PM forms committee to cut sugar prices

Express Tribune

17-03-2025

Prime Minister Shehbaz Sharif has constituted a committee, led by Deputy Prime Minister Ishaq Dar, to negotiate with the sugar mills a reduction in the prices after his earlier decision to allow export of the commodity led to 2,200% increase in its export and 19% surge in the prices this year.
The per-kilogramme price of Sugar has shot up to an average of Rs172 as of last Friday – Rs27 per kg higher than the same week of the last year, according to Pakistan Bureau of Statistics (PBS). The Rs1 per kg increase takes out Rs2.8 billion from the pocket of the consumers, according to the Food Security Ministry working.
The Prime Minister's Office has notified a 10-member committee with the mandate to reduce the sugar prices by engaging with the Pakistan Sugar Mills Association (PSMA) – the association that solely works for the protection of interests of the millers.
The Competition Commission of Pakistan (CCP) has in the past investigated the PSMA for its role in price manipulation. The prime minister also holds the portfolio of the industries minister and the sugar mills now directly fall under his domain.
The new committee will be chaired by Dar, tasked with giving its report within three days. The committee held its first meeting on Monday, according to officials. In the meeting, the government told the sugar millers that the average sugar production price was Rs153 per kg, therefore, the industry should itself reduce the prices.
The industry, however, sought time to consult with all the stakeholders before committing any new price, said the officials.
The prime minister set up the Dar-led committee after average sugar prices jumped after the sugar prices increased by Rs10 within a week and Rs27 compared to last year, according to the national data collecting agency. It also reported that the maximum national price skyrocketed to Rs180 per kg in Karachi and Islamabad.
The prices were also Rs27 per kg higher than the maximum threshold of Rs145, which the government had determined at the time of giving permission to export 600,000 metric tons of sugar.
A Food Ministry official told The Express Tribune on Monday that Rs1 per kg increase gave an additional benefit of Rs2.8 billion to the millers. By this count, the millers reaped Rs26 billion additional benefits in just the last one week and Rs76 billion since the start of the crushing season.
A key reason behind the increase in the sugar prices was Prime Minister Shehbaz Sharif's decision to allow sugar export. The PBS on Monday released the export data, which revealed that the country exported 757,779 metric tons of sugar from July to February of this fiscal year.
Compared to the last year when only 33,101 metric tons of sugar had been exported, there was a 2,190% increase in export in this fiscal year, showed the data. In terms of value, the exporters earned $407 million during July-February period, which was also $386 million or 1,831% higher than the previous fiscal year, the PBS data showed.
According to the Prime Minister Office's notification, the committee will engage with the PSMA to negotiate a reduction in the ex-mill price of sugar, aiming to stabilise market prices, particularly in response to the sharp increase observed during Ramazan.
The committee included Food Security Minister Rana Tanveer Hussain, Law Minister Azam Nazeer Tarar, Adviser to the Prime Minister Dr Tauqir Shah, Special Assistant to the Prime Minister Tariq Bajwa and four representatives of the PSMA. The industries secretary provided the secretariat support.
The government has not officially included Special Assistant to Prime Minister on Industries Haroon Akhtar Khan in the committee. Shehbaz instructed the committee to conclude its deliberations and submit a compliance report within three days, confirming that the issue of rising sugar prices had been effectively resolved.
Iskandar Khan, the President of the Khyber-Pakhtunkhwa (K-P) chapter of the PSMA, said that the prices shot up due to increase in the sugarcane prices during the crushing season. He added that the average sugarcane price remained Rs455 per 40 kgs, which pushed the production cost to Rs174 per kg. Khan said that imported raw sugar would also cost Rs190 per kg after refining it.
On September 20, the ECC allowed export of 100,000 metric tons of sugar, which was increased to 600,000 in October last year. The Express Tribune had reported in October that the government allowed export of an additional 500,000 metric tons of sugar on the basis of massively manipulated figures of available stocks and consumption patterns.
The PSMA, however, denies that the prices skyrocketed because of exports. Its Punjab zone spokesman stated that the industry agreed that ex-mill sugar prices would remain capped at Rs140 per kg during the export period, which was below its cost of production.
However, due to huge surplus stocks, the ex-mill prices remained between Rs120 to Rs.125 per kg, much below this benchmark, continuously for many months, he added. Almost 50% of the total available sugar was sold much below its cost of production causing massive losses to the industry, he added.
The PSMA spokesman said that the price mechanism was dependent on market forces. He blamed the price hike on hoarders and profiteers who spread rumours to influence the market forces to gain undue profits on sugar available with them.
The PSMA spokesman stated that no white sugar imports were needed, as domestic stocks were enough to meet the domestic requirement till the start of next crushing season. But he added that the PSMA endorsed import of raw sugar through a policy mechanism and had submitted its proposals to a ministerial committee constituted by the government.