Prime Minister Shehbaz Sharif has constituted an Inter-Ministerial Committee (IMC) to evaluate regional models for the import of raw sugar for refining and re-export, aiming to address rising domestic sugar prices, BR reported citing sources in the Commerce Ministry.
The committee, chaired by the Minister for National Food Security and Research, includes the Minister for Commerce, Minister for Petroleum, SAPM on Industries and Production, Secretary Industries, Jahangir Khan Tareen, Member of the Economic Advisory Council (EAC), two representatives from the Pakistan Sugar Mills Association (PSMA), and the Secretary of National Food Security and Research.Â
The panel is expected to develop a strategy to stabilise sugar prices and safeguard the interests of local growers.
The committee has been given 10 days to submit its report, with terms of reference focused on studying regional import models, formulating a policy framework, assessing surplus refining capacity, and estimating the potential foreign exchange earnings and impact on local sugar prices.
Officials in the Commerce Ministry believe that the recent sugar export decision at the start of the season, despite warnings from various quarters, has led to a steep rise in sugar prices. There are concerns that prices may continue to escalate, worsening market volatility.
According to sources, the sugar industry is calculating production costs based on late-season sugarcane procurement rates, raising concerns over price manipulation. While the industry has justified deducting weight for poor-quality sugarcane, officials argue that sugar prices should remain stable, with the ex-mill price set at Rs140 per kg, as envisioned by the prime minister.
There are also concerns that importing raw sugar to stabilize prices could allow monopolization by large industrial groups with the financial capacity to import and refine, sidelining smaller millers who lack sufficient bagasse for refining. This could concentrate sugar supplies among a few mills, enabling them to manipulate prices and secure higher profits at the expense of other industry players.
Discussions are also ongoing about whether the government should directly import sugar and maintain reserves to intervene in the market if prices exceed a set threshold. In such a case, the government could release sugar into the market to counter price surges.
This is not the first time the sugar industry has failed to meet its commitments. A similar situation arose under the previous government, prompting investigations into price hikes. At that time, only a few millers with stockpiled sugar were able to profit from exports, while others struggled with shortages.
Policymakers now face the challenge of preventing select groups from controlling sugar imports and refining operations. Sources emphasized that export volumes should have been carefully regulated from the outset, given the anticipated domestic shortfall.
