The government has set the retail price of sugar at Rs 164 per kilogram, marking a 13% increase from its previous cap when it approved the export of 600,000 metric tonnes.
This move benefits sugar millers, allowing them to generate higher revenues both domestically and internationally.
The decision was made by a 10-member committee led by Deputy Prime Minister Ishaq Dar. In consultation with the Pakistan Sugar Mills Association (PSMA)—an entity previously accused of cartelization by the nation’s antitrust watchdog—the committee finalized new sugar rates. The ex-factory price was set at Rs 159 per kilogram, reflecting a Rs 19 or 13.5% hike compared to the prior maximum threshold.
Deputy Prime Minister Dar announced the revised sugar prices via X, stating that the new rates would be applicable for a month. This increase in sugar prices translates to an additional Rs2.8 billion in earnings for sugar mills. The government had initially fixed the ex-factory sugar price at Rs140 and the retail price at Rs145 per kilogram when sugar exports were allowed last year. The latest adjustment contradicts the previous commitment to keep sugar rates stable despite exports.
Earlier this week, the government asserted that the cost of sugar production, including taxes, stood at Rs154 per kilogram. However, sugar millers claimed their production costs were closer to Rs174 per kilogram. Meanwhile, according to the Pakistan Bureau of Statistics (PBS), the national average sugar price had surged to Rs172 per kilogram as of last Friday, Rs27 higher than the same period last year. In some cities, sugar prices skyrocketed to Rs180 per kilogram.
Prime Minister Shehbaz Sharif’s decision to permit sugar exports has played a key role in the price surge. PBS data reveals that between July and February of this fiscal year, Pakistan exported 757,779 metric tonnes of sugar—an astonishing 2,190% increase from the mere 33,101 metric tonnes exported in the previous year. The country earned $407 million from sugar exports, up by $386 million from the previous fiscal year.
To monitor sugar prices, a sub-committee chaired by Minister of Food Rana Tanveer Husain has been established. The government has assured that sugar will still be available at Rs130 per kilogram at 274 designated bazaars nationwide. Furthermore, officials have warned sugar mills to commence the crushing season by November or face legal action.
The government’s intervention in fixing sugar prices could lead to market distortions. The Competition Commission of Pakistan (CCP) has repeatedly warned against price controls, emphasizing that sugar price manipulation is a long-standing issue. Since 2009, the CCP has identified PSMA’s involvement in price-fixing and supply manipulation. In 2021, it imposed a record Rs44 billion penalty on sugar mills and the PSMA, but legal challenges have delayed enforcement.
Currently, 127 cases related to sugar cartelization are pending in various courts, including 24 in the Supreme Court, 25 in the Lahore High Court, six in the Sindh High Court, and 72 in the Competition Appellate Tribunal. The CCP continues to push for reforms to reduce market distortions and promote fair pricing in the sugar industry.