DESPITE the fact that all decisions of the past to allow sugar export invariably resulted in price manipulation of the commodity by the powerful mafia in the domestic market, the government has not learned any lesson as it has given a carte blanche to exploiters in the shape of fresh agreement with the Pakistan Sugar Mills Association (PSMA), allowing future sugar exports if total stocks exceed seven million metric tonnes.
The new agreement, as per governmental version, aims to persuade millers to keep ex-factory sugar prices between Rs165 and Rs171 per kilogram until October 15.
There is a consistent pattern as far as the recurring sugar crisis is concerned – allow exports without proper and transparent verification of the available stocks followed by a sharp rise in its prices in the domestic market and import of the commodity in the name of provision of so-called relief to consumers. It is intriguing that this is happening for long but instead of learning lessons, the successive governments followed the same path and as a consequence consumers were left at the mercy of price manipulators. As for the incumbent government, Prime Minister Shehbaz Sharif showed reluctance initially when proposals were floated for export of sugar on the excuse of available surplus. However, finally he was convinced by relevant circles and he allowed the export of 765,000 tonnes of sugar with the condition that the decision will be reviewed if prices went up. As usual, there was no sanctity of assurance that the domestic prices would not surge as they hiked to Rs. 200 a kilogram and exports proceeded unhindered. Realizing the pitfalls of the decision to allow export, the government has allowed its import and to make the move really beneficial for consumers, it waived off duties and taxes but the decision is being resisted by the International Monetary Fund (IMF). Federal Board of Revenue (FBR) Chairman Rashid Langrial justified the tax waiver by pointing out that total import duties on sugar amounted to 53%, making imports unaffordable. The waiver aimed to cut the import price of sugar by Rs82 per kg. This makes the waiver understandable but some circles allege that the decision will benefit specific segments of consumers and not the ordinary one. The fresh agreement envisaging export of sugar is surely the product of give and take between the Government and the powerful Sugar Mills Association but is indicative of helplessness of the authorities concerned before exploiters. What a joke that the people of Pakistan have not recovered from the shocks of earlier decision to allow sugar export but a fresh permission has been granted in advance.
No doubt, it is linked to availability of surplus sugar but our track record shows there is the worst kind of data manipulation to influence the decision of the government. It is a lopsided accord clearly favouring millers at the expense of the general public as is evident from its different provisions. Ironically, the agreement stipulates “the federal government will allow, for export of sugar stocks exceeding seven million metric tonnes (carryover plus 2025-26 production), after 30 days of the closing of the crushing season 2025-26.” This means instead of local production of sugar, even imported sugar, if not consumed, could count toward total stock providing justification for export. Analysts also point out that the agreement includes a price-fixing clause that contradicts Competition Commission of Pakistan (CCP) laws. It states, “The maximum ex-mill price of sugar will be fixed at Rs165 per kg on July 15, 2025, and increased by Rs2 per kg monthly until October 15, 2025.” The prices of sugar went up from Rs. 135 a kilogram to Rs. 200 due to the decision of the government to allow its export on allegedly fudged data and now it aims to stabilize it at Rs.171 a kilo and that too for a few months. As the government has not been able to safeguard interests of the consumer, there is logic in demands by former Federal Minister Syed Naveed Qamar that the government should exit the sugar trade entirely.
