The recurring sugar crises in Pakistan have become less of an economic aberration and more of a systemic betrayal. Every few years, the country finds itself grappling with surging prices, empty shelves, political blame games, and hollow promises of reform. What should be a staple commodity-readily available and affordable to every household-has been transformed into a lucrative instrument of manipulation, mismanagement, and profiteering. This time, the crisis has re-emerged with even more ferocity. Retail prices of sugar have spiked to a staggering Rs 210 per kilogram, while domestic stocks have dwindled despite a harvest season that should have ensured supply sufficiency. Behind the scenes lies a cocktail of bad policy, distorted incentives, export greed, cartel behavior, and an utter lack of governance foresight.
Justice in economic matters cannot remain blind.
To dissect this crisis is to unpack layers of institutional failure. For starters, the production narrative is itself deeply flawed. Sugarcane, an inherently water-thirsty crop, continues to be grown in semi-arid regions like Punjab and Sindh without proper yield management practices or technological infusion. This season, the total sugar production declined by nearly 14%, dropping to approximately 5.9 million metric tons, largely due to climatic uncertainties, water shortages, and poor land planning. But what makes this supply decline explosive is the government’s decision-at the height of its harvest cycle-to allow and even encourage sugar exports. By the end of March 2025, more than 760,000 tons of sugar had been exported, far exceeding what the local market could afford to lose. The reward for millers was not only the international price premium but also the added benefit of depleting domestic stock, a move that would inevitably trigger a price surge later.
What makes the situation worse is the whiplash in government policy. From permitting massive exports to suddenly scrambling for sugar imports-initially approving up to 500,000 metric tons through public-sector channels-is the very definition of poor planning. The Trading Corporation of Pakistan (TCP) floated a formal tender for 300,000 to 500,000 tons of refined white sugar, targeting staggered shipments starting August and completing by September 30, 2025. However, within days of the tender’s release, the IMF issued a stern warning: Pakistan’s proposed 53% duty waiver on sugar imports breached the terms of its ongoing Extended Fund Facility. Facing the threat of suspended loan tranches, the Ministry of Commerce abruptly slashed the tender down to a mere 50,000 metric tons-just 10% of the approved import volume. This quantum, comprising two consignments of 25,000 tons each, is now expected to arrive by August 30. The remaining import volumes stand suspended indefinitely, caught in a policy tug-of-war between inflation control and IMF compliance.
While policymakers dither, sugar cartels seize the moment. The so-called “sugar mafia”-an alliance of politically connected millers, brokers, and wholesalers-have once again leveraged the crisis to stockpile, hoard, and artificially inflate prices. With over 90% of the sugar market controlled by a handful of players, price-setting is no longer driven by market forces but by calculated greed. These players purchase sugar from mills at capped ex-mill prices (Rs 140-165 per kg) only to delay release into the market, forcing artificial scarcity. They exploit weak price monitoring mechanisms, and when government authorities attempt action, they simply rotate stocks through third-party warehouses, making tracing and enforcement nearly impossible.
Equally troubling is the ineffective regulatory oversight. The Competition Commission of Pakistan (CCP), mandated to crack down on collusion and price manipulation, remains toothless-bound by outdated laws, under-resourced personnel, and selective enforcement. Sugar mill audits and forensic stock checks are either delayed or conducted with deliberate laxity. Meanwhile, provincial food authorities struggle with enforcing price ceilings due to court injunctions or the lack of coordination with the federal government. These institutional voids create a permissive environment where sugar becomes a rent-seeking instrument, benefiting the powerful at the cost of the poor.
The crisis also exposes the flawed political economy of sugar. Despite being an inefficient crop from an economic and environmental standpoint, sugarcane receives massive state patronage through support pricing, subsidies, water allocation, and export rebates. Why? Because the stakeholders who own sugar mills also hold parliamentary seats. It is a classic example of elite capture, where economic policy is not made for national interest but to secure the interests of a few. As long as elected officials continue to directly profit from the sugar industry, any structural reform becomes politically suicidal. This nexus must be broken.
If Pakistan is to break this vicious cycle, it must rethink its approach holistically. First, the government must put in place a dynamic export policy linked to domestic inventory levels, not political deals or external market prices. Export quotas should be conditional on verified surplus-audited by third-party monitors with real-time dashboard visibility accessible to the public. Second, import policy must stop being reactive. If the government insists on being in the import game, then it should build a strategic reserve system for essential food items like sugar, wheat, and oil, modeled after global best practices, particularly ASEAN nations that maintain buffer stocks to protect against market volatility.
Third, the pricing mechanism needs to be deregulated but also transparent. The State Bank of Pakistan can enable digital tracking of sugar transactions through mandatory banked payments for all transactions above a threshold, curbing cash-based hoarding. Millers should be required to submit monthly stock reports, which are audited quarterly. Those failing to comply must be penalized through suspension of licenses or withdrawal of subsidies.
Fourth, investment in sugarcane yield improvement must be accelerated. Average yield in Pakistan remains around 46-50 tons per hectare, compared to over 70 tons in countries like Brazil and Thailand. By introducing high-yield varieties, drip irrigation, and precision farming, the overall production cost can be reduced, and the industry made globally competitive without relying on policy manipulation.
Fifth, anti-cartel legislation must be revamped. The CCP must be given more autonomy, budget, and prosecutorial powers to investigate collusion. Establishing a fast-track tribunal for anti-competitive behavior-especially in essential commodities-can act as a deterrent. The sugar industry must also be brought fully under the purview of Pakistan’s Electronic Warehouse Receipt System (eWHR), which allows for traceable stockpiling, reducing room for speculation.
Sixth, inter-agency coordination must be institutionalized. A Sugar Supply Chain Management Committee, under the Council of Common Interests (CCI), should be formed comprising representatives from federal, provincial, and private sector stakeholders. Its mandate should include monthly reviews, contingency planning, and public communication. The committee’s data must be made public to ensure transparency and build market confidence. Finally, public trust must be rebuilt. Consumers deserve to know why they are paying double for a commodity that Pakistan produces in surplus during normal years. The Federal Board of Revenue (FBR), National Accountability Bureau (NAB), and FIA must publish joint investigation reports of any wrongdoing in the current crisis. Names of hoarders and beneficiaries of illegal exports must be made public. Justice in economic matters cannot remain blind.
In the end, Pakistan’s sugar crisis is not about weather vagaries or global price shifts. It is about a state captured by vested interests, too timid to confront its own elites and too disorganized to manage its supply chains. Until courage, competence, and coordination replace ad-hocism, every harvest will be followed by a crisis, every export will be followed by a shortage, and every shortage will be followed by yet another round of sugar-coated lies. The time to clean up the industry, empower regulators, and protect citizens from economic blackmail is now-or the bitterness of inaction will continue to haunt us for years to come.
The writer is a financial expert and can be reached at jawadsaleem.1982@ gmail.com. He tweets @JawadSaleem1982