Pakistan’s decision to permit sugar exports has sparked concerns about potential domestic shortages and inflationary pressures. The move follows claims by the Pakistan Sugar Mills Association (PSMA) of a surplus of roughly 1.03 million tonnes of sugar, prompting a request to export one million tonnes.

In September, the government’s Economic Coordination Committee (ECC) approved a limited export quota of 200,000 tonnes, a measure later endorsed by the federal cabinet. Subsequently, the State Bank of Pakistan issued guidelines on October 2 to implement the export plan and adjusted mill-specific quotas on October 13.

Despite these approvals, economists and consumer groups have cautioned against relying solely on the surplus data provided by the sugar industry, warning that this approach could lead to a repeat of last year’s market disruptions. In the previous export cycle, the government allowed nearly 750,000 tonnes of sugar to be exported, but domestic retail prices escalated sharply, reaching between Rs 180 and Rs 200 per kilogram. This price surge compelled the authorities to import around 300,000 tonnes of sugar at higher international prices, placing strain on Pakistan’s foreign exchange reserves.

The Pakistan Sugar Mills Association has previously faced allegations of market manipulation. In November 2020, the Competition Commission of Pakistan (CCP) issued showcause notices to the PSMA and 84 individual mills over claims of anti-competitive behavior and deliberate supply restrictions.

With the current export authorization, officials are balancing the industry’s surplus claims against the risk of domestic market volatility. However, analysts caution that without stringent oversight, the sector’s past patterns of supply control could exacerbate inflation and shortages, challenging the government’s efforts to maintain price stability in the sugar market.