Twelve sugar mills in Pakistan shut down amid falling prices and surplus stocks

At least 12 sugar mills in Pakistan have suspended operations due to financial difficulties caused by falling domestic sugar prices and the accumulation of large inventories. According to the Pakistan Sugar Mills Association (PSMA), the country’s sugar surplus has reached 1.3 mln tons, while prices have fallen by 25% over the past year. Total industry losses are estimated at PKR 98 bln.

According to the PSMA, substantial volumes of unsold sugar remained in storage after the end of the 2025/26 sugarcane crushing season. Delays in government decisions on exporting surplus production have increased storage expenses, loan servicing costs and interest payments. Falling prices have made it increasingly difficult for mills to cover production costs and meet their financial obligations.

The situation could worsen with the start of the 2026/27 sugarcane crushing season. The association forecasts Pakistan’s sugar production at approximately 8.5 mln tons. New production entering the market amid substantial carryover stocks could deepen the supply surplus and put further downward pressure on prices. Meanwhile, financial difficulties at sugar mills pose risks of delays to the start of the crushing season and payments to sugarcane growers.

To stabilize the situation, the PSMA is urging the government to approve an additional 800 thsd tons of sugar exports on top of the 200 thsd tons already authorized. This would bring the total permitted export volume to 1 mln tons. Industry representatives believe that expanding exports would help reduce inventories, ease financial pressure on mills and support the domestic market.

The association is also calling for full deregulation of the sugar industry, including a transition to market-based pricing. The PSMA warns that without timely action to address surplus inventories, more mills could suspend operations, while financial problems among processors could negatively affect sugarcane growers. In the longer term, declining production could even force Pakistan to import sugar despite its current surplus.

Tags: sugar, Pakistan