Pakistan needs to import 7m tonnes sugar

ISLAMABAD: Pakistan may need to import up to 700,000 tonnes of refined sugar to cover shortages in 2009, partly caused by the smuggling of the sweetener to neighbouring Afghanistan, a top sugar industry official said on Wednesday.

Pakistan is already in the international market to buy 50,000 tonnes of sugar through a tender to be opened on Feb. 28, after the government authorised a state trading agency early this month to import 200,000 tonnes. Industry officials had earlier estimated between 400,000 and 600,000 tonnes of imports for the year, after an expected fall in the 2008/09 crop, but a top trader said smuggling of sugar to Afghanistan has accentuated the problem. "Our shortages for this year will be around 700,000 tonnes which will have to be met through imports," said Iskandar Khan, chairman of the Pakistan Sugar Mills Association.

"The shortages would have been around 400,000 tonnes but nearly 300,000 tonnes of white sugar was smuggled to Afghanistan between November and January, and that has added to the problem." Khan said at the time, the price of sugar in Afghanistan was almost double that in Pakistan, providing a major incentive for smuggling to the land-locked country.

Various goods including sugar, urea and wheat flour are smuggled to Afghanistan. A transporter in Peshawar said sugar was being smuggled via the Mohmand tribal region along the Afghan border. Pakistan's decision to import refined sugar comes after domestic sugar prices increased more than 23 percent to 42 rupees/kg ($0.53) from 34 rupees about three months ago. Pakistani sugar prices have risen following a doubling of sugarcane prices to 120 rupees per 40 kg in the past year on lower output. Government and industry bodies had expected refined sugar output from the 2008/09 crop to fall to between 3.5 million and 3.6 million tonnes from 4.7 million tonnes a year ago. Final output estimates are expected by the middle of March.

But Khan said imported sugar would have no impact on the domestic price of sugar which is already lower than that in the international market. "The landed cost of imported sugar at Pakistani ports will be 45 rupees/kg, as against the domestic prices of 42 rupees/kg, and it will become more costly after adding the cost of transport to other cities."