Deregulating sugar sector: experts laud govt decision

The government of Pakistan’s decision to fully deregulate the sugar sector is a landmark step toward market-driven reforms that will reduce state intervention and promote efficiency across the agricultural value chain, experts said.

While talking to Business Recorder Arif Habib Commodities CEO Ahsan Mehanti said the government has taken a major decision to fully deregulate the sugar sector under commitments made with the International Monetary Fund (IMF), aiming to end subsidies and strengthen fiscal discipline.

Under the new mechanism, the government will no longer set minimum prices for sugarcane or intervene in export decisions. Instead, market forces will determine prices and trade flows, marking a significant shift toward a free-market framework, Mehanti explained.

Meanwhile, Pakistan Business Forum (PBF) Chief Organiser Ahmad Jawad said deregulation, if implemented in its true spirit, has the potential to enhance efficiency, promote competition, and improve long-term sustainability of the sector.

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 and the government will no longer regulate sugarcane prices.

Jawad said the decision to allow farmers to sell their crop to any mill of their choice is a positive and long-overdue reform, as it empowers farmers and fosters healthy competition among sugar mills.

In a truly deregulated environment, sugar mills would be forced to offer competitive prices and improved payment terms to secure sugarcane, helping to address long-standing issues such as delayed payments and the weak bargaining position of farmers, Jawad added.

“Fair market prices for sugarcane should be set through competition among mills rather than by administrative pricing mechanisms.”

“At the same time, the government must ensure strict oversight to curb anti-competitive practices, market manipulation, or collusion that could harm farmers and consumers. Deregulation should not create a regulatory vacuum, but instead be backed by robust enforcement of competition laws and transparent market monitoring”, he said.