The government’s decision to import 500,000 metric tons of sugar shortly after exporting approximately 765,734 metric tons during FY2024‑25 has sparked widespread controversy and raised serious questions about the country’s sugar policy.
Background and Rationale
Export-Then-Import Approach:
During the current fiscal year, Pakistan recorded a dramatic surge in sugar exports, reportedly increasing by 2,200% compared to the previous year. These exports generated roughly Rs 114 billion. However, this export-first strategy has created an artificial shortage within the domestic market.
With local sugar production falling to 5.9 million tons down 14% from the previous season domestic demand, which averages about 535,000 tons per month (with an annual consumption of 6.4 million tons), has been strained. This scarcity, in turn, pushed retail sugar prices upward from Rs140 to Rs190 per kilogram.
Policy Reversal:
Deputy Prime Minister Ishaq Dar declared that the government would re-import sugar in order to stabilise domestic prices after these shipments. A total of 250,000 tonnes of raw sugar are to be imported, awaiting cabinet permission, and 500,000 tonnes of refined sugar, which has already been approved. Many people believe that this inconsistent approach represents a shift away from free-market ideals and towards intervention that seems to favour some special interests in the sugar business.
Economic and Market Implications
Price Discrepancies:
Sugar prices first skyrocketed as a result of the rash export decision. The government claims that re-importing sugar at an import cost of about Rs 153 per kilogramme (before taxes) could help lower the current high prices of local retail sugar, which sometimes reach Rs190 per kilogramme. However, detractors contend that in addition to harming customers, these supply fluctuations also produce an unstable marketplace.
Beneficiaries – The Sugar Millers:
Critics, including opposition figures and market analysts, contend that this policy swing primarily benefits well‑connected sugar millers. By exporting large volumes at high international prices and then urging imports, the millers can capitalize on both ends of the market cycle. There is growing concern that this “export first, import later” cycle is orchestrated more by political influence than by genuine supply and demand considerations.
Market Distortions and Free‑Market Concerns:
Observers note that allowing sugar exports in such high volumes directly contradicts interests in ensuring domestic supply. With the government’s earlier decision to cap retail sugar prices effectively set at a level that already conferred windfall gains to sugar millers, this subsequent need for imports not only negates free‑market dynamics but also inflates prices even further, placing an additional burden on consumers.
Wider Repercussions
Impact on Consumers:
The rising domestic price of sugar significantly affects ordinary citizens, particularly low‑income households, by contributing to a higher overall cost of living. The government’s actions have led to strong public outcry, as consumers feel the pinch of policies that seem to prioritize the profits of a few over the welfare of the many.
Policy Credibility:
This flip‑flop in sugar policy has undermined confidence in the government’s approach to food security and market regulation. Critics argue that such inconsistent policymaking not only disrupts the balance of supply and demand but also leaves the broader agricultural and retail sectors vulnerable to manipulation and price volatility.
Calls for Reform:
Industry watchdogs and some political leaders are calling for a more transparent and market‑oriented approach to handling the sugar sector. They insist that export and import decisions should reflect genuine market dynamics rather than serve the interests of connected stakeholders.
The decision to re‑import 750,000 metric tons of sugar after exporting nearly the same volume has exposed deep-seated contradictions in Pakistan’s sugar policy. While the government frames the move as necessary to control soaring domestic prices, the export‑first, import‑later cycle has drawn fierce criticism for distorting market prices benefitting a select few at the expense of consumers.