Pakistan can get Indian sugar cheaper and faster if the sugar-deficit neighbouring country resumes trade with India and contain its rising retail prices of the sweetener out there during Ramadan that will commence soon, sugar industry bodies said on Sunday.
Sugar prices in the retail markets of Pakistan have spiralled sharply up to PKR 100 per kg due to production shortages and the country is mulling over imports.
The Pakistan Economic Coordination Committee (ECC) has recommended the government to allow import of 5,00,000 tonnes of white sugar to boost domestic availability.
Last week, there were sudden hopes of trade reopening between the two nations. However, Pakistan’s cabinet back tracked on the Pakistan ECC decision to allow import of sugar and cotton from India. Pakistan, which is expecting sugar production of 5.6 million tonnes in the ongoing 2020-21 marketing year (October-September), is facing a shortage of 5,00,000 tonnes, according to Pakistani traders.
Stating that India can meet Pakistan’s entire sugar shortage easily, All India Sugar Trade Association (AISTA) Chairman Praful Vithalani said: “It would be a win-win situation for both the countries if trade resumes. I want to say that essential commodities required for human consumption should be kept away from politics.”
The neighbouring country, where crushing operations are underway, needs white sugar of medium size grain consumed widely and which is adequately available in India, the world’s second largest sugar producing nation after Brazil.
Whereas Brazil has S-grade white sugar, that is, fine sugar and not much preferred in Pakistan, he said. “Through land route via Punjab, white sugar would cost about USD 398 per tonne (which includes freight charges and delivery at godown). This rate is cheaper by at least USD 25/tonne compared to other nations via sea route,” he said, and added imports via sea route would get expensive for Pakistan after adding port clearance and port-to-godown costs.
Not only logistics cost, Vithalani said Pakistan can get Indian sugar much faster, within four days compared to 45-60 days from Brazil. Further, AISTA Vice-Chairman Rahil Shaikh said India is the nearest country for Pakistan to import white sugar. The other nearby countries are Algeria and the UAE. Importing from Brazil is not viable both in terms of cost and distance.
He also said Pakistan has not imported any sugar so far in the ongoing marketing year.
State-own Trading Corporation of Pakistan (TCP) had floated two tenders for import of 50,000 tonne each. However, it had to scrap the tenders mainly due to high quotes. The lowest bid it received was USD 540 and USD 544 per tonne by Al Khaleez, Dubai.
Last year, Pakistan had contracted about 1,25,000 tonnes of sugar in the price range of USD 425-455 per tonne, Shaikh said adding that imports from India will be cheaper than this.
“If Pakistan contracts sugar from Brazil right now, it would take minimum 45 days to get the shipment. In fact, it might take more days as Brazil ports at present are busy and vessels are not moving fast,” said one of the sugar mills owner from Uttar Pradesh.
According to Indian Sugar Mills Association (ISMA) Director General Abinash Verma, “If trade opens, it will be good for both the countries. We can help Pakistan meet its sugar shortage. On the other hand, it would help India reduce some of its surplus stocks.” India is sitting on a surplus stock and aims to export 6 million tonne in the ongoing 2020-21 marketing year (October-September) with a transportation subsidy of Rs 6 per kg for shipment via sea route and Rs 4 per kg via land route.
Out of the total sugar exports, Indian mills have already contracted 4.5 million tonnes. The balance 1.5 million tonnes has to be exported in the next six months, Verma added.
One of the Pakistani trading companies official, on the condition of anonymity said that if trade opens between the two nations then the sugar imports from India would be less expensive at least by USD 25 per tonne via land route and the shipments will reach soon without much hassle. Timely imports will help boost domestic availability during Ramadan when sugar demand normally rises and help arrest rising retail prices, he added.
Pakistan is the world’s eighth largest producer and consumer of sugar. Sugarcane is grown on approximately 1.2 million hectares and provides the raw material for 89 sugar mills.