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BBC NEWS | South Asia | South Asia hit by sugar shortages

A massive shortage in sugar stocks in India and Pakistan has led to soaring prices and consumer unrest.

The Indian government has introduced strict limits on companies that stockpile sugar to check rising prices.

Shortages led Pakistan's government to nearly double sugar prices causing public outrage ahead of the fasting month of Ramadan, which has now begun.

The price of raw sugar worldwide has increased to its highest level since 1981, as supply concerns grow.

India is the largest consumer of sugar in the world and the second largest producer, but poor monsoon rains have slashed output, forcing it to rely on imports.

One newspaper report says India's sugar stocks have decline to 4.5 million tonnes - just enough to meet two months of domestic demand.

The Indian government said bulk sugar buyers, such as biscuit manufacturers, would be allowed to store only 15 days supply.

Festival demand

In Pakistan, a production shortfall has sent sugar prices up by more than 15% over the last couple of months.

Consumers have expressed unease about the price rises particularly ahead of the fasting month of Ramadan, when when food consumption usually goes up.

Factory owners in Pakistan have been told by the country's interior ministry they must release sugar stocks or risk punitive action.

Sugar production in Pakistan has fallen to around 3.7 million tonnes this year from more than 4.5 million tonnes last year.

The government says it is importing 175,000 tonnes of sugar on an emergency basis to meet domestic demand.

But traders say it will be a while before import consignments hit the market.

Global sugar prices have been pushed up by growing demand in Brazil for sugar to be turned into ethanol for vehicle fuel, and a sharp fall in production in India, the world's largest sugar consumer.
 

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BBC NEWS | Business | US sugar supplies 'running out'

A number of large US food manufacturers have called on the government to ease sugar import limits, saying they fear the country could run out of supplies.

The letter from firms such as Kraft Food and Hershey comes in the week sugar prices have hit 28 year highs due to worldwide supply shortages.

Currently US food firms can only import a certain amount of sugar before they have to pay import tariffs.

US sugar manufacturers insist there is no shortage of domestic stocks.

Imminent sugar harvest

In their letter to US Agriculture Secretary Tom Vilsack, the food firms, which also include General Mills, warned that "our nation will virtually run out of sugar".


There is absolutely no shortage of sugar here

Jack Roney, American Sugar Alliance
However, the US Department of Agriculture said earlier this week that domestic supplies were now increasing.

This was backed by sugar industry group American Sugar Alliance (ASA), which said the next main sugar cane harvest would start later this month, while the sugar beet harvest would begin in October.

"There is absolutely no shortage of sugar here," said Jack Roney, director of economic and policy analysis at the ASA.

Global sugar prices have been pushed up by growing demand in Brazil for sugar to be turned into ethanol for vehicle fuel, and a sharp fall in production in India, the world's largest sugar consumer.
 

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'India may face 50-70 million kg shortage in tea' - dnaindia.com

McLeod Russel, flagship of the BM Khaitan Group, and the largest plantation company in the world is at present fortified with a tea crop portfolio of 80 million kg. It is hungry for more. But the company will stick to plantations, and not enter the packet tea business, managing director Aditya Khaitan tells DNA, while fielding questions on the company's plans, challenges and the industry picture. Excerpts:

Your profits for first quarter have increased over four times to Rs 31 crore. Is this largely on account of price increases of tea?
Yes. Actually, last year, we had a lower profit of around Rs 7 crore and that too included some other income component. This time, it is a clear cash gain on higher prices of tea. We fetched an average of around Rs 30-35 per kg of tea, which propped up profits. Sales volumes were lower, however, by 6 lakh kg because of lower production up to May.

For the last few years, your strategy has been to grow through acquisitions...Williamson Tea Assam, Doom Dooma, Moran and Phu Bhen Tea in Vietnam. Any plan this year?
We have always been on the lookout for good acquisitions. The acquisition of the controlling stake of Phu Ben Tea Company will prove highly beneficial to Borelli and McLeod Russel. The acquisition has given us a presence in Vietnam, which could lead to possible expansion of production in future. We propose to have 1,000 hectares in Vietnam.

