Farooq Awan

Mandatory disclosure of sugar stocks and prices by mills, large traders, and wholesalers has been proposed as a key reform measure to curb hoarding, prevent artificial shortages, and improve transparency in the sugar market, according to a policy document issued by the Institute of Cost and Management Accountants of Pakistan (ICMA).

The document states that limited visibility over actual sugar stocks has been a recurring weakness in the existing regulatory framework. According to ICMA, discrepancies between reported and actual stock levels have frequently complicated government efforts to assess supply conditions, contributing to delayed or misinformed policy responses during periods of rising prices.

The study notes that allegations of hoarding and deliberate withholding of stocks have repeatedly surfaced during times of price increases. However, the document states that the absence of a reliable and enforceable disclosure system has made it difficult for regulators to verify such claims or take timely corrective action.

ICMA proposes that mills and major market participants be required to regularly disclose information on sugar production, sales, and stock positions. According to the document, this information should be submitted through a centralised system and made available to relevant regulatory authorities to enable real-time monitoring of supply conditions.

The report explains that under the current system, stock information is often collected on an ad hoc basis, typically after prices have already increased. This reactive approach, the study states, reduces the effectiveness of enforcement actions and allows speculative behaviour to persist unchecked.

According to ICMA, mandatory disclosure would improve market discipline by reducing information asymmetry between market participants and regulators. The document notes that greater transparency can discourage speculative stockpiling by increasing the likelihood of detection and enforcement.

The study further states that disclosure requirements should apply across the supply chain, including mills, large traders, and wholesalers, to prevent the shifting of stocks between entities to obscure actual availability. The document notes that partial disclosure limited to a single market segment would not be sufficient to achieve the intended transparency objectives.

ICMA records that reliable stock and price data would also support better policy coordination between federal and provincial authorities. According to the report, consistent information flows are essential for aligning decisions related to pricing, trade, and enforcement, particularly in a market that operates across multiple jurisdictions.

The document also highlights that mandatory disclosure of prices, alongside stock levels, would help regulators distinguish between price movements driven by genuine cost changes and those arising from coordinated market behaviour. According to ICMA, this distinction is critical for effective competition enforcement.

The study notes that disclosure requirements would need to be supported by clear reporting standards, verification mechanisms, and penalties for misreporting. Without such enforcement provisions, the document states, mandatory disclosure would risk becoming a formal requirement with limited practical impact.

ICMA emphasises that transparency measures are particularly important in the context of proposed sugar market deregulation. The report notes that as direct price controls are eased, regulators will need alternative tools to monitor market behaviour and respond to emerging risks.

The document concludes that mandatory disclosure of sugar stocks and prices is presented as a foundational reform to support a more transparent and accountable sugar market. According to ICMA, such measures would strengthen regulatory oversight, reduce uncertainty, and help prevent artificial shortages that have repeatedly disrupted the sugar supply chain.

Credit: INP-WealthPk