Arya News - With no effective policy cohesion and regulatory oversight, the burden continues to fall on ordinary citizens who are forced to absorb rising costs amid persistent market volatility.
ISLAMABAD – The government’s efforts to ease pressure on sugar prices through floating a tender for the import of 300,000 tonnes of sugar have failed to bring down the consumer price in the domestic market.
The failure to deliver relief at the consumer level highlights deep-rooted structural gaps in sugar sector governance, both at the federal and provincial levels. With no effective policy cohesion and regulatory oversight, the burden continues to fall on ordinary citizens who are forced to absorb rising costs amid persistent market volatility.
The sugar industry is one of the country’s most politically sensitive, with government and opposition elites controlling several mills. However, blaming mill owners for the sugar crisis simplifies a complex value chain. Vested production interests, speculative brokers, middlemen and inadequate provincial regulatory enforcement create market instability.
These systemic factors fuel recurrent boom-and-bust cycles, turning sugar into a commodity manipulated by multiple actors, with consumers inevitably bearing the brunt of the consequences.
A senior official from the federal Ministry of Industry and Production acknowledged the absence of a coherent national policy for the sugar sector, stressing the need for a long-term policy to stabilise and structure the market.
“There’s no national policy,” he remarked, noting that current government actions are primarily reactive and temporary fixes are introduced only after public outcry.
This ad hoc approach, he warned, fails to address the sector’s cyclical vulnerabilities and leaves both producers and consumers facing unpredictability.
Import of sugar
On July 4, the federal cabinet authorised the import of 500,000 tonnes to overcome production deficits and stabilise the domestic market, as sugar retail prices had risen nationally.
Next, the Trading Corporation of Pakistan bid on July 10 to import 300,000 tonnes of sugar through Karachi and Gwadar ports. Despite these measures, retail prices rose to an alarming Rs200 per kg in numerous cities. Policy efficacy and timing are questioned when the market ignores government import decisions.
Even with duty and tax exemptions, imported sugar at Karachi port costs between Rs155 and Rs160 per kilogram, according to a Ministry of Commerce official. Retail rates of imported sugar in central Punjab are expected to be around Rs165 per kg, with transportation expenses contributing to higher prices in Khyber Pakhtunkhwa and other regions.
Duty-free clearance awaits IMF approval. The fiscal terms could drastically affect landing prices, thus officials believe this endorsement determines the ultimate cost structure.
Granularity is another issue. Pakistani consumers prefer coarse, thick-grain sugar; however, global suppliers typically provide finer varieties. This shows that the government might not be able to meet the import quota.
Industry insiders say brokers and a few mill owners, aware of the high cost of imported sugar, have continued speculative trading, weakening the possibility of imports stabilising prices.
The government approved 150,000 tonnes of sugar exports in June 2024, provided that retail prices remained constant. By March 2025, sugar exports had reached 757,779 tonnes, exceeding the target. Officials approved exports based on unrealistic surplus production predictions, worsening the sugar crisis.
A growing policy divide between Islamabad and the provinces has also hindered the development of the sugar sector. Punjab and Sindh defer to market forces to control pricing, unlike the federal government, which promotes regulatory measures due to political sensitivity.
However, a lack of unified control has allowed unfettered speculation to occur. A Ministry of Industry senior official called the situation “deeply troubling”, noting that provincial disengagement has allowed brokers to manipulate the market easily.
Moreover, two key factors contribute to market instability. Firstly, large millers often sell significant quantities of sugar to brokers and investors under informal agreements, keeping the product in storage for months. This arrangement allows millers to make quick returns, while speculators release stock at strategically timed intervals to maximise profits, often at the expense of price stability.
The involvement of brokers who also own sugar mills raises concerns. These vertically integrated operations blur the lines between production and speculation, allowing mill owners to control stock movement and manipulate market behaviour. These actions have led to accusations of price manipulation.