Pakistan's Sugar Policy: A Cycle of Artificial Shortages and Subsidised Exports

Pakistan's sugar policy has been marred by a cycle of artificially created shortages and subsequent exports, which benefits a politically protected cartel.

The state spends taxpayer money importing expensive sugar when shortages are manufactured, only to export it later, claiming there is a surplus. This pattern has repeated itself multiple times in recent years, with the Economic Coordination Committee approving the export of 108,000 metric tonnes of sugar last year, allegedly due to a bumper crop.

Sugarcane is one of Pakistan's thirstiest crops, and state-backed export incentives have led to the subsidised export of scarce groundwater, resulting in the country importing wheat at a premium. The disappearance of any line between regulator and regulated has allowed millers to manipulate data to obtain export approvals, which are then accepted by the government.

Haroon Rashid Siddiqi, a retired professional based in Canada, argues that the Prime Minister bears responsibility for this cycle, as a high-powered committee had recommended structural reforms to take the state out of the sugar trade. However, these reforms were set aside, and state control remained, allowing export quotas to be distributed and inefficiencies to be protected.