CHINA SEEN UNLIKELY TO RAISE SUGAR IMPORTS
China will not increase sugar imports
substantially this year because of foreign exchange constraints
and large stocks, despite falling production and rising
domestic demand, traders and the official press said.
    "Despite rapid increases in domestic production over the
last 30 years, imbalances between supply and demand continue to
be extremely serious," the Farmers Daily said. It said 1986
plantings fell due to removal of crop incentives, because
farmers could earn more from other crops and because technical
and seed improvements had not been widely disseminated.
    The official press had estimated the 1986/87 sugar crop
(November/March) at 4.82 mln tonnes, down from 5.2 mln a year
earlier, and domestic consumption at six mln tonnes a year.
    The Yunnan 1986/87 sugar harvest was a record 521,500
tonnes, the provincial daily said. It gave no year-earlier
figure. Output in Guangxi was 1.04 mln tonnes, the New China
News Agency said without giving a year-earlier figure.
    The Nanfang Daily said production in Guangdong province
fell to estimated 1.92 mln tonnes from 1.96 mln and that the
area under sugar was dropping.
    "Supply of cane (in Guangdong) is inadequate," the newspaper
said. Processing costs are rising and the economic situation of
nearly all the mills is not good. To guarantee supply of cane
is a major problem."
    A Western diplomat said sugar output also fell n Fujian,
south China's fourth major producer, where there was a drop in
area planted.
    He said the rural sectors in Guangdong and Fujian were wel
developed, enabling farmers to choose crops according to the
maximum return, meaning that many had avoided sugar.
    The Farmers Daily said a peasant in the ortheast province
of Heilongjiang could gross 108 yuan from one mu (0.0667
hectares) of soybeans and 112 yuan from one mu of corn but only
70 from one mu of sugarbeet.
    The paper said the profit margin of mills in China fell to
4.7 pct last year from 11.87 pct in 1980.
    Mills lacked the capital to modernise and they competed
with each other for raw materialsX, it added. This resulted in
falling utilisation rates at big, mode{nised mills.
    The price of sugar had not changed in 20 years, the
official press has said.
    Customs figures showed China imported 1.18 mln tonnes of
sugar in calendar 1986, down from 1.9 mln in 1985.
    The diplomat said stocks at end-August 1986 were 2.37 mln
tonnes, up from 1.92 a year earlier.
    A foreign trader here said China accumulated large stocks
in 1982-85 when provincial authorities were allowed to import
sugar on their own authority. This practice was stopped in 1986
when the central government resumed control of imports.
    "As China lacked storage, much of these imports was stored
in Qinghai, Inner Mongolia and other inland areas," the diplomat
said.
    The trader said transporting stocks from these areas to
consumers in east and south China was a problem, particularly
as coal had priority. "How quickly they can move the sugar is
one factor determining import levels," he said.
    Another factor was the quality of the harvest in Cuba,
China's major supplier through barter trade, he said.
    "China bought two distress cargoes last week, for about
152/153 dlrs a tonne," he added. "China is not a desperate buyer
now. But if the Cuban harvest is bad, it will have to go into
the open market."
    A Japanese trader said Peking's major concern regarding
imports was price.
    "While the foreign trade situation has improved this year,
foreign exchange restraints persist," he said.
    The diplomat said domestic demand was rising by about five
pct a year but "a communist government is in a much better
position to regulate demand than a capitalist one, if the
foreign exchange situation demands it."
 REUTER
