Sugar mills delay crushing season | The Express Tribune

ISLAMABAD:

Sugar millersgot stay order from a provincial court on Friday against Punjab’s orders to start crushing from Saturday (today) – a move the federal minister for national food security said was in breach of an agreement and meant to keep commodity prices high.

The millers have managed to delay the crushing season for at least a few more days amid depletion of stocks to critical levels. Under a July agreement with the federal government, the millers were supposed to begin crushing on November 1.

The Lahore High Court (LHC) on Friday gave a stay order to sugar mills till November 17 against the Punjab government’s decision to start sugarcane crushing from November 15. The provincial government has set the deadline to ensure the availability of the sweetener before stocks run out and also to ensure that farmers get the right price for their produce.

However, the petitioners pleaded before the court that under the Punjab Sugar Factories Control Act 1950, the crushing season must commence on or before November 30 every year, according to the court order sheet.

Punjab’s notification made it binding on the millers to start crushing on November 15, which was contrary to the spirit of the law, claimed the petitioners. The millers contended that only Punjab had issued the notification, calling it discriminatory and illegal.

The sugar mills’ move to approach the court and get a stay order was in breach of an agreement, “which I signed on behalf of the federal government and required the mills to start crushing season from November 1”, said Federal Food Security Minister Rana Tanveer Hussain, speakingto The Express Tribune.

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He said that the purpose of getting the stay was to keep prices high and sell the remaining 207,000 tonnes of sugar at prevailing rates. “Had they begun crushing on November 1, sugar prices would have dropped below Rs150 per kg,” said the minister.

The Pakistan Bureau of Statistics (PBS) – the national data collecting agency – reported on Friday that the average sugar price jumped to Rs185.5 per kg, 40.3% higher than last year. It was the second highest increase in any commodity following a 56% surge in prices of ladies’ footwear, according to the weekly inflation bulletin.
The law officer representing the provincial government informed the court that the notification to begin crushing had been issued on the direction of the provincial cabinet and was in conformity with the provincial law. But the law officer sought time to obtain instructions from the concerned authorities.

The court decided that the “contention raised (in the petition) needs consideration” and gave a stay order till November 17.

In July this year, the federal government and the Pakistan Sugar Mills Association (PSMA) had signed an agreement for keeping ex-factory sugar prices between Rs165 and Rs171 per kg until October 15 and starting crushing on November 1, said Rana Tanveer.

The government permitted the export of 765,000 tonnes of sugar, driving local prices up to Rs200 per kg. In order to stabilise prices, it then allowed tax-free imports, triggering sharp criticism from the IMF.

Rana Tanveer told The Express Tribune that the country had so far imported 308,000 tonnes of sugar, hoping that there were sufficient stocks to meet local requirements.

The July sugar export agreement also stated “the federal government will allow, for export of sugar stocks exceeding seven million metric tonnes (carryover plus 2025-26 production), after 30 days of the closing of the crushing season 2025-26.”

The agreement includes a price-fixing clause that contradicts the Competition Commission of Pakistan (CCP) law. It states, “The maximum ex-mill price of sugar will be fixed at Rs165 per kg on July 15, 2025, and increased by Rs2 per kg monthly until October 15, 2025.”

Before last year’s sugar exports, ex-mill prices were below Rs140 per kg. By setting the maximum price at Rs171 per kg, excluding retail profit margins, the government effectively granted a windfall to millers.

The sugar millers are violating the Competition Commission Act and CCP has become a silent spectator.

According to minutes of an internal meeting of sugar mills, attended by representatives of at least 10 mills, they “unanimously decided to commence the crushing season 2025-26 on Friday, November 28”. The millers proposed a sugarcane rate of Rs400 per 40 kg for the new season.