LAHORE, Jan 7: The Punjab Crop Reporting Service calculates the cost of production of sugar cane for 2003-04 at Rs58.16 per 40kg provided the total yield remains 550 maund an acre.

The cost of production, however, will be rationalized before recommendation to the federal government for changing the support price. The growers from the Punjab on Wednesday said the calculation vindicated their stance that agriculture was fast losing its economic attraction because of the government policies.

"Against the calculated price of Rs58.16 for 40kgs, the government had announced an indicative price of Rs40 only," says Ibrahim Mughal of the Pakistan Kissan Board. On the contrary, the farmers are receiving only Rs32 per 40kgs after deductions and that, too, in the shape of cane purchase receipts (CPRs).

During the last year, prices of input saw significant raise, also increasing the cost of production. But, it is not reflected in the official price; the government kept last year's price of Rs40 for 40kgs. Even that was not being paid to farmers, he lamented.

An official of the Farmers Associates Pakistan says even the price of Rs58.16 per 40kgs was possible if yield remains above 550 maunds. Whereas the national average is only 480 maunds an acre. The current price is economically viable only if yields go up to 700 to 800 maunds an acre.

He says the growers are suffering a loss of Rs23 billion. Sugar cane is sown on 27 million acres that feed around 70 mills in the country. The total production of sugar cane comes around 1.96 billion maunds, which farmers are selling at a loss of Rs18 per maund; totalling a Rs23 billion loss, he claims.

With the advent of the World Trade Organisation regime, all the sugar mills in the country will lose profitability as the sugar cane can be imported, he says, adding they will have to purchase cane at much higher price from the local market.

He demands the government that it should cut back on taxes and try to reduce the cost of production instead of raising the support price. On the other hand, an official of the agriculture department said this calculation was very preliminary. "It is always on the higher side because farmers and departmental representatives include the rent of land and management cost in the calculation that normally increases the cost by 30 to 35 per cent."

Citing the example of wheat, he said, the cost calculated and recommended by the Punjab government last year was Rs387 per 40kgs. However, it announced a support price of Rs350 only.

"The government normally fixes the price on the basis of its economy rather than the wishful thinking of the farmers. The committee is representative of farmers and exaggerate view of problems."

But the farmers insist that apart from validity of these cost calculations, the government must realise the extent of its failure in agriculture. Almost all the crops have suffered on the one pretext or the other.