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Importing key commodities has become a habitual exercise in recent years. While in part it is done to create an alternate supply to counter hoarding, another reason is to fill the demand-supply gap. The idea that the government should start thinking today about importing sugar for next year falls in the latter context.
The country's sugarcane crop is feared to fall short of target this year, as farmers are gradually shifting towards rice and cotton crops owing to lower support prices on sugarcane and lesser use of DAP fertiliser. These, of course, are in addition to other factors, such as tight water supply and foul delays in crushing on part of millers - a regular practice in our country.
The shortfall - which is likely to make its presence felt by November 2009 - is expected to equal 1 million tons, down from 35 million last year to 34 million tons. And since 34 million tons of sugarcane is able to produce 3.4 million tons of sugar, an import of 0.6 million tons would be required, knowing that Pakistanis consume about 0.3 million tons of sugar every month, leading up to an annual demand of 4 million tons.
Now, in the international market, the commodity is currently being sold at its 29-year high of 22 cents per pound after having risen 68 percent between March and August. However, with the arrival of new crushing season in the major sugarcane producing countries, like Brazil, prices will likely fall for a short period at the beginning of next calendar year.
Understanding the urgency of now, the authorities have quite rightly imported 100,000 tons of the common sweetener with plans to purchase 100,000 tons more. However, they must keep monitoring global sugar prices carefully and seize the small windows of opportunity by importing at the right time, as prices, nonetheless, are expected to be higher in the long-term, owing to concerns of drought in India coupled with heavy rains, and rising ethanol fuel usage in Brazil.

Copyright Business Recorder, 2009

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