China needs to set up its own sugar security reserve because the nation's limited sugar-bearing areas do not match its growing sweet demands, market analysts and officials said.

Sugar consumption in this world's most populous market is expected to outreach 11.8 million tons in 2005, according to the China Sugar Association and industry forecast agencies, which means more than one million tons of sugar need to be imported this year to fill the insufficient domestic supply.

A security reserve of the sweet material is therefore needed to avoid major market fluctuations and prevent prices from running out of control in the future as the domestic sugar supply is expected to remain deficient in the long run, market analysts said.

A fast expanding economy, a booming food processing industry and a change in consumption structure are three factors that drive up the sugar consumption in the country, said Ma Zhanping, deputy director with the Economy, Trade and Circulation Department of National Development and Reform Commission.

China is now the world's fourth largest sugar producer, only after Brazil, India, and European Union, and the world's fifth largest consumer after India, the EU, Brazil and the United States.

Customs statistics show that China has imported 579,300 tons of sugar during the first nine months of 2005, making it inevitable to become a huge sugar importer this year.

China's drastically rising appetite for sugar was mainly fueled by its flourishing food processing industry which now has an annual growth rate of between 10 and 12 percent, said Jia Zhiren, secretary-general of China Sugar Association.

Jia said the demand for sugar by the food baking companies in 2005 would maintain a growth rate between 7 to 8 percent while the dairy products will pick up a pace of between 10 and 15 percent.

Beginning in 2004, the domestic sugar supply in China has run short of more than 1.3 million tons and it is impossible for its sugar output, consisting of beet sugar and crane sugar, to exceed 13 million tons given its limited planting areas, said Lin Weimin,vice president of a sugar company in southwest China's Guangxi Zhuang Autonomous Region.

Sugar cane is planted in three low-latitude provinces and autonomous region including Guangxi, Yunnan and Guangdong while sugar beet is mainly sown in three northeastern provinces and northwest Xinjiang Uygur Autonomous Region.

"Unless there is major technological breakthrough, the ceiling for China's sugar output will remain at 13 million tons every year," Lin said, "And it is an optimistic estimation because peasants in these areas are also lured to plant other crops with greater economic revenue."

(Xinhua News Agency October 16, 2005)