PSMA calls for complete sugar sector deregulation

LAHORE: The Pakistan Sugar Mills Association (PSMA) has called for complete deregulation of the sugar sector, arguing that the industry should be allowed to operate according to free-market principles. The association’s general body reiterated its longstanding demand for complete deregulation of the sugar sector. It maintained that farmers would be the primary beneficiaries of deregulation as they would have greater access to international market-linked prices for their produce. The association 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 to meet domestic requirements. READ MORE: PKI President calls for complete deregulation of sugar sector The PSMA also claimed several sugar mills were currently closed, while deregulation would enable mills to freely import raw sugar when required and process locally produced sugarcane according to market conditions. The association urged the government to move towards complete deregulation of the sugar sector to ensure market-based operations, facilitate farmers and maintain the viability of the sugar industry. 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 stocks of 800, 000 tonnes. A PSMA spokesman said the sugar industry had been consistently requesting the government since February 2026 to allow immediate export of surplus sugar produced at the end of the 2025-26 crushing season. Through official meetings, letters and press releases, the industry had repeatedly informed the government that the country was holding a surplus of around 1. 25 million tonnes of sugar. It had proposed exporting one million tonnes, arguing that this would help safeguard farmers’ interests while generating much-needed foreign exchange for the country. The spokesman said the new crushing season was less than two months away and any delay in clearing surplus stocks could create serious difficulties for both sugar mills and growers. According to the association, sugar mills were incurring substantial additional costs on carrying surplus stocks, including mark-up on bank financing. At the same time, 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. He further said less than two months remained before the start of the new crushing season, 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 situation was particularly concerning because the upcoming sugarcane crop was estimated to produce an additional surplus of around 1. 5 million tonnes of sugar. Combined with the existing surplus of 1. 25 million tonnes, this could create serious storage constraints for the industry. The PSMA 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. Copyright Business Recorder, 2026

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