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A shift to fuel ethanol would save the country considerable foreign exchange As a sop to the technology, the Pakistan State Oil (PSO) and the Hydro Carbon Institute of Pakistan (HDIP) have launched a pilot project, aimed at meeting the energy shortfall, to introduce blended fuel in the country. In three PSO petrol pumps (one in Karachi, Lahore and Islamabad each), fuel ethanol is being blended with gasoline in a 1:9 ratio. However, there is a cosmetic aspect to this initiative and it is almost self-evident that the oil lobby will stall further initiatives. Sources in the private sector repeatedly highlighted certain policy proposals during our interviews with them. These included a ceiling on the export of molasses and a subsidy on bioethanol production to compensate for the fluctuation in the prices of molasses. To date, there has been no real government response to these suggestions. In fact, the government has directed the PSO to conduct a background study on the feasibility of bioethanol use, which clearly illustrates the clout of the oil mafia. An equally concerning move situated the mandate of bioethanol promotion within the Ministry of Petroleum and Natural Resources rather than the Ministry of Industries and Production or the Ministry of Environment. Clearly, the policy provenance must shift if any pro-ethanol initiative is to succeed. Export promotion A perverse domestic policy contributes to this sub-optimal performance in the shape of high central excise duty and sales tax on alcohol. This policy needs to be done away with to increase price competitiveness, both abroad and in the country. Also, Pakistan would do well to follow India's lead in imposing a ceiling on the export of molasses. Tariff restrictions In May 2005, the Commission of Industrial Ethanol Producers (CIEP) of the EU accused Pakistan and Guatemala -- the largest duty-free exporters for the period 2002-2004 -- of dumping ethyl alcohol in the market, causing material harm to domestic producers. A year later, the EU imposed tariffs on Pakistani imports. In particular, differentiated tariffs on bioethanol and feedstock (raw molasses in Pakistan's case) point to tariff escalation that discriminates against the final product. There currently is no unique customs classification for bioethanol. Industrial alcohol is traded under Code 22-07, which covers both denatured (HS 22-07-20) and un-denatured alcohol (HS 22-07- 10). Both these types of alcohol can be used for biofuel production. Despite this lack of specific customs classification, the use of tariffs is common practice in countries aiming to protect their domestic agriculture and biofuel industries from external competition. Moreover, the tariffs vary. For instance, the EU and the United States (US) have trade agreements that grant differentiated market access conditions to various countries. The local distilleries have consequently begun to suffer losses and some have even closed operations. After 2002-03, the number of distilleries in the country had increased from six to 21. However, given a rise in the exports of molasses post-2003-04, and the more stringent EU tariff measures, the distilleries soon became idle. At least two distilleries have already closed down as a result, while another five are contemplating doing so. Technical, environmental and social standards For instance, the EU's Biomass Action Plan is contemplating certification to ensure that the biofuel imported is produced from crops grown in an environmentally sustainable manner. Individual EU members such as the Netherlands and United Kingdom (UK) are already implementing certification schemes. A number of additional voluntary measures to ensure import of 'sustainable' biofuel are also under way. The varying standards requirements across the North present additional compliance problems for the technically- and institutionally-unprepared South. Pakistan has, in principle, supported standards in the global trading regime. But, as a member of the Southern block, it has concurrently and repeatedly opposed any measures that may allow the North to use standards as 'protective' devices against free trade. Its stance on the EU agricultural support, which includes 'energy crops', echoes that of the G-20 block within the World Trade Organisation (WTO): Pakistan seeks an end to EU subsidies to its farmers, especially 'Amber Box' subsidies. Negotiations on EU's agricultural support, however, continue with no end in sight. Institutional ambivalence Given the optimistic forecasts for biofuel growth, the WTO and others must act now to regulate rules and standards that are all over the globe. According to the International Food and Agricultural Trade Policy Council, which released the report on WTO rules on fuels like fuel ethanol, developing countries are "wildly producing biofuels". The report recommends a unified classification for biofuels. With rules for measures such as import standards varying from country to country, the WTO, the World Customs Organisation and national governments must coordinate to make sure that the future of biofuel trade is safe. Recap Despite the potential advantages, progress in promoting bioethanol lacks policy impetus. The oil refining companies in collusion with the Ministry of Petroleum have managed to keep a lid on private sector involvement. Rather than enjoying incentives, the private sector is burdened with domestic taxes on industrial alcohol sales. Such domestic policy biases have been compounded by import restrictions abroad, which have compromised the country's export potential. EU imposed tariffs under the revised GSP have led to the closure of distilleries. Furthermore, institutional uncertainties and contentious issues pertaining to bioethanol