LAHORE: The Competition Commission of Pakistan (CCP) has recommended that provincial governments should ban the burning of wheat straw in fields and as a fuel.
Wheat straw - a byproduct of wheat - is the main raw material in the production of pulp and paper and constitutes approximately 85% of the total cost of low-quality paper.
“Since wheat straw has become a common raw material, its burning for alternative fuel has caused an acute shortage and driven up prices for this commodity, adversely affecting prices of meat and dairy products and also creating the issue of survival for the pulp and paper industry,” according to an analysis released by the CCP on Tuesday.
The commission, after receiving a number of complaints relating to the shortage of wheat straw in the market, conducted an open hearing on November 7 in Lahore. Various stakeholders associated with different industries such as paper manufacturing, livestock, dairy milk and fertiliser attended the hearing.
The wheat byproduct is used by the livestock and dairy industry as an essential component of fodder for cattle and is also being increasingly used as an alternative source of fuel for power generation. As per estimates, 50% of wheat straw is used for animal consumption and 40% is used by other sectors which include exports. Of this 40%, nearly 5% is used by the pulp and paper industry.
In the past three years, the price of wheat straw has jumped from Rs250 per ton to Rs480 per ton and can even reach around Rs1,000 per ton in off-season. During the hearing, a few small livestock farmers revealed that since they were not purchasing in bulk, like the paper mills, they had to pay around Rs650 to Rs680 per ton for the wheat straw.
Owing to its unavailability and high prices, the pulp and paper mills either faced closure or were forced to increase paper prices. The CCP analysed that in the short term, there appeared to be no readily available alternative to the wheat straw.
Moreover, the rise in prices and shortage of this commodity have had a more pronounced impact on the smaller players in the livestock, dairy and paper sectors since they are not able to reap the benefit of economies of scale. The unavailability of wheat straw has led to the closure of seven paper mills.
“This is an alarming situation since it not only affects the livelihood of persons associated with these units, it also has repercussions for competition in the sector since only two mills producing good-quality paper from imported wood pulp remain operational,” the report said.
“There will also be a profound impact on the public procurement and education budgets as provincial textbook boards procure mostly from the local industry, which produces low-quality paper for the printing of coursebooks for students of government schools.”
The commission was of the view that given the importance and economic potential of wheat straw, the farmers may be incentivised to reduce its wastage. Furthermore, it may be taken into consideration during the calculation of wheat support price.
“We are cognisant of the fact that the government under the Alternative Energy Development Board’s Policy for the Development of Renewable Energy for Power Generation, 2006 encourages the generation of power through the use of renewable energy sources to bring energy security and improve the energy mix.
“However, we are of the opinion that this should not be at the cost of depriving the essential sectors of an important input ie wheat straw without which their survival is at stake,” the CCP said.
It emphasised that for the purpose of biofuel/bioenergy, various alternatives to the wheat straw should be utilised. These residues are in surplus and are equivalent to or have a higher energy potential than the wheat straw which include rice straw, cotton stalk, bagasse, sugar trash, maize stalk, etc.
Published in The Express Tribune, December 25th, 2019.
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