Are sugar exports becoming yearly feature again?

LAHORE: Sugar exports become a yearly feature for the second season in a row after a couple of year-long break, toeing a decade-long external trade streak.

Since 2011-12, barring financial years 2021 and 2022, Pakistan has been a sugar exporter, thanks to pro-industry policies by successive governments. During this period, governments also provided hefty subsidies, running into billions of rupees, to sugar mills to make them competitive in the international market.

The export of sugar between 2011-2023 has been volatile, with the sharply fluctuating quantities and values of exports on a yearly basis. Significant peaks in exports were seen in 2012-13 when Pakistan exported 1.06 million tonnes of sugar, and in FY2017-18 with 1.46 million tonnes of exports. Similarly, varied average prices per metric ton were a hallmark of the external trade in the period under review, depicting instability of the domestic sugar market.

In the period between 2019 and 11MFY24, high exports were recorded in FY19 (0.691 million tonnes), while a sharp decline followed in FY20 (0.181 million tonnes). No exports were made in FY21 and FY22, and reduced exports of 0.215 million tonnes in FY23 and 0.033 million tonnes in 11MFY24 were recorded.

There have been lower exports in FY23 compared to FY19, and a further declining trend is seen in exports in 11MFY24. Based on the current pro-industry policy of the government, sugar exports are on track to reach 0.150 million tonnes in 2024-25.In 2020, Pakistan had to import sugar for meeting the gap in demand and supply as sugar stocks were at their three-year low. Before 2020, the last time Pakistan imported sugar was in the 2010-11 season.

In 2023-24, according to official estimates, sugar production in the country slightly increased owing to higher sucrose recovery rates despite lower output. Additionally, despite lower sugarcane output and delays in starting sugarcane crushing, the sugar production season progressed relatively smooth, showing slightly improved output. The main factor contributing to this increase was a higher sucrose recovery rate.Sugar exports have largely been bad news for domestic consumers as local prices spiralled due to consequent tightsupplies. Particularly, the price trend in the past couple of years shows that upward pressure on prices has persisted. During this period, this pressure was mainly due to the smuggling and black-marketing of sugar despite the increased production of the commodity.

The price of sugar skyrocketed to Rs 150 per kg from the level of less than Rs 100 a year back.It may be noted that the Pakistan Sugar Mills Association (PSMA) has lately lobbied for opening a permanent window for one million tonnes of sugar exports, citing a persistent increase in the output of sugarcane and the production of sugar over the years.

The PSMA has also praised the effective measures taken by the government against the smuggling of essential commodities. If the surplus sugar is exported consistently, the greatest benefit will be transferred to farmers and people, as valuable foreign exchange will flow into the country and the government will have to depend less on foreign aid.

According to the PSMA, the domestic sugar industry has achieved the surplus production of sugar in the crushing season 2023-24. The total available sugar in the current year is 7.5 million metric tons, while the country’s annual consumption is 6.0 million metric tons which shows that Pakistan has a surplus of 1.5 million metric tons and can earn $1.2 billion in foreign exchange.