classification may complicate the development and global growth of the industry. The domestic policy biases, export barriers and institutional ambivalence lead to a poor prognosis for future development of bioethanol as a renewable energy source. While the potential for both domestic use as well as exports remains high, key fiscal, policy and external constraints will have to be addressed if positive outcomes are to be accrued. The News on Sunday, Rawalpindi/Islamabad September 23, 2007 By Shaheen Rafi Khan It is important to analyse biofuel prospects in Pakistan in a sustainable development context The Climate Change 2007 Fourth Assessment Report has muffled the sceptics. The current findings replace speculation with scientific certainty -- in fact, the reality has overtaken modelled forecasts. Earth is heating up faster than predicted, with extreme events in their several manifestations spiralling out of control. Glacier retreats, polar ice meltdowns, sea level rise, tropical cyclones, storms and hurricanes have triggered natural and human calamities on an unprecedented scale. There is a corresponding urgency to address both the causes of climate change (mitigation) and its effects (adaptation). Renewable energy in general and biofuels in particular have begun to look like an increasingly viable mitigation option. The 'bio' in biofuels refers to crop and wood-based raw materials such as molasses, rice husks, corn and wood waste, which are processed into fuel. For developed countries, biofuels offer prospects for meeting their emission reduction commitments under the Kyoto Protocol. For developing countries, biofuels present a means to reduce energy import bills as well as earn precious foreign exchange. Reconfiguring the fuel economy to renewable sources, however, is not without risks, as global environmental benefits also generate adverse local environmental impacts. Similarly multinational corporations offer price incentives to farmers to switch from growing food crops to biofuel crops, which threatens food security. The rapid uptake of biofuels reflects the ease with which they can replace or be blended with fossil fuels, such as petrol and diesel. The technology is simple, cost-effective and environment-friendly. The blended fuels provide a higher octane content, improving vehicle efficiency while reducing carbon emissions. Developing countries also enjoy a cost advantage -- they experience year-round growing seasons, they can access cheap farm labour, and they can use crop by-products to fertilise fields and fire up distilleries. For instance, Brazil is able to sell ethanol for $25 a barrel, compared with $50 and $70 for the United States and Europe respectively. Not surprisingly, many countries have picked up on biofuels as a way to reduce their oil bills or to earn foreign exchange. Thailand is building over a dozen ethanol plants using sugar cane and rice husks as a fuel source. China has constructed the world's largest fuel ethanol facility at Jilin. It is reportedly planning to import Brazilian ethanol as well. Japan has already gone that route -- the country signed its first 15 million-litre deal with Brazil in May 2006 preparatory to replacing up to three per cent of its gasoline. Still, this emerging global market in biofuels is not clear of the political thicket. Developed-country farm lobbies lend momentum to biofuels market development, but they also demand protectionist barriers. "Everyone pretends (their enthusiasm) is for the environment, but it is all about agricultural subsidies," biofuels expert Christian Delahouliere warns. To encourage biofuels, the European Union pays farmers 45 euros for each hectare of 'energy crops' they grow. That provides them a huge incentive to produce 'energy crops', effectively barring cheap foreign bioethanol from entering their market. When Pakistan gained special access to EU markets in 2002 and began shipping bioethanol, local farm lobbies persuaded Brussels to change course and re-establish tariffs. The US also imposes a 50-cent-a-gallon import duty on Brazilian ethanol. Additionally, almost every country has its own biofuel standard with different specifications that may be manipulated to hinder market access. In this article, we evaluate the biofuel prospects in Pakistan in a sustainable development context. The specific biofuel is ethanol, extracted from molasses, a by-product of sugar. The potential for producing biofuels from corn, rice husks and wood waste exists, but has not yet been tapped. We will also examine the external and internal policy constraints that have prevented the domestic ethanol production from taking off. Production trends About 80-85 per cent of the total sugarcane production goes towards producing sugar. The remaining 15-20 per cent is converted into gur, a local variant of sugar, which is largely produced and consumed in the NWFP. Cane crushing produces sugar and molasses as a by-product. The molasses-to-bioethanol conversion process is conducted in distilleries. Currently, 21 distilleries produce industrial alcohol in the country. Most of these distilleries are a part of sugar mills and are situated on-site, making the production cycle an integrated one. The mills receive the cane, crush it for sugar, store the molasses in storage tanks on-site and then pass it on to the distilleries for industrial alcohol production. Industrial alcohol can be converted into fuel alcohol by using molecular sieve technology, which requires a capital expenditure of about $1.5 million and a completion period of five to six months. As many as eight distilleries have so far installed the molecular sieve technology to process industrial ethanol into fuel ethanol. The fuel ethanol conversion plant is linked to the industrial alcohol plant. Export trends The