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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.