Pakistan’s sugar sector has been heavily administered by the government, with administered procurement prices, a ban on new sugar mills, and controlled export/import decisions routed through the Economic Coordination Committee (ECC). These measures have resulted in repeated cycles of scarcity, price hikes, and import emergencies rather than the price stability and farmers’ protection they aimed to achieve. These challenges drove the government to initiate the process of comprehensive deregulation. In July 2025, a high-level team headed by Federal Minister Awais Leghari was established to draft a proposal across four areas: licensing, cultivation, pricing and trade.
The draft policy framework, as reported in the media, proposed to eliminate the minimum support price for sugarcane, remove zoning restrictions, eliminate export subsidies and quotas, liberalize imports, and lift the ban on new mills. Under the IMF’s Extended Fund Facility (EFF), sugar sector deregulation was designated as a structural benchmark with a deadline of End-June 2026. The program necessitated a national policy agreed between federal and provincial governments and adopted by the Federal Cabinet. Punjab and KP governments have approved the framework. Sindh protested, arguing for phased implementation over five to ten years. The deadline has passed; however, the government has failed to evolve a consensus on deregulation.
What has followed is the continuation of the previous state-directed approach. In FY2025, Pakistan exported 765,734 metric tons of sugar. A 15% decline in production resulted in an increase in retail price to Rs 220 per kilogram, from Rs 180. The government then imported 300,000 metric tonnes through the Trading Corporation of Pakistan (TCP) on a tax-exempt basis, waiving 53% of import duties. This measure is inconsistent with the IMF program’s restriction on granting new tax exemptions to the sector. In FY2026, the domestic retail prices dropped to Rs 148 per kg as production improved. Two local tenders for the remaining 108,000 metric tons of imported sugar failed. The ECC has now approved re-export through TCP as surplus stock of sugar has piled up. The sugar purchased at tax-free rates when prices were high will be sold at lower international prices.
This is not an isolated measure but a predictable outcome of the statist framework that deregulation was supposed to abolish. The ECC continues to control trading volumes on an ad hoc basis, and TCP is still operating as a state’s trading arm. Administered quantitative limits continue to exist in place of price signals. All the tools that were supposed to be abolished continue to remain in practice. The reforms should address production, pricing, and trade constraints simultaneously. Trading decisions should not be made through the ECC route, nor should trading volumes be determined through quotas. Pricing and trading decisions should be determined by market forces, allowing the market to operate freely. Once a competitive market framework is in place, the government should withdraw from the market while placing protective measures for consumers and farmers without interfering in price signals.