Pakistan to fully deregulate sugar industry by June under IMF push

By Staff Reporter

ISLAMABAD: Pakistan is set to fully deregulate its sugar industry by the end of June, handing control of prices, production and trade over to market forces in a bid to meet International Monetary Fund requirements and ease fiscal strains.

The move, which follows the recent liberalisation of the wheat sector, will scrap government oversight that’s persisted for decades, according to official documents. It includes abolishing minimum support prices for sugarcane, lifting bans on imports and exports, and allowing farmers unrestricted choice in cultivation and sales.

Under the plan, farmers will gain complete freedom to grow sugarcane in any location, without zoning limits, and sell it to any mill or convert it into jaggery. The government will no longer fix sugarcane or sugar prices, letting supply and demand dictate rates instead.

Officials said the reforms will bar any formal or informal collusion by industry groups to influence ex-mill sugar prices. Subsidies on sugar exports will be eliminated, along with current export quotas for mills.

In a push for investment, the longstanding ban on new sugar mill licenses will be withdrawn, opening the sector to fresh capital. Mills idled for up to eight months will be permitted to import raw materials, and all mills can process either locally grown sugarcane or imported raw sugar without needing approvals.

To boost capacity utilisation, sugar mills will be allowed to import raw sugar, refine it domestically and re-export the product, which is expected to enhance exports of refined sugar. Import duties on sugar will be reduced, further liberalising trade.

While aiming to reduce government intervention, the plan includes safeguards for farmers. Officials said a list of prohibited sugarcane varieties—those with low recovery rates that could hurt earnings—will be issued before each sowing season to prevent cultivation of suboptimal types.

The deregulation aligns with IMF-mandated structural reforms, signalling a broader shift toward a market-driven agricultural economy. By exiting the sugar sector, the government seeks to cut its fiscal burden, curb market distortions that have triggered shortages or price spikes, and foster competition at home and abroad.