The Pakistan Sugar Mills Association (PSMA) has urged the government to allow immediate sugar exports and implement full deregulation of the sugar industry. The association warned that ongoing restrictions are causing significant financial losses to millers.
Importance of the Sugar Industry
Pakistan’s sugar industry is the second-largest agro-based sector after textiles. It plays an important role in the economy.
The sector:
- Generates over PKR 1,000 billion each year
- Pays around PKR 300 billion in taxes
- Saves about USD 5 billion in imports
Even with strong compliance, the industry is still heavily controlled.
Provincial governments continue to control ex-mill prices, supply mechanisms, and payment timelines. These controls limit market efficiency and create distortions. PSMA highlighted that nearly 70% of sugar used in commercial and industrial sectors operates under deregulation. However, the portion allocated for household consumption remains tightly controlled, creating imbalances in the market. The association emphasized that deregulation would improve efficiency, attract investment, and align the sector with market-driven dynamics.
According to PSMA data, Pakistan’s sugar production reached approximately 7.5 million tons by March 25, 2026, and is expected to rise to 7.7 million tons by the end of the crushing season. With an additional 100,000 tons from beet sugar, total availability is projected to reach 8.071 million tons. Against an estimated domestic consumption of 7.02 million tons over 13 months, Pakistan faces a surplus of around 1.05 million tons. The association warned that carrying excess inventory is increasing holding costs and placing severe financial pressure on millers, making exports essential.
PSMA also noted that Pakistan has the capacity to produce up to 12 million metric tons of sugar annually. This creates the potential to export up to 6 million tons and generate around USD 4 billion in foreign exchange. Additionally, ethanol exports could contribute another USD 1 billion.
The association further urged the government to revive ethanol blending policies in fuel. Pakistan introduced such policies in 2006 and 2009 but later discontinued them. Implementing a 20% ethanol blend in petrol could significantly reduce the import bill while supporting the domestic sugar industry.
PSMA concluded that timely policy action, particularly allowing exports and implementing deregulation, will stabilize the sugar sector, support rural livelihoods, and help Pakistan earn valuable foreign exchange.
