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Pakistan’s sugar crisis dampens festive spirits

A sugar crisis in Pakistan has wrong-footed the political leadership as mills owned by lawmakers are blamed for compounding the miseries of Pakistanis and housewives struggle to sweeten the Eid festival.
Depleted crops, international prices at 30-year highs and hoarding are variously blamed for Pakistan's latest commodity price hike, forcing the federal government to eye costly imports to stabilise prices.
Pakistan is Asia’s third-largest user of sugar and the world's fifth largest producer of sugar cane, according to the Pakistan Sugar Mills Association.
Despite this production, Finance Minister Shaukat Tarin told AFP imports were now needed.
"We'll import 300,000 tons of raw sugar and 75,000 tons of refined sugar to stabilise domestic prices," he said.
A kilo of sugar cost 25 rupees [three US cents at the start of 2009 and now costs more than 50 rupees, said independent economic analyst A.B. Shahid.
Estimates show a 23 percent decline in sugar crop production. While last year Pakistan produced 4.7 million tons, farmers are on track to produce 3.2 million tons this year. That means a severe shortfall as annual national consumption is 4.2 million tons.
Low rainfall has exacerbated the shortage but Pakistani manufacturers have been blamed for fuelling the problem.
"Sugar mill owners created an artificial shortage crisis. This is a clear case of total loss of government control over the market," said Shahid.
Some of the country's 80 mills are owned by influential lawmakers affiliated both to the government and the opposition, injecting politics into sugar as into almost everything else in Pakistan.
"There are interest groups on our political landscape who […] shelter each other in public because they have common vested interests," said Shahid.
"Such food crisis shortages will escalate further because we have a useless government, which does not know what to do. No trade body takes action against the black marketeers and hoarders and we see total anarchy," he said.
The International Sugar Organisation (ISO) says worldwide sugar supplies are expected to fall nine million tonnes short of demand in 2008-09.
In south Asia, sugar has major social and political implications. It is a key part of the diet and an essential ingredient for delicacies at religious festivals, of which Eid al-Fitr is coming up in Pakistan and Diwali in India.
Pakistan, the world's second most-populous Muslim nation, is observing the holy month of Ramadan, when after the dawn-to-dusk daily fast and the Eid holiday at the end, people consume more sugar and flour than normally.
The benchmark has seen sugar futures at the New York-based Intercontinental Exchange rise five percent to 22 cents a pound for October delivery, the highest since March 30, 1981.
The federal government is offering a one-billion-rupee (12-million-dollar) subsidy on essential food items through a chain of state-run utility stores across the country.
"Mill owners hoarded sugar and themselves increased prices thinking the government will ultimately import," said Rana Sanaullah, law minister in Punjab, one of Pakistan's sugar-producing provinces.
"There is a lack of consumer protection bodies in the country, which is the main reason that our people suffer," he added.
But mill owners take a different line, accusing the cash-strapped government of agreeing to imports too late.
"The government is responsible for the sugar crisis," said Humayun Akhtar Khan, a leader in the opposition Muslim League-Q party whose family owns a sugar mill partly held responsible by some ministers.
Neighbouring rival India is also reeling from a poor sugar crop, forcing it to import from ultra-expensive international markets.
The contry is estimated to have only 4.5 million tonnes of sugar stock left, which would meet demand for just two months.

 

Levi Strauss tempts Indians with denim on credit

US jeans maker Levi Strauss has begun selling its denim on credit in India, offering shoppers the chance to buy a 30-dollar pair of its famous trousers in three installments.
The technique of allowing deferred payments is an age-old commercial strategy more common for sales of washing machines or cars, but the company has embraced the concept to tempt aspirational Indians with restricted budgets.
"This is the first time the world over that apparel like jeans and shirts are being sold on credit that will be deducted by the bank in three monthly installments," Levi Strauss India managing director Shumone Chatterjee told AFP.
The group, which claims to have created the first blue jeans in 1873, has teamed up with India’s largest private bank, ICICI Bank, to launch the initiative in the IT hotspot of Bangalore.
Buoyed by the response, Levi's said it was in talks with other private banks such as HDFC to offer credit to a wider range of buyers and in other cities around the country.
Bangalore, with its large young population of IT workers, was an obvious starting point.
"Ever since we introduced the ‘buy now, pay later’ scheme without interest or hidden charges in June, our sales have surged by 10-15 percent," Levi’s franchise manager M. Aaron told AFP from his spacious showroom in Bangalore.
The only condition for the credit is that the bill should be for at least 1,500 rupees [30 dollars], which means interest-free repayments of 500 rupees a month.
The lowest price for a pair of jeans in Aaron's store is 1600 rupees.
Judging by the customers walking out with shopping bags, Levi's are a hit among Bangalore's college students, young techies and middle-aged professionals who were busily swiping their credit cards.
The move is an attempt by Levi Strauss to tap into the burgeoning demand for Western-branded clothes among India's growing middle class.
Changing lifestyles, rising incomes and the influence of Western culture have fuelled demand for designer clothing in India, an obvious symbol of wealth in the status-conscious country.
"With rapidly changing and globally exposed lifestyles, tastes and desires, consumers in India are seeking means to upgrade and update their wardrobes," Levi’s brand manager Vishal Bhalla said.
Harish Bijoor, a brand specialist who runs an Indian consultancy, told AFP that he expected the installment plan to tempt buyers who might have been put off by the total price tag.
It could also boost sales at a time when consumer spending has weakened because of a broader slowdown in the Indian economy in the wake of the global financial crisis.
"The Levi’s scheme is a trendsetter in the jeanswear or apparel industry, which has been growing in double-digits over a decade," he said.
"The scheme makes branded products like Levi’s jeans affordable to a critical mass," he added.

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