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By Aamir Ashraf

Written by: Staff

KARACHI, Apr 4 (Reuters) Pakistan, facing a shortage of around one million tonnes of sugar, has received an Indian offer to barter wheat for the sweetener, a senior government official said today.

''India is looking for an arrangement to barter their sugar for our wheat,'' Ashfaque Hasan Khan, an adviser to the Finance Ministry told Reuters.

''They have not mentioned any quantity but we are considering their proposal... a decision, however, would only be taken after a final estimate on the size of our wheat crop.'' Pakistani farm officials forecast wheat output to reach 22 million tonnes during the 2005/06 (Oct-May) crop year. Annual domestic demand is a little over 20.8 million tonnes.

Agriculture officials would make a final assessment on the crop size in the second week of May.

Khan said recent rains in the central Punjab province, Pakistan's main wheat-producing belt where the new crop is in the final growth stage, have brightened prospects of a bumper harvest this season.

''From Indian proposal, it seems they need huge quantity of wheat,'' Khan said. ''The final details can only be finalised, if our harvest meets the target.'' Another agriculture ministry official said the ministry estimates that the country would have an exportable surplus of at least 1.5 million tonnes of wheat this season.

''We need some market for our surplus harvest otherwise the farmer would not get good prices,'' the official said on condition of anonymity.

In May 2004, Pakistan banned wheat exports in the face of lower output and a shortage to meet domestic demand.

The official said the government would purchase five million tonnes of wheat from the farmers in 2006, on top of the carryover stocks of 2.5 million tonnes held from the previous year.

''The government is more inclined to involve private traders in wheat trade, especially in procurement and storage, to give a better price to the farmers,'' he added.

But industry officials said they expect a soft response from the traders because of low profit in wheat trade last season.

SUGAR IMPORTS Pakistan has been regularly buying sugar from the international market after sugar output declined to 2.8 million tonnes in the production year that began in November, from 3.2 million tonnes the previous year.

Annual consumption is 3.8 million tonnes.

Pakistan removed a four-year ban on imports from India last year after ties improved in the wake of a peace process launched in early 2004.

In March, the TCP bought 50,000 tonnes of white sugar from the Indian Sugar Exim Co Ltd at 473 dollars a tonne cost and freight at Karachi -- first purchase by the government in five years.

Another official at Pakistan's agriculture ministry said private traders have booked about 152,423 tonnes of white sugar from India, Dubai and China for April to May shipments.

''Out of the total deals, 77,423 tonnes are confirmed to reach in April,'' he added.

State-run Trading Corporation of Pakistan also issued a tender yesterday to buy 50,000 tonnes of white sugar, with shipment due in May.


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