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Pakistan struggles to export sugar surplus as global prices plunge

Reuters  |  KARACHI/MUMBAI 

By Syed Raza Hassan and Rajendra Jadhav

KARACHI/(Reuters) - Pakistan's industry is urging the to reinstate export subsidies after a steep fall in global prices has slowed shipments, adding to a domestic surplus just as the country prepares to harvest a record crop.

Without revenues from exports, local mills will struggle to pay farmers for new supplies, while large stockpiles will stop domestic prices from rallying in the world's eighth-largest producer, industry officials said.

Prime Minister Shahid Khaqan Abbasi met with the politically influential industry last week and directed the Commerce Ministry and Advisory Board to work on ways to resolve "the issues and problems" affecting sugar, his office said in a statement.

last had an export subsidy in 2015/16, set at 13,000 rupees ($124) per tonne for of 650,000 tonnes of the sweetener, and a similar subsidy level is needed again, the industry said.

"Mills are not able to export at the current international prices," Iskandar Khan, senior vice chairman of the politically influential Mills Association told

Global prices have fallen over a quarter so far in 2017 to around $378 a tonne as output is expected to climb in key producers like India, China and Thailand.

"In the world market, prices need to rise by $60 per tonne to make viable," said a Mumbai-based dealer with a global trading firm.

cane is a popular crop in as the sets procurement prices, while the industry is protected by a 40 percent import tariff which has led to high domestic prices.

The association says the area given over to cane has risen about 30 percent over the past seven years, while output has more than doubled with the help of subsidies for fertilizers and other aids.

produced 7 million tonnes of in the 2016/17 marketing year ending September 30, exceeding local demand of around 5 million tonnes, and the association pegs this year's crop at a record 8 million tonnes.

controls via quotas in an effort to ensure sufficient local supplies. So far this year it has authorised 725,000 tonnes of shipments, which would make it the world's ninth largest exporter, according to the United States Department of Agriculture.

However, the country has actually exported only about 350,000 tonnes, traders estimate, with current stockpiles sitting at about 1 million tonnes.

Mills in usually start crushing in October, but this year plan to delay crushing by a few months as they lack the funds to settle bills for cane purchases before the new season, said a miller based in

"has no choice but to export surplus sugar," said the Mumbai-based dealer.

($1 = 105.2600 Pakistani rupees)

(Reporting by Syed Raza Hassan in and Rajendra Jadhav in MUMBAI; Editing by Richard Pullin)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, September 12 2017. 12:08 IST
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