on 1.7 million acres, and gets 35 million tons of production. Out of it, around 70 per cent gets to the mills, as 30 per cent is used as seed, gur making and fodder. These 45 mills have a combined crushing capacity of 325,000 tons a day. Thus none of the mills can run at its full capacity at any point of time during 130-day operation, except for a few.

If Pakistan is considered as one country, someone must paint the national agriculture picture with a brush of ecological advantage? It is not necessary for every district or province to try to produce everything and destroy soil sustainability without getting much in return. The country needs to re-arrange its agriculture priorities, and cane is the prime item for such a revision.


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