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The Pakistani government plans to import 750,000 metric tonnes of sugar after having exported a similar quantity in the current fiscal year. It has raised significant concerns and questions about the state’s sugar policy as it will only add more burden on the masses. This paradoxical move will directly contribute to a sharp increase in domestic sugar prices, benefiting sugar mill owners while burdening consumers.
In the first 11 months of the current fiscal year, Pakistan exported a remarkable 765,734 metric tonnes of sugar, earning Rs114 billion – a 2,200% increase compared to the previous year. This was followed by the government’s decision to import 750,000 metric tonnes, comprising 250,000 metric tonnes of raw sugar and 500,000 metric tonnes of refined sugar.
Before exports were allowed, the domestic retail price of sugar was around Rs140/kg. Following the exports, prices surged to a record Rs190/kg, a significant increase of 35%. This surge occurred despite the government having set a retail price cap of Rs164/kg in March, which was already 13% higher than the price when export approval was first given.
Critics argue that this policy directly benefits sugar millers who gained from selling sugar at higher international prices and are now set to profit again from imports. The Pakistan Sugar Mills Association (PSMA), often accused of cartel-like behavior, has been a direct beneficiary of the export decision.
The most prominent criticism is the inconsistency in government policymaking. Why allow large-scale exports if they disturb domestic supply and drive up prices, necessitating imports soon after?
Many experts and opposition members allege that the policy is designed to appease and benefit influential sugar millers with political connections. This “export first, import later” cycle appears to be a recurring pattern in Pakistan’s sugar sector. While the same “mafia” gains massive profits at the expense of consumers.
Despite government-set retail prices, authorities have largely failed to ensure stable prices in the market. The Competition Commission of Pakistan has previously accused PSMA of cartel-like practices, and the government’s inability to enforce price caps adds to public frustration.
There are strong suspicions that sugar millers and traders create artificial shortages directly adding more to prices. It especially happens during high-demand periods like Ramadan. The government’s actions, or inactions, are seen as inadvertently supporting such practices.
The rising sugar prices significantly impact ordinary consumers, especially low-income households, who bear the brunt of the government’s policy choices.
The core problem is not a genuine supply shortage but rather an administrative failure to make the sugar industry honor its commitments. Importing sugar is seen by some as an “eyewash” that delays addressing the root causes.
The government’s intervention in allowing exports and then imports contradicts its stated commitment to free-market agricultural policies. The Ministry of National Food Security claims that imports are being pursued to stabilize domestic prices, even while arguing that there are sufficient stocks.
Deputy Prime Minister Ishaq Dar emphasized the government’s commitment to balancing the interests of consumers and producers.
Some justifications might include ensuring future availability and preventing a more severe crisis down the line, although this doesn’t explain the immediate price hike after exports.
The PSMA has recommended measures to curb sugar smuggling and suggested a tolling policy for raw sugar imports to manage shortages and ensure year-round operations for mills. However, these are often seen as self-serving.
This is not a new phenomenon in Pakistan. The sugar sector has a history of price volatility, government interventions, and accusations of cartelization. Past instances have also seen the government allowing exports only to face domestic shortages and import needs later, leading to similar criticisms.