distilleries in Pakistan have three major buyers. The domestic industry purchases industrial alcohol for various purposes. Fuel ethanol is currently only being sold domestically in small quantities to the Pakistan State Oil (PSO), as part of a pilot project under which ethanol (10 percent) is blended with gasoline (90 percent). The third and predominant outlet is exports. Most of the industrial and fuel ethanol produced in the country is exported through international trade houses. It is brought from distilleries throughout the country to the Karachi port for onward shipping to different parts of the world. Alcohol exports have increased rapidly in the last five years, reaching 167,600 tonnes in 2006-07. The average export price for different grades of alcohol ranged from $560-680 per tonne; the total earnings amounted to $100.6 million in 2006. The value-addition in molasses through its conversion into alcohol has enabled exporters to earn as much as eight to 10 times more foreign exchange. The bulk of exports went to Japan and the EU, with Italy being the single largest recipient country within the EU. However, exports to the EU as a whole declined in the wake of Pakistan's removal from the GSP scheme. Sustainable development
implications Another environmental concern relates to industrial effluents. Wastewater flowing out of distilleries is highly contaminated; if left untreated, it can pollute fertile land and harm aquatic life in water bodies. However, despite the general lack of effluent treatment by industries in Pakistan, most distilleries have installed treatment plants, albeit with varying efficiencies. Cost savings associated with waste treatment are the main incentive for distilleries to be environmentally conscious. Distillery wastewater treatment is an anaerobic process through which the organic components of the wastewater are converted into biogas, with negligible excess sludge production. The two major products of the treatment process are methane gas and carbon dioxide. Methane gas is recycled as an energy source in the distilleries, meeting as much as 70-90 per cent of the total energy requirement. In effect, distilleries have a 'closed carbon cycle'. The final discharge, when diluted with subsoil saline water, has BOD and COD concentrations reduced by as much as 97 per cent and can be used for land irrigation. The environmental gains from wastewater treatment are thus obvious, while the cost-savings incentives to distilleries are written in. In relation to the end-use, the consumption of fuel ethanol in automobiles leads to a substantial reduction in emissions. The blended fuel provides a higher-octane content without any presence of lead (traditionally used in gasoline as a booster), thus enhancing car performance and at the same time reducing disease-causing emissions from car exhausts. Although no Pakistan-specific estimates are available, the general norm is that for blended gasoline carrying 22-24 per cent fuel ethanol, reduction of fossil carbon dioxide from the tailpipe could be as high as 80 per cent. The clearly demonstrates that economic and environmental benefits associated with bioethanol production have failed to induce adequate policy responses, both domestic and foreign. The News On Sunday, Rawalpindi/Islamabad September 16, 2007 By Karin Astrid Siegmann In the last part of this series, the problems of women cotton-pickers are highlighted Women cotton-pickers are the first, but at the same time the weakest, link in the global textile chain. The poor conditions they have to work in are embedded in their subordinate position assigned by patriarchal gender norms. The competitiveness of Pakistan's textile and clothing industry on women's back is not sustainable in the short-term, at least as far as agricultural workers' health and well-being are concerned. In the long-term too, it is not sustainable because of the sustained competitiveness of cheap cotton-based manufactures. The textile chain from cotton to cotton-based textile and clothing (T&C) manufactures has special importance for developing countries. Most cotton is produced and manufactured in the global South, with China, India and Pakistan alone being responsible for almost half of global cotton production in 2004. Around one billion people, mostly in developing countries, are either directly or indirectly involved in the production and marketing of cotton. The global market for cotton and cotton-based products has been characterised by interventions biased against southern producers, such as the prevalence of huge subsidies for cotton cultivation in the United States and other growing countries as well as export restrictions faced by T&C manufacturers in developing countries. In the global power balance tilted towards industrialised countries, 'pulling the cotton rope' has given southern countries some negotiating power. When the World Trade Organisation (WTO) came into being in 1995, developing countries were able to achieve an agreement on the phase-out of quotas in T&C that had hampered cotton manufacturers' exports. Brazil successfully challenged the world's largest economy regarding the trade-distorting support payments for US cotton growers in the WTO. The WTO panel decided in June 2004 that the giant US must stop subsidising its farmers at the expense of growers in poor countries, such as the dwarf economies of Benin, Burkina Faso, Chad and Mali. Million of tonnes of cotton is hand-picked by women and girls every year between August and February in the cotton growing belt of Punjab and Sindh. They stand at the beginning of the textile chain that links livelihoods in rural Punjab and Sindh with the world market. Does this global commodity chain enable their economic empowerment? The analysis presented in the previous articles in