Floods fan the flames for sugar imports
As if the existing tribulations for the sugar industry weren enough, the devastating floods in the country have put another question mark on the future of the pearly-sweet commodity for the coming few months.
Wake-up calls to the TCP, over the past few days and the dreary state of sugar stocks of 1.1 million tons, sufficient only until October, had prompted an urgent need for timely sugar imports to prevent a price hike.
To some extent, sugar imports have started showing progress; 334,151 tons had arrived in the country in early August, and import contracts for 70,000 tons of sugar from the Dubai-based Sucden, 250,000 tons from the Singapore-based Agrocorp and 205,000 tons from the Dubai-based Al Khalij Sugar Co. have already been awarded last week.
But these attempts will prove short of being fruitful given what lies ahead for Pakistan. Sugarcane growers cite losses of approximately 500,000 tons of refined sugar output due to damages to the crop, presumed to be greater once the water recedes. This means that more cushion from imported stocks will be needed in the future.
There are fears that delays in the arrival of tendered sugar, the Achilles heel of state sugar management in Pakistan, will result in higher import costs as international prices are seen rising over the next quarter.
Global sugar prices rose to a one-week high, $549 per ton on August 12 after droughts in Russia and floods in Pakistan raised market speculation about possible increases in imports from the two countries.
Pakistans farming community has claimed losses of about 200,000 acres of sugarcane. Because the crop has been destroyed to an extent so great, replanting and growing cane will take very long, according to economists at the International Sugar Organization in London.
Rising import prices and limitations of catching up with domestic production leave only one option for Pakistan - import refined sugar and do it quickly and on time.
Synergies can possibly be derived by working with private players in this moment of crisis. The time is there for TCP to knuckle under and speed up imports.