October 28, 2003	Tuesday	Ramazan 1, 1424

KARACHI, Oct 27: Call it a lack of coordination or a real breakdown of communication between the federal and provincial governments and between the various federal ministries that cotton textile and sugar crisis is gradually assuming an alarming proportion that threatens the government’s fixed target of economic growth of 5.5 per cent for the current fiscal year.

“The situation is taking such a turn that it will cause a slump in agricultural production, pull down industrial growth, halt export growth and increase import bill,” a senior banker involved in cotton financing at a nationalized bank told Dawn.

On Saturday, the Economic Coordination Committee (ECC) of the cabinet decided to lift two 200,000 tons of sugar from the stock of millers. The millers are expected to begin sugarcane crushing from next month following which the government will start lifting sugar from their stocks after Eid.

“How will millers pay sugarcane growers unless they have cash in hand,” Sindh Agriculture and Food Minister Arif Jatoi told this correspondent by telephone on Monday. “I am writing a letter to the federal food and agriculture minister on this issue,” he said. He implied that millers should have been paid quickly for the sugar to be lifted from their stocks so that they could pay to growers.

Leaders of the sugar industry in Sindh addressed a press conference at the Karachi Press Club on Monday in which they remained non-committal whether they would commence sugarcane crushing next month. They were repeatedly asked whether they would start sugarcane crushing next month.

Their issue is disposal of about 700,000 tons of unsold sugar in their inventory. Of this, there are 195,000 tons of sugar in Sindh. Their contention is that unless this stock is not cleared “tell us what could we do” — an evasive answer.

Arif Jatoi said that delay in sugarcane crushing could cause a serious setback to wheat sowing in Sindh. He disclosed that wheat in Sindh would be sown on about one million hectares. Of this, 100,000 hectares will be of sugarcane fields. In case wheat could not be sown on these sugarcane fields there could be 10 per cent shortage in wheat production.

The government has already exported 100,000 tons of sugar from the millers’ stock. It has cost the government exchequer about Rs60 million because of subsidy of Rs6 on export of every kg. Market watchers say that sugar price in the world market has gone down further and there may be a subsidy of about Rs7 on export of a kg. In case the government decides to export this sugar it will cost Rs70 million for 100,000 tons.

In another development, federal industries secretary Javed Ashraf informed Dawn on Monday that a meeting of the Federal Textile Board was being convened before end of this week to take stock of the situation arising from the reports of damages to cotton crop from infestation and unusual rise in cotton and yarn prices.

He expressed the hope that real size of the cotton crop would be assessed in a meeting of the Federal Committee on Agriculture (FCA) being held on Wednesday. Then the textile board would be in a better position to consider relief options for the textile industry, he added.

In case there is a marked shortage in the cotton crop the secretary hinted at the possibility of offering some relief to the textile industry in the polyester

fibre import. But then, he maintained the same position, which is being taken by all the government functionaries and leaders of the textile industry that crop damages are being blown up out of proportion. “Let’s wait for a final assessment,” he said.

A senior official of the federal agriculture and food ministry from Islamabad said that correct size of the cotton would be assessed next Wednesday at the FCA where ministers of agriculture and senior officials of Punjab and Sindh would be able to give correct assessment.

He said relief options for the textile industry could be considered by the finance ministry. The agriculture and food ministry may offer some suggestion but he was not clear whether fiscal concessions could be given to the textile industry.

A well-placed source at the finance ministry in Islamabad ruled out the possibility of any fiscal concession. “I am not aware of this,” the source replied when informed that textile industry leaders want reduction in sales tax rate from 15 per cent to five per cent for next six months.

But a senior officer at the commerce ministry in Karachi indicates that a temporary fiscal relief measure for the textile industry could be considered provided it is established that the industry is real distress and the finance ministry approves it.

Conversations with these senior and well-placed officials at the ministries of finance, commerce, industry and production and agriculture and food revealed that there had been no exchange of information, notes and suggestions on the recent developments in sugar and textile industries, which could have serious implications on the agriculture.