2017-18 season: Pakistan’s sugar production likely to hit record at 8m tons

Millers, however, struggle to export surplus as global prices plunge

MUMBAI/ KARACHI: Pakistan’s sugar industry is urging the government to reinstate export subsidies after a steep fall in global sugar 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 sugar producer, industry officials said.

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

Pakistan last had an export subsidy in 2015-16, set at Rs13,000 ($124) per ton for exports of 650,000 tons of the sweetener, and a similar subsidy level is needed again, the industry said. “Mills are not able to export sugar at the current international prices,” Iskandar Khan, Senior Vice Chairman of Pakistan Sugar Mills Association told Reuters.

Global prices have fallen over a quarter so far in 2017 to around $378 a ton 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 ton to make exports viable,” said a Mumbai-based dealer with a global trading firm.

Pakistan produced seven million tons of sugar in the 2016-17 marketing year ending September 30, exceeding local demand of around 5 million tons, and the association pegs this year’s crop at a record 8 million tons. “Pakistan has no choice but to export surplus sugar,” said the Mumbai-based dealer.

Published in The Express Tribune, September 13^th, 2017.

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