Cooking up plans for raw sugar imports

With steep rises in sugar prices internationally, and the inability of the TCP to import white sugar on time at a reasonable cost, the situation for the common sweetener has become quite sensitive.
Talks of an imminent sugar crisis abounded in the local media as an emergency meeting with millers and the ministerial body was convened yesterday to review the situation, where, according to reliable sources, the plan to import raw sugar was approved.
Representatives of the Pakistan Sugar Mills Association (PSMA) told BR Research that hardly 200,000 tons of sugar stocks were available with the TCP.
Roughly 150,000 tons are expected to arrive by the end of this month; however, in case this is delayed any further, a dire situation is likely to be created as the existing stocks are not sufficient to last more than a few weeks, sources revealed.
Fuelling the dreary scenario is the failure of the TCP in speeding up imports. The latest in the hitches of delays has been TCPs failure to open an LC for import of 105,000 tons of sugar due to a shortage of funds.
Industry stakeholders have been propagating the import of raw sugar instead of refined sugar as it would save the national exchequer some $240 per ton. "Refined sugar costs 73 rupees (90 cents) a kilogram on landing at Karachi Port, while raw costs 50 rupees", Iskandar Khan, Chairman PSMA told Bloomberg last week.
Knowing that, according to industry sources, processing of raw sugar results in wastages of only 2-3 percent, while the cost of processing is usually minimal, Khans argument makes sense.
However, the price of raw sugar has been rising internationally - soaring above 21 cents a pound in the beginning of September, a level hit for the first time in six months.
Indias less-than-expected estimate of sugar output, down 3 million tons from consensus forecast, concerns about Brazils output due to consistently dry weather conditions in the countrys cane growing areas and increased expected demand from Pakistan have underpinned raw sugar prices.
This implies that the import of raw sugar needs to be rendered on time to prevent it from seeing a fate similar to that of white sugar.
Despite the obvious risks of further delays, the ministerial committee however, has not yet decided the quantity of raw sugar imports; neither has it been decided as to when it will be imported, and which official body will be assigned the task of importing it.
However, at a previous meeting summoned to address this issue, the ministerial body claimed that it was too late to source raw sugar at the beginning of the crushing season since it would take around 80 days to import raw sugar from Brazil.
Consequently, a more suitable time had been suggested as December this year when the effects of the flood on the crop also become clearer. However, a time for importing the commodity is still to be decided.
While an unwarranted 25 percent import duty on raw sugar is another issue that needs to be addressed by the concerned authorities, one hopes of at least a timely decision on the import of the same.