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Page last updated at 10:43 GMT, Tuesday, 25 August 2009 11:43 UK

South Asia hit by sugar shortages

Sugarcane field in India
Sugar is used extensively in food and beverages in South Asia

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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