EDITORIAL: You don’t need to be a forensic economist to see through the sugar sector’s game. Prices don’t climb this high without a plan. And this one’s been refined over decades — export surplus sugar, engineer a local shortage, drive up prices, and cash in all over again. That’s not free-market economics. That’s policy-enabled profiteering. The state, once again, finds itself chasing shadows of accountability after the damage is done.
Now, as sugar touches Rs 200 per kilo, a parliamentary committee is finally considering what should’ve been obvious years ago: a tax on windfall profits of sugar millers. Just like the banking sector, where unexpected interest rate-driven gains were rightly taxed, the sugar industry too must be held to account. Because this isn’t just a matter of market fluctuations; it’s a carefully timed cycle that rewards the few while punishing the many.
The sugar sector has always enjoyed a unique kind of immunity. Every time prices spiral, every time there’s a crisis, the same groups are involved — and they’re never far from political power. That’s why the old quip goes: sugar is always in government, no matter who wins the election. And with the Pakistan Sugar Mills Association (PSMA) acting as a shadow ministry, it’s hardly a secret that policy has long been shaped to protect producers, not consumers.
Just look at the facts. The government had an agreement in place: a fixed ex-mill price with a modest monthly increment. But several mills refused to honour it. At the same time, insiders inflated carry costs based on outdated interest rates, exaggerated holding burdens, and lobbied aggressively for exports. With global prices running Rs30–40/kg higher and no sales tax on exports, the incentive to sell abroad was too strong to resist; even if it meant throwing the local market under the bus.
That export window, predictably, triggered domestic scarcity. Now the government is floating import tenders at inflated rates, while millers walk away with their margins intact. It’s a textbook case of regulatory failure — or worse, regulatory capture.
This is why the windfall tax must go ahead. Not as a populist gesture, but as a structural correction. It must serve as a warning to all rent-seeking industries that exploit weak oversight and political connections. Taxing supernormal profits won’t solve everything, but it’s a start. It creates space for accountability, and helps plug some of the fiscal leakage caused by elite capture.
The sugar lobby has long argued that the industry supports agriculture, generates employment, and contributes to GDP. All true. But that doesn’t grant it the right to sabotage the market. If anything, the public cost of its manipulations, in inflation, lost productivity, and consumer distress, far outweigh the private benefits it generates.
The proposed inquiry into beneficiaries of the latest price spike, and the consideration of a multi-party probe into export dynamics, must be welcomed — and more importantly, protected from political interference. The trend of overstated surplus, underreported stock, and manipulated price floors cannot continue unchecked.
Pakistan doesn’t need a war on sugar. It needs fair play. If the sector is to remain viable, it must compete, not collude. If millers want access to subsidies, export permissions, and policy support, they must accept regulatory scrutiny, market transparency, and tax fairness.
There’s still time to correct course. The state is required to assert itself, not just as a responder to crisis, but as a steward of equitable growth. Let the sweet profits flow, but not at the cost of souring the social contract.
Copyright Business Recorder, 2025