Pakistan Decides to Fully Deregulate Sugar Sector
In a significant policy shift, the government, in collaboration with the farming community and sugar industry representatives, has decided to fully deregulate the sugar sector, marking a key step in implementing structural reforms recommended by the International Monetary Fund (IMF).
According to a comprehensive plan, a copy of which is available with Business Recorder, the deregulation move will hand control of the sugar industry over to market forces, ending decades of state intervention. The decision follows the earlier deregulation of the wheat sector, with sugar now set to follow suit.
The plan outlines a series of wide-ranging reforms aimed at eliminating government oversight.
Under the new policy, farmers will have complete freedom to cultivate sugarcane, without any restrictions on the varieties they grow or the zones in which they plant.
They will also have the liberty to sell their sugarcane to any sugar mill or use it to produce jaggery, free from government control.
The government will no longer regulate sugarcane prices. The document reveals that the existing minimum support price mechanism will be abolished, with prices instead determined by market demand and supply. This marks a fundamental shift in agricultural pricing policy, moving towards a market-driven approach.
As part of the deregulation, the government has also pledged to eliminate subsidies on sugar exports and remove the current export quotas on sugar mills.
In a major liberalisation measure, the longstanding ban on both sugar imports and exports will be lifted, allowing for free trade in the commodity.
The plan further proposes lifting the ban on the establishment of new sugar mills across the country.
Mills that have been closed for up to eight months will now be allowed to import raw materials. The deregulation will also grant sugar mills the freedom to process both locally grown sugarcane and imported raw sugar.
In an effort to boost industry capacity, sugar mills will be permitted to import raw sugar, refine it locally, and re-export the refined product. This is expected to increase capacity utilisation and enhance exports of refined sugar.
While the plan aims to reduce government involvement in the sector, safeguards for farmers have been proposed. A list of prohibited sugarcane varieties will be issued before each sowing season to prevent the cultivation of low-yield or suboptimal varieties, helping to protect farmers’ interests.
Officials believe this measure will strike a balance between encouraging market freedom and ensuring that farmers are not left vulnerable to the consequences of unregulated cultivation.
The reform package signals a major shift towards a market-driven agricultural economy, in line with the IMF’s structural reform requirements.
By exiting the sugar sector, the government aims to reduce its fiscal burden, promote competition, and meet its international reform commitments. If implemented as planned, the changes will transform the country’s sugar industry, making it more competitive on both the domestic and international fronts.
The proposed reforms are expected to reshape the landscape of the country’s sugar market, with significant implications for farmers, mills, and consumers alike.
