Kissan Ittehad Urges 1 Million Tonnes of Sugar Exports Ahead of Crushing Season
The Pakistan Kissan Ittehad (PKI) is demanding immediate export approval for 1 million tonnes of surplus sugar to prevent a price collapse that could cost farmers up to Rs 100 billion. The move highlights the sector’s vulnerability and could pressure PSX-listed sugar companies to face lower margins.
Share
Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
The potential price collapse and regulatory uncertainty are likely to pressure PSX-listed sugar companies, leading to margin compression and a cautious stance for investors.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- EconomyNegatively affected
- MarketsNegatively affected
Companies
Mentions in This Briefing
Sectors: Economy, Markets — Negative · Do not buy. PSX tickers: OGDC, PPL, MARI, PSO, SNGP, ATRL. The potential price collapse and regulatory uncertainty are likely to pressure PSX-listed sugar companies, leading to margin compression and a cautious stance for investors.
Full Story
Open on Dawn## Background
The Pakistan Kissan Ittehad (PKI), the apex body representing sugar growers, has called for the government to grant export permission for 1 million tonnes of surplus sugar before the crushing season that starts on 15 November. The request comes amid warnings that a lack of export clearance could trigger a sharp fall in domestic sugar prices, potentially eroding farmers’ revenue by as much as Rs 100 billion, a figure reminiscent of the 2017‑18 crisis.
## Current Supply Situation
PKI President Khalid Mahmood Khokhar noted that a record crop of sugarcane—covering more than 3.5 million acres—has been harvested, with production expected to rise 10‑15 % year‑on‑year. Pakistan’s total sugarcane output for FY26 reached 89.45 million tonnes, a record high. However, the industry already holds a surplus of 1.3 million tonnes in domestic reserves. Without export clearance, this excess could flood the market, driving prices down and forcing growers to sell below cost.
## Policy Demands
To address long‑standing structural issues, PKI presented four key policy proposals: 1. Fully market‑driven sector – remove administrative controls over imports, exports, production and pricing. 2. Ban on new mills – halt construction until existing mills operate at 75 % capacity utilisation. 3. Minimum spacing for new mills – enforce a 50‑mile distance between new facilities to avoid concentration. 4. Repeal provincial regulations – eliminate local rules that distort the market.
These measures aim to boost productivity and ensure long‑term profitability across the supply chain.
## Implications for PSX
The immediate concern for PSX investors is the potential price collapse that could hurt the profitability of listed sugar companies. While export approval could mitigate the surplus problem, the policy demands signal uncertainty and possible regulatory changes that may affect operating costs and capital expenditure for mills. The sector’s exposure to government policy makes it a sensitive component of the broader markets.
## Key Takeaways
- PKI’s export request is aimed at preventing a price crash that could cost farmers up to Rs 100 billion. - The sector faces a surplus of 1.3 million tonnes and a record crop that could exacerbate supply pressure. - Policy proposals seek to liberalise the market but also impose restrictions on new capacity. - PSX-listed sugar companies may experience margin compression if prices fall, while regulatory changes could alter future investment plans.