Govt finalises sugar deregulation policy to end political price controls, zoning system

The federal government has finalised a national policy to deregulate the sugar sector, removing political control over pricing, zoning restrictions and licensing barriers in line with reform commitments tied to the International Monetary Fund, The Express Tribune reported. 

The draft National De-Regulation Policy proposes ending formal and informal controls across the sugar value chain, allowing the sector to operate on market principles. Officials said the move aims to improve efficiency, enhance competition and create a more transparent pricing mechanism.

A key component of the policy is the abolition of the zoning system, which previously restricted where farmers could sell sugarcane and limited the establishment of new mills. The changes will remove constraints on crop sales and production decisions, enabling farmers to access competitive markets and potentially secure better returns.

At the processing level, restrictions on mill capacity expansion and approvals will be lifted in consultation with provincial governments. Millers will also be allowed to diversify raw material sourcing, addressing gaps between sugarcane supply and installed capacity.

The policy introduces measures to strengthen farmer protections, including third-party weighing systems, improved access to credit and support for mechanisation. These steps are aimed at ensuring transparency in transactions, timely payments and higher productivity.

The government also plans to reform trade mechanisms by replacing discretionary controls on sugar imports and exports with defined procedures. A transitional framework for export decisions will be implemented this year, with full liberalisation targeted from November 2026.

To manage domestic supply, the Ministry of Food will determine annual consumption requirements and verify production levels through a track-and-trace system. Additional measures include maintaining buffer stocks, promoting ethanol blending and strengthening competition oversight.

Officials said the reforms are intended to address inefficiencies caused by overlapping federal and provincial regulations, including provisions under the Sugar Factories Control Act of 1950, which restricted market choices for growers and millers.

Pakistan produces around 6.13 million tonnes of sugar annually and has 79 processing mills, making it the world’s seventh-largest producer. The sector’s value chain is estimated at Rs1.1 trillion and remains a key source of income for small farmers.