this series has not resulted in a positive answer. Women's economic empowerment can be defined as "access to and control over productive resources". Cotton pickers are socially and economically even more disadvantaged in an environment characterised by dire poverty. Patriarchal gender norms prescribe that that they do not control income to whose generation they contribute as unpaid workers. They commonly neither legally own nor control land as the most important productive resource in rural Punjab and Sindh. In comparison with male household members, they face discrimination in access to education. The question is whether the opportunity for paid employment as labourers in cotton harvesting strengthens this weak economic status. Cotton cultivation provides employment for a large number of women in Pakistan's cotton belt, where economic opportunities are limited by gender norms that restrict the types of jobs considered appropriate for female employment. As a result, as compared with their status as unpaid family helpers in agriculture, this helps them to access cash income. Their work is paid, yet precarious. The triple informalisation as seasonal, contract, and piece-rate workers is associated with low social and economic status. This implies that it is the stick of poverty rather than the carrot of gainful employment that persuades women to join the harvesting labour force. Research on sub-contracted employment in Pakistan's manufacturing sector has shown that paid employment does not necessarily empower women workers economically, especially if their labour relations are informal. This lack of economic empowerment of informal workers is, for instance, expressed in the fact that cotton pickers' employment goes up and down in response to changes in the harvest. It implies that cotton pickers' employment remains at the mercy of the growers, the climate and the market. As compared with other agricultural workers, cotton pickers' wages are low. Their precarious status as seasonal, contract and piece-rate workers as well as their poverty and poor bargaining power contribute to low earnings. These aspects are not directly related to their gender, but indirectly reflect patriarchal social norms. For example, the concentration of women workers in this activity is related to the perception of men as the household's main breadwinners, lowering women's aspirations for more secure and rewarding types of employment. Perceptions regarding the appropriateness of mobility and work for women household members restrict their options in the labour market and lead to an oversupply of labour for this occupation. This, in turn, has negative repercussions for their bargaining power. Whereas education levels of both men and women are low in the cotton-cultivating areas, the gender gap in literacy is significant. This is another factor diminishing their bargaining power, as illustrated by their lack of ability to check the correct weighing of their harvest. The close association of their responsibility for household chores and market work acts as a constraint on their availability in the field. Their working hours in the harvest and thus their earning ability depends on number of dependants and other women available for domestic work. Finally, these intertwined work schedules in the home and the field restrict women pickers ability to organise and jointly work for improvement of their working conditions. Formal and informal rules governing labour relations in cotton cultivation contribute to women workers' economic disempowerment. Their status as seasonal, contract and piece rate labourers implies the employers' contractual obligations vis-a-vis their harvesting workforce remain weak. The financial risks of a late harvest, low yields, poor harvesting effort, illness and other unforeseen disturbances are borne by the pickers who are not paid if they do not carry the raw material to the growers' scale. Whereas pickers face -- sometimes unjustified -- sanctions in the form of deductions from their due earnings if the growers consider the quality of their harvest to be below standard, no positive incentives appear to trickle down to the women labour force in the cotton field. These institutions have in common that they shift risks to the weakest link of the cotton chain in terms of poverty and bargaining power. The News on Sunday, Rawalpindi/Islamabad September 02, 2007 By Karin Astrid Siegmann Pickers stand at the beginning of the chain that links cotton fields in Pakistan with the global textile market. Despite this, they are paid poorly In Pakistan, cotton provides livelihoods to millions of people involved in its cultivation, industrial use and trade. Cotton-picking, though a seasonal activity, represents by far the largest share of employment in the sector -- in three to five waves, running from August to February, an estimated two million cotton-pickers harvest the fuel for Pakistan's export engine. Most of these cotton-pickers are women, despite the fact that the working of women is seen as a threat to family honour in most parts of Pakistan -- yet another indication of the extent of poverty prevalent in the cotton-growing belt, outlined in detail in an earlier article of this series. Another major reason for this is that the men hailing from the cotton-growing belt, having more choices in the labour market, migrate for industrial or construction employment to urban areas. The extreme poverty in which women cotton-pickers live compels them to sell their labour as the only productive asset they possess. The lack of alternative employment opportunities in the rural economy also leads to an oversupply of women labourers during the cotton-harvesting season. Coupled with their poverty, this significantly reduces the bargaining power of women