Talking of acquisitions in general, I should say prices of tea gardens are expensive and good quality assets don't come easily. We are further assessing the Vietnam scene. We are now at 5 million kg of tea in Vietnam with the new company which we acquired. We hope to double this in 3-5 years. Also in the next 5 years, about 30-40% of our exposure should be outside India. Witha vast experience in tea production, manufacture and marketing, we hope to improve the quality of tea being produced by Phu Ben Tea and consequently achieve a higher price realisation. We are also scouting for properties in Africa.

What cash accretion can be expected from your company? And what is your turnover target?
Tea prices have been rising in recent times, but are still lower than what they should be. As far as McLeod is concerned, if the current price trend continues, there could be an approximate cash accretion of around Rs 150 crore, perhaps on account of higher prices of tea. We are looking at a turnover of around Rs 1,000 crore this year.

What do you plan to do with the extra cash and profits this year?
Retiring debt and growing the company. Our net outstanding debt is at Rs 385 crore. Working capital is around Rs 125 crore, while the balance is term debt. We hope to repay about Rs 100 crore this year.

Any capital expenditure this year?
We normally spend Rs 35-40 crore every year as capex for expansion purposes. We have 55 factories in India and 3 in Vietnam at present. We also reinvest in uprooting and replanting, which is 1-1.5% of the bushes every year.

Any plan to enter the packet tea business?
No, our expertise is in the plantation business and we command a position in the global market. There are big players like Tata Tea and Levers in the packet tea business. Our core expertise is in investment in plantations, and we will continue to do that.

What are your biggest challenges?
We are saddled with security costs. Social costs, which are borne by the company, are Rs 7 per kg of tea. In a year, we spend almost Rs 8 crore towards social and security costs. We are talking to the government to share 50% of the industry's social costs.

As chairman of the Indian Tea Association, do you think it would be a buoyant time for the tea industry over the next few months at least?
Well, adverse weather conditions till May 2009 in almost all tea producing countries affected production substantially and the global shortfall up to May is estimated to be over 84 million kg as compared to last year. In India, the weather condition has improved, although it continued to be unfavourable in Sri Lanka and Kenya. Indian tea production is estimated to be lower by almost 24 million kg upto May 2009. July production is also not too good. Most of the tea is produced in the second and third quarter of the year.

Calendar year 2009 started off with poor pipeline stocks. Do you see the same trend continuing in calendar 2010 given the low production?
As far as tea production in north India is concerned, from mid-March to June, about 20% of the annual production takes place. Huge volumes come in post June. But still, on a conservative estimate, we foresee a 50-70 million kg pipeline shortage in India next year. Kenya has not been able to return to its production level of earlier years and Sri Lanka also has its own problems. There may be more enquiries for Indian tea. In India, consumption is growing at 3.5%
 

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Chilli futures up 1.16 pc on short-covering

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New Delhi, Sep 3 (PTI) Chilli prices today rose up to 1.16 per cent in futures trade on the National Commodity and Derivatives Exchange largely on short-covering by traders even as chilli prices weakened in spot markets.

Chilli for delivery in October contact shot up by Rs 63, or 1.16 per cent to Rs 5,494 per quintal. The contract has an open interest in 2,735 lots.

Chilli for delivery in December contract also added Rs 53, or 0.94 per cent at Rs 5,672 per quintal, in an open interest in 1,005 lots.

Market analysts said short-covering by traders mainly pushed up chilli prices at futures market here but weak trend in spot markets restricted gains.

At Guntur, Andhra Pradesh, chilli in spot trading traded lower at Rs 6,000 per quintal.
 

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fullstory

Rice output may slump by 16 MT this season: FM

New Delhi, Oct 23 (PTI) Finance Minister Pranab Mukherjee has apprehended that rice production this year could be 16 million tonnes below the 2008-09 level due to twin-impact of drought and floods.

Mukherjee, however, exuded confidence that there would be no supply-side shortage for the foodgrain.

"We could have achieved higher growth but adverse impact of both drought and later floods in some parts has affected the agricultural prospects and particularly the khariff crop would be substantially affected," he told PTI.

Though the Finance Minister endorsed the Prime Minister's Economic Advisory Council's growth projection of 6.75 per cent this fiscal, he provided a more pessimistic outlook on the farm sector. The PMEAC, earlier this week, projected the decline in foodgrain production this season by as much as 11 million tonnes.

India produced record 99.15 million tonnes of rice in the 2008-09 season.
 

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