The Rs600bn sugar rip-off

As of July 2025, the international price of sugar is approximately $0.365 per kilogramme, or around Rs104 per kg at current exchange rates. In comparison, domestic retail prices in Pakistan range from Rs180 to Rs210 per kg.

With annual national consumption estimated at six million tonnes, this price differential amounts to an additional burden of roughly Rs600 billion on Pakistani consumers – assuming the gap remains constant over the year. Two pressing questions: why does sugar in Pakistan cost nearly double the international price? Why must every Pakistani family pay an extra Rs17,000 each year just to consume sugar?

The Rs600 billion sugar rip-off is centered around six factors: price manipulation, hoarding, export subsidies, cartel-like practices, political connections of powerful sugar mill owners, and regulatory failure. In 2010, the Competition Commission of Pakistan (CCP) launched an investigation into the sugar industry and described it as a ‘multi-layered cartel’. The inquiry revealed that sugar mills, operating through the Pakistan Sugar Mills Association (PSMA), engaged in collusion across multiple stages – production, pricing, procurement and distribution – to manipulate the market and inflate profits.

The CCP concluded that the PSMA also influenced government policies – such as export subsidies and import restrictions – to serve the interests of mill owners, often at the expense of consumers and public finances. In 2020, the then PM Imran Khan ordered a government inquiry into the sugar industry. The investigation revealed that the industry functioned like a cartel, dominated by politically connected mill owners who colluded to do three things: fix prices, manipulate supply and extract excessive profits from consumers.

The PSMA was implicated in coordinating pricing strategies. The report found that just six groups controlled 51 per cent of the country’s sugar production. Lo and behold, reverse Robin Hood in action: a system that extracts from the poor and middle class to preserve the privileges of the powerful. It’s an economy where the poor fund the rich, the powerless subsidise the powerful, and wealth flows upward instead of downward. The Rs600 billion sugar rip-off, fuelled by a multi-layered cartel, thrives on government intervention – subsidies, quotas and price controls that empower mill owners to exploit consumers. Yes, the government can break the cartel’s stranglehold. Yes, the government can restore market fairness. Yes, the government can relieve Pakistani families of the Rs17,000 annual burden they face for sugar.

The government must withdraw from the sugar supply chain. Complete deregulation - removing government controls on sugar prices, exports, imports and procurement. The sugar cartel’s grip, fortified by government policies,.has bled Pakistani families for too long. Deregulation offers a straightforward path to dismantle this multi-layered cartel, align prices with the global market, and restore fairness.

The writer is a columnist based in Islamabad.