Pakistan allows imports of Indian sugar to fill gap

Aug 2 | Updated: Aug 3 2005, 05:30am hrs
Pakistan, Asias third-largest sugar consumer, will allow imports of the sweetener from India for the first time in four years as it seeks to fill a local shortage.

Trade in white sugar with Pakistans neighbor may start from Wednesday, said Asfaq Hasan Khan, an adviser in the Ministry of Commerce and head of debt management in Islamabad. The government banned sugar imports from India in 2001, saying they didnt meet quality standards.

There are no limits on the amount of sugar that may be imported from India or how long the trade may last, Mr Khan said in a phone interview on Tuesday.

Pakistan has been importing sugar to lower prices that increased almost 15% in the past two months after a drought cut domestic production by more than a fifth last year. Pakistan is the worlds ninth-largest sugar producer.

Non-government importers had received 260,000 tonne of the 550,000 tonne of white sugar they ordered as of July 7, Raees A Tar Mohammad, chairman of the Pakistan Commodity Traders Association, said last month. This was in addition to the 100,000 tonne bought by the government for delivery in August and September from United Arab Emirates-based Al Khaleej Sugar Co.

Any exports from India would be a drain on that countrys sugar supplies.

Production in India, the worlds biggest consumer of the commodity, is estimated at 12.5 million tonne in the year ending September 30, down 11% from a year earlier. That compares with domestic consumption of about 20 million tonne.

A larger shortage in India may force the country to buy more raw sugar from Brazil and other suppliers, and buoy world prices.

Raw sugar prices have risen 10% on the New York Board of Trade this year after a 59% jump in 2004.

The prospect of Indian sugar exports to Pakistan would be positive for international sugar prices, said Ravi Chandra, a commodity analyst at TransGraph Consulting Pvt in the southern Indian city of Hyderabad. There is still a shortage of supply in the market.

Bloomberg