cotton-pickers in negotiations with cotton growers. Moreover, women cotton-pickers are paid by the weight of their harvest. In such a piece-rate system, wages are paid per unit of output rather than per unit of time, as in the case of daily wage labourers. Traditionally, payment to cotton-pickers used to be in kind. In recent years, however, a vast majority of growers have moved to payment in cash. On the whole, women cotton-pickers' earnings are lower than those of the male agricultural labourers like sprayers and tractor drivers. This gender-based gap is legitimised by the societal perception of men as the household's main breadwinners and women as its supplementary income-earners. On an average, a fast picker can harvest one maund (40 kilograms) of cotton in a day. The cotton-picking rate in Southern Punjab in 1996/97 was reported to be Rs 40 per maund, which increased to Rs 50-80 by 2005/06. This increase contrasts sharply with 42 per cent increase in the Consumer Price Index (CPI) between 2000/01 and 2005/06 only. The piece-rate system of payment for cotton harvesting translates into meagre daily earnings. For example, a picker who spends four to five hours in the field and gets Rs 80 for harvesting one maund of cotton would report daily earnings of just Rs 40-60. Additionally, cotton-pickers are unable to verify whether their harvest has been weighed honestly or not. Even if it has not been, they have no forum to register their protest against those in charge of weighing. Besides poor remuneration for hard work, cotton-pickers are also exposed to serious health hazards. It is estimated that almost 80 per cent of the total pesticides consumed in Pakistan are applied on the cotton crop, so the most significant health risk cotton-pickers face is their chronic exposure to pesticide spray residuals in their working environment. The cuts and skin rashes of cotton-pickers further expose them to the hazards of pesticides. Picking cotton is also common during pregnancy and breastfeeding, which poses additional risks to the health of women labourers and their children. Also, cotton-pickers and their family members consume water that is contaminated with pesticides. Besides, pesticides enter the food chain because of their exposure to the soil, livestock and the cotton seeds that are pressed to produce edible oil. Cotton stalks are often used as fuel-wood in cotton-growing areas. Residuals are thus inhaled by cotton-pickers and their communities. Equally hazardous effects of pesticide exposure are found among farmers as well as non-farmers during research in Southern Punjab. It comes as no surprise as all people living in a village use the same drinking water from wells situated nearby fields. The necessity to use more and more pesticides due to the resistance developed in pests, as well as the fact that prices of pesticides have dropped considerably since the adoption of import liberalisation policy in 1995, has increased their consumption considerably in the last few years. During the same period, however, the cotton yield has not increased significantly, thus raising serious questions about the effectiveness of increased pesticide consumption. As most cotton-pickers are illiterate, they are unaware of the hazards they are exposed to. Moreover, on account of their poverty, they are vulnerable to greater health risks. These factors prevent investment in simple protective measures and make recovery from pesticide-related ailments very costly. The bargaining power of cotton-pickers vis-a-vis their employer is too weak to negotiate for protective gear. The close association between their domestic responsibilities and paid work exposes not only them but also their children, who are attended to while harvesting, to serious health hazards. The result is chronic pesticide poisoning, with its symptoms ranging from mild headache via skin allergy to cancer of internal organs. One of the few studies conducted in Pakistan on the issue showed chronic pesticide poisoning among cotton-pickers, especially in the post-harvest period. According to the study, blood samples of only 10 per cent female cotton-pickers were in the normal range after the harvesting season. On the other hand, blood samples of 42 per cent female cotton-pickers exceeded the normal range after the harvesting season. Cotton-pickers are trapped in a vicious cycle of poverty, which is fuelled by the low pay they receive and the health hazards they are exposed to. The low piece rates they earn does not allow them to use equipment that can protect them from the harmful effects of pesticides, as they believe protective gear will slow down their speed. With their low earnings they cannot afford a balanced diet, which in turn weakens their immune system and makes them vulnerable to pesticides' hazardous impacts. Once ill, they do not have the means to get proper treatment. As a first step towards ensuring decent working conditions in the cotton fields, the role of agricultural workers, especially women, as crucial economic stakeholders needs to be acknowledged. Women workers, who represent more than one-third of the agricultural labour force, are not even mentioned separately in the National Agricultural Policy. As extension services are provided mostly by men, they hardly reach women agricultural workers. In this scenario, existing legislation for the protection of their lives and livelihoods -- such as the 1973 Agricultural Pesticide Rules, the United Nations Food and Agricultural Organisation's International Code of Conduct on the Distribution and Use of Pesticides, and the 2005 National Environment Policy that promotes integrated pest management and discourages the use of agro-chemicals -- needs to be implemented forcefully.
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