Sugar exports persist amid production shortfall

LAHORE: Recent sugarcane and sugar production data have raised critical concerns regarding the sweetener’s shortfall.

Latest figures indicate that sugar production for the current year has fallen short of last year’s levels, marking a significant decline compared to demand and prompting the government to explore extreme measures, including imports.

According to fortnightly data compiled by the Federal Board of Revenue (FBR), total sugar output from November 16, 2024 to February 26, 2025 stood at 5.37 million tonnes, compared to 6.056 million tonnes in the same period last season. This represents an 11 per cent decline, amounting to a shortfall of 0.686 million tonnes.

Despite claims from both industry representatives and the government of a record sugarcane yield during the 2024-25 season, cane production and sucrose recovery have declined in the concluding crushing period compared to the previous year, even though cultivation covered a larger area.

While advocating for export approvals, the Pakistan Sugar Mills Association (PSMA) previously claimed a surplus of up to two million tonnes of sugar during the 2024-25 season. However, the shortfall in production has exposed a gap between domestic supply and demand, just days after a senior government official touted the export of substantial sugar volumes, particularly to Afghanistan.

A closer look at the data shows that the decline in production was not uniform, with notable reductions occurring in both the initial and final phases of the crushing season. The most significant drops were recorded in the first fortnight of December 2024 and the last fortnight of February 2025, with steep declines of 19 per cent and 20 per cent, respectively, compared to the same periods last year. The second fortnight of December also saw a substantial 17 per cent decline. In contrast, production fell by 11 per cent, 5.0 per cent, and 2.0 per cent during the two fortnights of January and the first fortnight of February, respectively, indicating a potential stabilisation as the season progressed.

By February 26, total sugarcane crushed stood at 56.85 million metric tonnes, with sugar production at 5.37 million tonnes. With an estimated 10.5 million metric tonnes still available for processing, it appears unlikely that production will recover to earlier projections as the season nears its end.

On March 11, the finance minister estimated total sugar output for the 2024-25 season at 5.7 million tonnes. With a carryover stock of approximately 0.766 million tonnes, total sugar availability for the year stands at 6.466 million tonnes. This leaves a shortfall of about 0.3 million tonnes compared to the projected demand of 7.1 million tonnes, which includes 0.2 million tonnes for supply chain absorption and a strategic reserve of 0.45 million tonnes, necessary for price stability and food security -- provided exports remain below 0.3 million tonnes.

These projections align with last year’s sugar consumption trends, which saw sugar lifting at 6.401 million tonnes (from December 1, 2023 to November 30, 2024), plus carryover stocks of 0.766 million tonnes, excluding exports of 0.377 million tonnes.

However, continued sugar exports earlier this year exacerbated the supply-demand imbalance. Data suggests that had the government proactively monitored production through the Sugar Advisory Board and adjusted export allocations accordingly, Pakistan might have avoided the recent sugar price surge and the looming need for imports.

By December 31, 2024, sugar production had already begun to decline sharply. Despite this, the government allowed exports to continue instead of suspending or slowing sugar shipments.

According to State Bank of Pakistan (SBP) data, 0.204 million tonnes of sugar were exported in January and February 2025, even as the production shortfall widened. No timely action was taken by authorities.

Historical trends further contextualise this year’s production decline. Last year, sugar production stood at 6.841 million metric tonnes, setting a benchmark for comparison. The five-year average production has been approximately 6.36 million metric tonnes, meaning that this year’s estimated output of 5.7 million tonnes falls short not only of last year’s figures but also of the historical average. This concerning trend raises questions about the sustainability of sugar production and its implications for domestic supply and pricing in the coming months. The current price trajectory already reflects tightening market conditions.

Commenting on the sugar outlook, Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan said that the export of refined sugar was permitted only for the 2023-24 season. Of the approximately 1.3 million tonnes of surplus sugar in 2023-24, the government allowed 750,000 tonnes for export, while over 500,000 tonnes were carried forward into the 2024-25 season. He asserted that no export of white sugar had been permitted for the 2024-25 season.

However, he did not address why sugar exports continued during the 2024-25 crushing season, despite low sucrose recovery. The unchecked situation has reduced net sugar availability, creating a supply-demand imbalance that has now forced the government to consider imports.

A senior member of the PSMA remarked, “Following the controversial decision to export sugar at the start of the season, despite warnings from various stakeholders, sugar prices have skyrocketed and seem increasingly difficult to control.”

Regarding the deputy prime minister’s recent meeting on sugar price regulation, he noted, “Farmers have publicly highlighted that the sugar industry is calculating its production costs based on the last week’s procurement prices. Given the alleged deductions for poor-quality cane at the weighment stage, the cost should remain within reasonable limits. The industry must adhere to the government’s envisioned ex-mill rate of Rs140 per kg.”

He further argued that price control committees should regulate sugar prices, as the government had not set a support price for sugarcane, much to farmers’ dismay, especially following issues with wheat procurement. He pointed out that the crushing season began with sugarcane priced at Rs325 per 40 kg.

The sharp rise in sugar prices during Ramazan has further burdened an already cash-strapped lower-income population. According to the PSMA member, exaggerated export projections were used to manipulate prices, and policymakers were misled by manipulated data.

An insider noted that the deputy prime minister’s push to start the next crushing season earlier than usual is an indirect admission that the market is experiencing a supply crunch. He emphasised the need for a proactive policy, including importing three to five million tonnes of sugar, to stabilise supply and curb price hikes.

Another senior sugar industry representative blamed the current crisis on mismanagement, arguing that authorities failed to handle what he described as “abundant sugar stocks” wisely.

Ch Zaka Ashraf, former PSMA chairperson, said that Pakistan had been experiencing surplus sugar supplies for the past few years, justifying exports. However, he acknowledged that only 0.4 million tonnes of carryover stock were available for consumption in the 2024-25 season. When asked about the possibility of importing 0.3 to 0.5 million tonnes of sugar to bridge the supply gap, he declined to comment.