Pakistan hikes sugar volume eligible for export subsidy

NEW YORK: Pakistan has hiked the amount of sugar eligible for export subsidies to 2 million tonnes from 500,000 tonnes, in a bid to reduce excess domestic supplies, the US government said in a report published on its website.

Pakistan, forecast to produce about 6.5 million tonnes of sugar this year, increased its sugar export quota in late 2017, the US Department of Agriculture (USDA) attache in Islamabad said in a report dated Jan. 24. Each tonne qualifies for a freight subsidy of up to $97, which could bring government costs for the program to $194 million. The move comes as Pakistan struggles to whittle down large carry-over stocks from the previous year amid another bumper crop.

The world is already awash in excess sugar supplies, which have caused global prices to tumble. Benchmark raw sugar futures  finished 2017 with their biggest annual loss in six years, falling by more than 22 percent.

In September, Prime Minister Shahid Khaqan Abbasi said the country would allow sugar mills to export 500,000 tonnes of sugar.

Exports of the sweetener gathered pace toward the end of 2017, going to Sri Lanka, Bangladesh and some African countries among others, the USDA said.

“As long as sugarcane remains an attractive option for farmers with a nominally guaranteed price, barring a significant increase in international prices, Pakistan is likely to continue this annual cycle of excess cane and sugar production followed by subsidized exports,” the report said.

The country has utilized the export subsidies to reduce local stocks during four of the last five marketing years, USDA said.

from The Daily Mail International – Leading English Newspaper from Pakistan http://ift.tt/2nmgUuq