Govt clears 200,000 tonnes sugar export

The government has decided to allow the export of an additional 200,000 metric tonnes of sugar, despite concerns that higher exports could put pressure on domestic prices.

The decision was taken by a sugar steering committee chaired by Deputy Prime Minister Ishaq Dar. The proposal will now be presented to the Economic Coordination Committee (ECC) for formal approval.

This is the second sugar export decision in less than a month. On August 19, the ECC had already approved the export of 108,000 tonnes of imported sugar.

The government says the latest export will not create a shortage in the domestic market.

Federal Minister for National Food Security Rana Tanveer Hussain said the country would have more than 600,000 tonnes of surplus sugar after meeting domestic requirements until the next crushing season. He said 200,000 tonnes of this surplus would be exported, subject to ECC approval.

Dar’s office said the deputy prime minister was satisfied with the availability of sugar stocks. He maintained that existing stocks, along with expected production, would be sufficient to meet domestic demand until the next crushing season.

The government has also decided to establish a mechanism to prevent the export decision from causing a significant increase in local sugar prices.

Officials have stressed the need for close monitoring of the market. They have also called for timely action to protect food security and ensure the availability of essential commodities at affordable prices.

However, the decision has raised concerns because Pakistan has experienced sharp increases in sugar prices following previous export decisions.

Last year, the government allowed substantial sugar exports at a time when domestic production subsequently declined. The National Food Security Ministry later acknowledged that the combination of exports and a 15% fall in production contributed to a sharp increase in sugar prices.

Sugar prices eventually climbed to around Rs220 per kilogram.

The current situation is different, with sugar prices around 18% lower than a year earlier because of improved production. The commodity is currently selling at an average price of about Rs148 per kilogram.

The latest export decision could therefore test whether the government can maintain this price relief while allowing millers to sell part of the surplus abroad.

Pakistan’s previous experience has added to the controversy surrounding the latest move.

In June last year, the government permitted the export of 790,000 tonnes of sugar before later allowing the import of 500,000 tonnes. However, only around 300,000 tonnes were ultimately imported.

The government had also reached an agreement with the Pakistan Sugar Mills Association to keep ex-factory sugar prices between Rs165 and Rs171 per kilogram until October 15, 2025.

The agreement was not maintained, and prices subsequently rose to around Rs220 per kilogram.

The latest decision has also revived concerns raised by the International Monetary Fund over governance in the sugar industry.

An IMF Governance and Corruption Diagnostic Assessment released last year highlighted what it described as a close relationship between powerful economic interests and state regulators in Pakistan’s sugar sector.

The report said sugar producers had benefited over the years from government policies, subsidies and regulatory arrangements.

It also raised concerns about the influence of politically connected mill owners on sugarcane prices, tariffs, exports and other government decisions.

The IMF referred to previous instances in which large-scale sugar exports contributed to domestic shortages and price increases.

An investigation by the Federal Investigation Agency had also examined allegations of artificial shortages, speculative hoarding and manipulation of sugar prices.

The IMF report identified the sugar industry as an example of weak regulatory enforcement and anti-competitive practices that could ultimately hurt consumers.

Pakistan has around 90 licensed sugar mills, with a number of them linked to political figures and elected representatives.

Against this backdrop, the latest export decision is likely to attract further scrutiny.

The IMF has previously called for greater liberalisation of the sugar sector and a reduction in direct government involvement. The implementation of related reforms is expected to come under review during the IMF’s upcoming engagement with Pakistan.