PSMA renews call for full sugar sector deregulation

The Pakistan Sugar Mills Association has renewed its call for complete deregulation of the sugar sector, arguing that free-market principles would benefit farmers and help maintain the industry’s viability. The association’s general body reiterated the longstanding demand, saying growers would have greater access to international market-linked prices for their produce. It warned that if the sector remained subject to the existing regulatory framework, growers could gradually shift away from sugarcane cultivation, potentially forcing Pakistan to spend substantial foreign exchange on sugar imports. The PSMA also claimed several sugar mills were currently closed, and said deregulation would allow mills to import raw sugar when required and process locally produced sugarcane according to market conditions.

Welcoming the government’s decision to allow export of 200,000 tonnes of surplus sugar, the association said it should be followed by immediate permission to export the remaining 800,000 tonnes. A PSMA spokesman said the industry had been requesting since February 2026 that the government allow immediate export of surplus sugar produced at the end of the 2025-26 crushing season. Through official meetings, letters and press releases, it had informed the government that the country was holding a surplus of around 1.25 million tonnes and proposed exporting one million tonnes, arguing this would safeguard farmers’ interests and generate much-needed foreign exchange.

According to the association, sugar mills were incurring substantial additional costs on carrying surplus stocks, including mark-up on bank financing. It said production costs had increased considerably because of higher sugarcane prices, taxes, wages and the cost of imported chemicals, while domestic sugar prices remained below production costs. The spokesman said the financial pressure on mills could affect their ability to offer competitive sugarcane prices to growers and could also create difficulties in starting the new crushing season on time. Less than two months remained before the start of the new crushing season, he said, while large quantities of sugar were still lying in warehouses. With mills already facing financial constraints, the accumulation of carryover stocks could result in an acute shortage of working capital required for crushing operations.

The PSMA said the situation was particularly concerning because the upcoming sugarcane crop was estimated to produce an additional surplus of around 1.5 million tonnes. Combined with the existing surplus of 1.25 million tonnes, this could create serious storage constraints for the industry. The association warned that low exports and the high cost of maintaining carryover stocks could make it extremely difficult for mills to maintain continuity of crushing operations during the season beginning in November 2026.