Pakistan ranks as the 7th largest global producer of sugar, with sugarcane standing as its second most crucial cash crop after cotton. In the crop year 2021-22, the country achieved a record production of 7.8 million tonnes of sugar, albeit with a per-hectare cane yield of 46 tonnes, slightly below the world average of 60 tonnes.
From 2016-17 to 2019-20, Pakistan witnessed a decline in sugar output. However, subsequent years saw production rebound due to improved yields, expanded acreage, increased minimum sales prices, and enhanced oversight by the Punjab Cane Commissioner, ensuring timely payments to growers. These factors contributed to an unexpected surplus of 2 million tonnes in 2021-22.
Similar to wheat, sugarcane holds political significance, compelling federal intervention in factory commissioning, trade regulations, and price controls. This oversight influences grower decisions and market dynamics. The government also regulates sugar import-export activities to maintain domestic prices at deemed reasonable levels, often under pressure from millers seeking export opportunities to alleviate oversupply conditions.
Starting the 2023-24 crushing season with a carryover stock of 0.7 million tonnes, Pakistan anticipated a total sugar production exceeding 6.84 million tonnes (6.76 million from cane and 80,000 from beet), resulting in a surplus stock of over 1.5 million tonnes against a projected domestic consumption of 6.1 million tonnes.
Despite industry lobbying, the government approved only 0.15 million tonnes of sugar exports due to concerns over potential domestic price hikes. Previous export permissions had indeed led to significant price escalations, causing hardship for consumers. The industry’s export efforts aimed to capitalize on favorable international market conditions exacerbated by India’s reduced sugar exports in favor of value-added products.
The Pakistan Sugar Mills Association (PSMA) warns of impending crises with substantial carryover and projected surpluses in the coming seasons. Current below-cost selling prices threaten industry viability, risking operational defaults for many mills and delayed payments to cane farmers. The PSMA underscores government mismanagement in balancing domestic price stability with industry sustainability, urging reforms to safeguard the entire sugar value chain and ensure equitable market outcomes.
