A powerful sugar cartel is driving the surge in sugar prices across Pakistan, exploiting export permissions, manipulating production costs, and pocketing billions, according to official documents.
Sugar mill owners have historically secured government subsidies under the pretext of sugar exports, yet domestic prices remained uncontrolled. From 2015 to 2020, 26 sugar mills received Rs4.12 billion in subsidies to export 400,000 metric tons of sugar.
Investigations reveal fraud in export records, particularly concerning Afghanistan. While mill owners claimed to have exported 2.35 million metric tons of sugar to Afghanistan, the Afghan government recorded only 1.5 million metric tons. Records for 778,000 metric tons of sugar remain missing.
Past collusion to inflate prices led to legal cases against 38 sugar mills. FIA investigations suspected that mill owners extracted Rs110 billion from the public through artificial price hikes between 2018 and 2020 by falsifying production costs. This manipulation reportedly earned mill owners an extra Rs53 billion in profits and helped them evade Rs18 billion in corporate taxes.
Since January this year, sugar prices have surged by Rs60 per kg. The government had fixed the price at Rs140 per kg in March, but after exporting 750,000 tons, market prices skyrocketed to Rs170 and have now reached Rs200 per kg.
In response, the government plans to import 500,000 tons of sugar to stabilize prices. Meanwhile, the IMF has imposed conditions since 2021, requiring Pakistan to end subsidies on sugar exports and deregulate supply and demand mechanisms in the sector.
