Monday, February 4, 2013

China’s Smuggling Problem -Sugar

Like us China is battling smugglers working across their southern borders. But their battle is not with drug smugglers, it’s with sugar smugglers. And it is failing as it keeps domestic prices higher than the world market to support China’s own production.
Beijing's policy of stockpiling to support domestic prices and keep its farmers growing cane will also keep the profit incentive firmly in focus for the smugglers. As long as there is a big price gap, smuggling will continue.

Traders and analysts estimate that between 500,000 tons and 1 million tons of sugar was smuggled into China in 2011/12, mainly from the world's second largest exporter Thailand, but often via third countries. That is in addition to official imports of 4.26 million tons.
The world's top sugar importer's policy is keenly watched and its impact complex. Cheaper world prices encourage China to import more, which supports global prices and helps cope a little with a surplus haunting the market for a third season. Rising Chinese stocks, boosted by smuggling and higher domestic output, may weigh on local prices.

The Sugar Association said domestic sugar prices are quoted at 5,500 yuan ($883.80) per ton in top growing region Guangxi and for smuggled sugar, the price is about 4,000 yuan ($642.70) per ton.
That price gap means that smuggling will likely be about the same as last year.

The association last year offered a reward of as much as 500,000 yuan (about $80,000) for tips and information on smuggling, but monitoring movements of sugar across the vast borders is a difficult task. It estimates more than 100,000 tons had already been smuggled into China since the start of 2013.
Live Long and Prosper...

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