After allowing exports in 2024, the government finds itself in an awkward position this year by importing sugar to keep prices down. The question is, why does this keep happening again and again?
In the first three months of the current fiscal year, Pakistan’s food import bill surged to nearly $2.25 billion — a 35.56% increase from the same period last year. This sharp rise was driven primarily by increased imports of sugar, edible oils, and tea.
Among the most striking statistics is the 3050.38% year-on-year increase in sugar imports, with the country bringing in 31,289 metric tonnes in just the first quarter, compared to a mere 993 metric tonnes during the same period in FY25.
The massive jump in sugar imports highlights not only the country’s rising food import dependency but also the contradictions within government policy. At a time when Pakistan is seeking to bolster its foreign reserves and reduce trade imbalances, the surge in food imports — particularly sugar — puts significant pressure on the economy. For a nation that has long relied on self-sufficiency in key commodities, the figures are staggering, raising questions about the government’s ability to manage domestic food supply amidst fluctuating global market conditions.
To import or to export?
The drama surrounding Pakistan’s sugar imports begins with the government’s 2024 decision to approve sugar exports based on stock figures submitted by sugar mills. In a move that initially seemed sound, the government allowed the export of nearly 750,000 metric tonnes of sugar. However, this decision was linked to the condition that retail prices would not exceed a fixed threshold — Rs164 per kg. Yet, by the time the exports were underway, retail prices had already surpassed Rs200 per kg, effectively breaching the price cap and sparking domestic outrage.
Critics immediately warned that the decision to export large quantities of sugar, while domestic prices were already rising, would exacerbate supply shortages and inflate prices further. These concerns quickly proved correct. As domestic sugar prices continued to climb, the government found itself in a bind, facing soaring prices that hit consumers hard while millers reaped record profits from both local and international markets.
Yet, in an unexpected twist, the government — only months after approving the sugar export policy — decided to reverse course. It announced the import of 750,000 metric tonnes of sugar to stabilize the domestic market. The measure, which included both raw and refined sugar, aimed to quell the rising tide of sugar prices, but it raised more questions than answers.
Political powerhouse
To understand the government’s contradictory stance on sugar exports and imports, it is essential to grasp the immense political influence wielded by Pakistan’s sugar industry. Historically, the sector has been a stronghold of political patronage, with mill owners often closely aligned with political elites. This dynamic has led to a cycle of government policies that favor sugar millers at the expense of consumers.
The Pakistan Sugar Mills Association (PSMA), which represents the interests of sugar mill owners, has long been accused of operating in a manner akin to a cartel. In 2023, the Competition Commission of Pakistan (CCP) accused the PSMA of price manipulation, suggesting that the mills had been artificially inflating sugar prices through coordinated efforts. Despite these accusations, the sugar industry continues to maintain significant political leverage, thanks to the entrenched interests of powerful mill owners.
In 2024, when the government decided to approve sugar exports, it did so in response to lobbying by sugar millers who sought to capitalize on favorable market conditions. However, the decision was based on figures submitted by the mills themselves — figures that, as subsequent events demonstrated, were overly optimistic. This discrepancy between reported stock levels and actual supply created a perfect storm, pushing the government into a corner where it had to reverse its policy and allow imports, further exacerbating the fiscal and market challenges.
The political clout of the sugar lobby is not a new phenomenon. Sugar mills, which operate across key constituencies, have long been seen as critical sources of funding and support for politicians. The relationship between mill owners and political figures has created a system where policy decisions often prioritize the financial interests of a select few over the broader needs of consumers. This, in turn, has led to a situation where prices are manipulated, stocks are misreported, and market stability is sacrificed for short-term political gains.
Serious consequences
The decision to both export and import sugar within a single fiscal year speaks to the deep contradictions inherent in Pakistan’s sugar policy. On the one hand, the government approved the export of 750,000 metric tonnes of sugar, boosting foreign exchange reserves. On the other, it was well aware that this export policy would lead to shortages in the domestic market, driving up prices. Once domestic prices soared, the government was left scrambling to secure sugar imports to meet demand, at a time when foreign exchange reserves were already under strain.
For millers, however, the situation was far more lucrative. They were able to export sugar at higher international prices, while simultaneously benefiting from the government’s decision to import sugar at higher domestic prices. This windfall — coupled with the lack of effective price control mechanisms — has allowed sugar mill owners to enjoy significant profits, despite the adverse effects on consumers.
Moreover, the decision to allow exports based on overly optimistic stock figures reflects a broader issue of governance within the sugar sector. Despite the existence of regulatory bodies like the Competition Commission of Pakistan, the sugar industry continues to operate with minimal oversight, undermining efforts to ensure market fairness. This lack of regulatory enforcement has allowed the industry to manipulate both supply and demand, leaving consumers at the mercy of fluctuating prices.
Surging food import bill
The decision to increase sugar imports comes at a time when Pakistan’s food import bill is already under significant strain. In FY26, food imports rose to $2.252 billion, driven largely by the importation of palm oil, sugar, and other essential food items. This surge in food imports not only increases Pakistan’s trade deficit but also underscores the fragility of its domestic agricultural sector, which is increasingly unable to meet the demand for key commodities.
The increase in sugar imports, in particular, highlights the vulnerability of Pakistan’s food security system. While the country remains a major producer of sugar, the inefficiencies within the industry — coupled with a lack of regulatory oversight and policy inconsistency — have forced the government to rely on costly imports to meet domestic demand. The rise in sugar prices, fueled by both domestic production issues and imports, has exacerbated inflation, making it harder for ordinary citizens to afford basic necessities.
This situation is made worse by the fact that Pakistan’s sugar mills continue to receive government support through subsidies and price guarantees, creating a cycle of dependency that does little to address the root causes of the sector’s inefficiency. The lack of a long-term strategy to reform the sugar industry and improve its transparency has led to an unsustainable model where both producers and consumers face significant challenges.
Desperate reforms
Pakistan’s recent sugar import surge is a direct consequence of inconsistent government policies, political interference, and a lack of effective regulation. The government’s contradictory stance — approving exports only to reverse the decision months later and allow imports — highlights the challenges of managing a vital industry that is heavily influenced by political forces.
Moving forward, Pakistan’s policymakers must address the structural issues within the sugar sector and introduce reforms that prioritize market stability, transparency, and consumer welfare. This includes ensuring that stock figures provided by sugar mills are accurate and accountable, improving price control mechanisms, and reducing the political influence of the sugar lobby.
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