worst hit are the comparatively small newspapers and magazines
By Syed M. Aslam
Sep 25 - Oct 01, 2000
Rising international prices and the continuous
weakening rupee-dollar parity have pushed prices of newsprint to record
highs for the discomfort of the Pakistani publishing industry which
entirely depends on imported newsprint as a primary raw material.
During last one-and-half month the CIF prices of
newsprint has registered a drastic increase of 25 per cent. The
situation is worsened by the shedding of value by the rupee against the
dollar with the introduction of the free-floating system last month
resulting in wild fluctuations. With the withdrawal of the control by
the central bank, the State Bank of Pakistan, the exchange rate has
soared to as high as over Rs 60 in the open market.
The newsprint stocks which are usually stored in the
bonded warehouses are subjected to the import duties and taxes at the
time of release on the exchange rate on that particular day. With the
weakened rupee the release of newsprint from the bonded warehouses is
costing more and more in import tariffs and taxes to increase the landed
This in turn has resulted in inflating the prices of
newsprint by as much as Rs 8,000 per tonne to Rs 44,000 in a course of
just 4 weeks, a tremendous increase indeed. In terms of kilogram this
means an increase in the price of the newsprint from Rs 35 to Rs 44.
While the increased newsprint prices has left no
sector in the publishing industry untouched the worst hit are the
comparatively small newspapers and magazines which can not afford to
import the basic printing material themselves and the expenses it
requires to store and guard it. Only a handful of big publications
including a few large publishing groups and a limited mass circulation
newspapers and magazines chose to benefit from the traditional newsprint
quota policy. The majority remained dependent on buying their own
newsprint from the open market at whatever prices it was available.
The measure which was seen by the observers to
appease the large publishing groups enjoying an all pervasive influence
on the public opinion resulted in the creation of a black-market as only
a portion of the allocated newsprint quota was used by these large
publishing houses while the rest finds in the local market.
It was in this backdrop that the present government
extended the booking of the newsprint by the commercial importers
besides the traditional consumers in the print media. Today commercial
importers can book newsprint at the same rate of duties and tariff as
that applicable to the newspapers and magazines.
However, the recent surge in the international prices
of the newsprint in addition to a rupee which keeps on losing value on
any given day are proving to be the proverbial two-edge sword to push
the cost to an unaffordable level, particularly for small publications
be it a newspaper or a periodical.
The worst sufferer of the drastic increase in the
prices of newsprint are the small newspapers and periodicals who due to
reasons of pure economics prefer to buy the newsprint from the open
market. Unlike the handful of big publishing houses enjoying mass
circulation, the large majority of small newspapers and magazines have
to absorb the increased cost of newsprint which pose a cause of great
concern for them. Though hurting, the smaller newspapers and magazines
have thus far been absorbed the increase as newsprint price make up
between 12-15 per cent of the total production cost. However, like
everything else they would only be able to absorb the cost up to a
certain level after which they would either be forced to increase the
price of their publications and face a possible backlash in reduction in
readership or slash the number of pages, a no less difficult option.
While newsprint prices have been on the rise over the
years what is worrying is the fact that they have never registered such
wild fluctuations over such a small period as witnessed in the recent
months. During a brief duration of just four days last week the price of
a ream of art paper increased by Rs 150 to Rs 2,750 while that of a ream
of 55 gram newsprint increased by Rs 40 to Rs 600. This represent 11 per
cent increase in the cost of newsprint.
What is even more disturbing is the fact that the
newsprint prices are not expected to come down in the near future, for
the same two reasons which fuelled it in the first place — surging
international prices and the weakening rupee and the uncertainty that
where will it stop. Newsprint producers in North America are reportedly
booking the product for the next month at Rs 45,000 per tonne.
This is also evident from the announcement by world's
largest newsprint maker, Montreal-based Abitibi-Consolidated Inc.,
predicting increased earnings in the fourth quarter this year way back
in June. Abitibi attributed its improved second-quarter earnings of
Canadian $61 million on sales of C$1.48 billion compared with earnings
of C$35 million same period last year. It cited continuous rise in
newsprint prices for the improved financial performance.