Sugar Crisis: Global Shortage of Sweet Commodity

Pakistan is currently in the midst of a major sugar crisis and Pakistanis are very bitter about. The sugar which Pakistanis dump into their tea and use to make their many baked deserts has completely disappeared from the shelves of local stores.

“Look for the sweetener in a local bazaar and you’ll find there’s none on the shelves; ask for it at the counter and you’ll hear there’s a black market supply available–at more than a full day’s wage” says Forbes Magazine.

Estimates show a 23 percent decline in sugar crop production this year. While last year Pakistan produced 4.7 million tons, farmers are expected to produce 3.2 million tons this year. Since the average annual consumption is 4.2 million tons, this means a severe shortfall for Pakistan.

Millers, along with the government are prime targets of blame and outrage. Interestingly enough, many leading political families are these very mill owners. While the military owns Fauji sugar mills, one of the largest in Pakistan, more than 50% of the sugar in Pakistan is produced in mills owned by the most powerful politicians in the country.

Pakistan, is not, however, the only country currently in this situation. India, which is currently world’s largest consumer and currently a leading importer of sugar, needs 23 million tons of sugar annually. This year the country is expected to produce only around 16 million tons in the crop year ending Sept. 30. Cane production is expected to decrease even further in coming months.

The rising shortage of sugar in India has been affecting the international market. In anticipation of shortages in India, sugar futures have been trading at a 28 year high of 27.49 cents per kg. Delhi based SMC Global Securities analyst, Ajeet Kumar says “There is no respite from high sugar prices till September,” as India’s sugar marketing year runs from October to September.

This is not welcoming news for the citizens of both Pakistan and India as the situation they are facing now is quite grim. Amidst hoarding of the little amount of sugar in circulation by wholesalers, The nation’s courts, ordered seizure of wholesale stocks and fixed a third price, for retail sugar, at 40 rupees per kilo, which was half the price in neighboring Afghanistan. Moreover, to simply break even while buying sugar cane at the government price of 100 rupees per 40 kilograms, mills say they’d have to sell refined sugar at 48 rupees per kilo; now they are mandated to sell at 40 rupees. It would be impossible for them to meet both requirements at once.

The lack of policy co-ordination is also becoming a hindrance to government efforts to control prices in India. While the federal government has been encouraging sugar mills to import raw sugar, for example, the opposition-led provincial administration of Uttar Pradesh has a ban on imports by mills in the state, resulting in some 900,000 tons of raw sugar being held up at Indian ports. “The government’s record of implementing (programs) have been poor,” says Ajeet Kumar.

A food ministry official Tuesday told Dow Jones Newswires that India will make a cap on the amount of sugar that can be held by bulk consumers such as makers of biscuits and beverages by six months, to November. The cap, which was supposed to have expired in mid-February, prohibits users from holding stocks of more than 15 days’ requirement.

As both India and Pakistan, as well as other countries such as Brazil, search for solutions to their sugar problem the outcome in the near future is uncertain. And it is also still uncertain whether or not the shortage will continue through next year.

One can only hope that a solution is found to this shortage of sugar, as shortages of other foods such as wheat and other staples are becoming more and more imminent. Nations should begin to worry about severe food shortages in the coming years as they are starting to take shape.