ISLAMABAD: The Pakistani sugar industry has managed to manufacture more sugar than the country could use during this year’s production season. It is no lamentation, but rather a historic achievement. The current crushing season of 2025-2026 yielded 7.573 million metric tons of sugar up to March 31, 2026, while there is further manufacture of beet sugar to continue until June. When Pakistan’s total domestic demand for sugar is estimated at around 6.6 million metric tons annually, simple calculations reveal that there is 1.3 million metric tons of sugar surplus to be exported.
The Pakistan Sugar Mills Association (PSMA) has sent an official letter to the Deputy Prime Minister and Foreign Minister Ishaq Dar, calling for an emergency meeting of the cabinet committee of the federation to get permission for exports. The reason behind writing the letter by PSMA President Chaudhry Zaka Ashraf is clear that while 550,000 metric tons have been held as the strategic reserve of sugar, there is 0.76 million metric tons available for exporting which can earn the country around half a billion dollars at current market rates.
Industry’s Side: The Argument of Cash Flow, Farmers, and a Bumper Harvest to Come
The PSMA case is more than a concern for the surplus produced during the current season. It is part of an even wider issue surrounding the sustainability of the relationship between the sugar industry and sugarcane farmers.
As per the organization, the large stocks of sugar are resulting in severe cash flow challenges for sugar mills as they face difficulties in meeting their bank repayments and settling the amount still due to the farmers for this season’s cane crop. The prices of sugar in the domestic market are now lower than the cost of production due to high supply, whereas costs in terms of fertilizers, power, and labor have increased. Sugar mills are keeping their inventory which is losing its relative value and the financing cost of the inventory.
The farmer aspect of this debate holds special significance. According to PSMA, the punctual payments made to sugarcane growers over the past couple of years, in part due to export licenses granted prior to this, helped foster greater investment by these farmers in terms of better quality inputs, better seeds, and farming techniques that led to increased per acre productivity as well as higher levels of sugar extraction. As a result, another record-breaking production level of sugarcane can be expected in the upcoming season, with an anticipated surplus production of around 2 million tons worth between $1.5 and $2 billion.
In other words, if the sugar export approval for the country are not released by the government in a timely manner, the mills will not be able to pay off the farmers, which will result in a decline in confidence on the part of the farmers, decreased investment, and uncertainty regarding the production of the next year’s record harvest. The $500 million foreign currency earnings potential is the same issue expressed differently by PSMA.
The precedent set in 2024 provides the most compelling point for PSMA’s case. It’s not a guess or an approximation – it is a fact, proven by the Prime Minister in his own words in a public address. The country authorized exports of sugar in 2024, generated $500 million in foreign exchange and Prime Minister Shehbaz referred to it as a good decision. PSMA is now requesting for the same decision to be repeated, in almost the same circumstances.
This decision will be made via the establishment of a cabinet committee, chaired by the Deputy Prime Minister of Malaysia, Dar, in whose creation PSMA recognizes the importance of as expressed in its letter. The demand by the association for an immediate meeting is motivated by the realization that the period during which they can maximize the value of their export dwindles, with fluctuating global prices for sugar and competition from countries like Brazil.
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The Government’s Calculation: Foreign Exchange Potential vs Inflation Risks
It is a calculation that the government has faced before and one that the IMF has criticised thoroughly. sugar export approval in Pakistan have to deal with the conflict between the potential for earning foreign exchange via surplus exports and the risk that such exports pose for domestic inflation rates. Following aggressive exports of sugar from Pakistan in the period of 2022 to 2023, domestic prices for sugar almost doubled by mid-2023, resulting in a ban on exports in August 2023.
The present scenario is different from 2022-23 because the surplus is higher, more substantiated by evidence, and has production figures from the FBR. The total supply of 7.96 million metric tonnes as compared to domestic consumption at 6.6 million metric tonnes is indeed a structural surplus and not an insignificant one where any aggressive export will turn the market into a shortage. A safety measure is the one month’s supply to be kept in stock, while the rest can be exported.
The Significance of the $500 Million for Pakistan’s Foreign Account Position
The current account of Pakistan has become stable to some extent compared to where it was during the crisis period in 2022–2023. But it is still highly vulnerable to changes in the export performance and import needs of the country. Foreign currency reserves at the State Bank of Pakistan have continued to rise up until 2025 and further into 2026, with contributions coming from IMF releases, bilateral transfers, and export performance. In this context, the $500 million generated by a single export approval translates to about two weeks’ worth of imports by Pakistan.
It is also important to take note of the wider picture. The sugar industry in Pakistan, for example, produces Rs1 trillion in economic activity each year from farming to transportation and ancillary sectors, pays approximately Rs300 billion in taxes, and substitutes imports worth around $5 billion each year. An economic policy that will stabilize the finances of such an industry through surplus clearance, cash flow stabilization in mills, and timely payment to farmers will have ripple effects across agriculture that go far beyond $500 million.
What the Coming Harvesting Season Will Tell Us About
PSMA’s advice about the future harvesting season should be heeded. The prospect of another record-breaking harvest of 2 million metric tons of sugar cane worth $1.5 billion to $2 billion does not offer any gain if the government fails to act promptly and appropriately. It will only add to the problem if the prices have already been affected by excess stocks prior to any action taken by the government. The government allowed exports in installments for six months. This system proved successful but resulted in the gradual realization of $500 million.
The need for an emergency meeting in PSMA’s plea represents the industry’s wish to start the process of exporting sugar in the year 2025-2026 ahead of time, considering the coming harvest season. The only variable which can either turn the surplus in sugar into an asset worth $500 million or keep it a burden is whether the deputy prime minister convenes the committee or not.
