Repeat after me: in an industry where producers engage only in opportunistic exports — and where the domestic market is walled off from serious import or substitute threats — the outcome of exports will always, without exception, be an increase in local prices.
Case in point: in the eight months since June 2024, Pakistan’s sugar industry exported nearly 0.8 million metric tons (12 percent of last year’s output). The result? A 20 percent rise in domestic sugar prices compared to the period when exports were banned. Not because local prices suddenly aligned with international parity. Not due to a supply shortage. But because exports served their intended purpose: they relieved downward pressure on local prices in a market that otherwise had a surplus.
The industry wasn’t coy about it either. When mills demanded export permission last year, they warned that without exports, carryover stocks would balloon, forcing mills to delay crushing and leaving farmers holding the bag. Now that the purpose has been served and domestic prices have risen, export demand has evaporated — just 2,000 tons exported in February 2025 compared to an average of 100,000 tons per month between June and January.
This isn’t rocket science, and the government must resist knee-jerk reactions. The sugar industry is no helpless victim; it saw this coming. Cane availability is tight, and refined sugar output for the Nov 2024–Jan 2025 period is the lowest in six years. But that’s no reason to panic. Left alone, the market will self-correct after peak demand in Ramazan and Eid. If price pressures persist beyond Eid, importers will step in. Even a 0.3 MMT import consignment would be enough to send a strong signal to hoarders and speculators.
Yes, a 31 percent increase in retail sugar prices since November 2023 is painful for consumers and small businesses. But before we wail, consider what we’ve avoided. As of March 2025, retail sugar prices are only 4 percent higher than their last peak in September 2023 — 19 months ago. Between Q3-2023 and Q4-2024, sugar prices were in secular decline. That’s confirmed by banking data: sugar mill financing dropped by only 36 percent between March and November 2024, against a historical average of 55 percent.
What does that tell you? Prices were falling even as other commodities surged, demand had collapsed, and mills were suffocating under old bank debts. If exports weren’t allowed, mills would have refused to crush. Farmers, already burnt by the wheat debacle, would have taken another hit. And all this during a season with a short cane supply. Imagine the chaos: mill shutdowns, angry farmers, shortages in urban markets — and let’s not forget, politically embarrassing headlines when the families of the sitting President and Prime Minister are reportedly mill owners themselves.
Could the industry have restrained its instincts? Sure. But animal spirits don’t change overnight. And thank God they didn’t, because farmers finally got a fair price for cane.
This is not the time for price controls, nor for banning exports or imports. Ramzan shocks are inevitable growing pains. Let them play out. Price signals are functioning. Sugar is not essential for survival, not for the poorest. Let prices rise to the point where imports correct the market. Don’t confuse participants by imposing artificial price caps now.
Long term, the industry will only learn discipline once it faces competition from real substitutes and loses its information asymmetry advantage. Pakistan has (finally!) taken steps toward deregulation. Don’t snap back.
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