Sugar mills are facing a severe cash shortage ahead of the new crushing season as large unsold sugar stocks continue to tie up funds, the Pakistan Sugar Mills Association (PSMA) said.

The PSMA said the government had acknowledged the presence of surplus sugar during several meetings but had yet to decide on the industry’s request to export the excess stocks. The association said exports would allow mills to generate cash while bringing foreign exchange into the country.

With only two months remaining before sugarcane harvesting and the start of the new crushing season, mills are struggling to finance essential expenses, including plant maintenance, machinery repairs, farmer payments and employee salaries.

The industry estimates that the upcoming crop could produce about 8 million metric tons of sugar. The existing surplus of around 1 million metric tons, however, could make it difficult for mills to store the new season’s production.

The PSMA said mills were also carrying higher production costs because of rising sugarcane prices, taxes, wages and the cost of imported chemicals. At the same time, sugar prices have remained below production costs, putting further pressure on mills’ finances.

The association said surplus stocks were accumulating in mill warehouses while buyers remained scarce in the domestic market. Holding the stocks is also increasing mills’ financial burden because they have to continue paying bank markups on the funds tied up in unsold sugar.

The PSMA said international sugar prices currently offered a favorable opportunity for exports and urged the government to allow shipments without further delay. According to the association, exports of the surplus sugar could generate between $700 million and $800 million in foreign exchange.