The sugar industry in Pakistan continues to pose challenges, with the crushing season yet to reach full swing in most of Punjab. Despite recent discussions highlighting the existing issues in the sugar sector, new developments have emerged. The Pakistan Sugar Mills Association (PSMA) has urged the government to either purchase the surplus of 1.13 million tons of sugar from stock through the Trading Corporation of Pakistan or permit the export of the agreed-upon second batch of 250,000 tons from the previous government.
Sugar mill operators emphasize that while the surplus can meet the demand for the next two months based on average consumption, the storage capacity of most mills is already at its limit. PSMA argues that stringent restrictions on inter-provincial sugar movement, unresolved bank liabilities related to unsold sugar stocks, high-interest rates, and reduced credit lines for grower payments due to a recent court decision in the JS Bank case have exacerbated cash flow challenges.
Also Read: Sugar Prices Drop, but Crackdowns Provide No Relief
This situation mirrors the events of the previous year when the Sugar Advisory Board reported a surplus of 1.25 million tons. The government allowed the export of 500,000 tons, but smuggling exceeded this amount by almost 800,000 tons, as reported by the Punjab Food Department. Attempts to regulate sugar prices faced legal challenges, resulting in soaring retail prices.
The recurring pattern of surplus sugar exports, even during years of low international prices, and occasional sugar imports highlight the lack of a reliable strategic food management system. Government figures across various commodities, not just sugar, have faced scrutiny, leading to cyclical crises in sugar and wheat. The halted FIA investigation into sugar mills’ alleged profiteering, coinciding with PSMA’s renewed export request, raises questions.
Despite a crackdown in September that curtailed smuggling and speculative contracts, sugar production and pricing lack a dependable reporting mechanism. PSMA reported 8.5 million tons of sugar stocks at the end of the 2022-23 season, indicating a consumption of over 7 million tons in 12 months. Storage issues persist, despite the country’s self-sufficiency in sugar production.
The recent delay in reviewing the Minimum Support Price of Sugarcane by the Sugar Advisory Board and the decision left to provinces underscore challenges in agricultural governance. Differing support prices in Sindh and Punjab aim to address regional needs, but concerns about farmers’ welfare and sustainable practices persist.
In summary, the discourse in Pakistan’s sugar sector echoes familiar challenges of price fluctuations, government inefficiencies, and loopholes. Despite the country being self-sufficient in sugar production, it grapples with issues affecting both farmers and consumers, highlighting the need for comprehensive reforms in the sector.
