Pakistan considers deregulating sugar sector amid high prices, market manipulation concerns
Officials weigh deregulation as sugar prices soar, while past collusion investigations and court battles continue to cloud the sector.
PAKISTAN – The Government of Pakistan is considering a proposal to deregulate the sugar sector, granting millers more autonomy over pricing and trade decisions amid soaring prices and persistent concerns about market manipulation.
The Express Tribune reports that this move follows a similar deregulation effort in the wheat sector, which left many farmers vulnerable to exploitation by intermediaries, especially in Punjab.
Farmers in Punjab have raised concerns about being forced to sell wheat at below-market rates, with some considering withdrawing from cultivation entirely. This has raised alarms about long-term food security across the country.
In light of these developments, sources say the Ministry of National Food Security and Research has been tasked with evaluating the potential benefits and risks of deregulating the sugar industry.
The issue was discussed during a recent meeting of the Economic Coordination Committee (ECC), where officials reviewed key challenges related to sugarcane production, crop zoning, water management, storage, and trade. Some committee members advocated for complete deregulation, warning that partial reforms might worsen existing inefficiencies.
The ECC directed the food ministry to conduct a comprehensive assessment of how deregulation would impact supply chains, storage capacity, and consumer prices.
Currently, consumers are facing high sugar prices, which some attribute to the dominant position of sugar millers in the market.
The Competition Commission of Pakistan (CCP) has been monitoring the industry for anti-competitive behavior.
In 2020, it uncovered evidence that sugar mills, with support from the Pakistan Sugar Mills Association (PSMA), had engaged in price-fixing and coordinated supply control. This led to a fine of Rs 44 billion (US$511M) issued in 2021.
However, legal proceedings remain stalled due to interventions by the Sindh and Lahore High Courts and the Competition Appellate Tribunal.
The CCP had earlier found similar collusion in 2009 and issued formal notices to the PSMA and several mills. These cases have also been delayed due to ongoing court proceedings. Over the years, the CCP has released multiple policy notes urging government intervention to reduce market distortions.
A recent federal cabinet report highlighted that sugar prices had exceeded the government’s benchmark, prompting an export suspension.
Despite this, the Ministry of Industries continued supporting international sales. The report also stated that some sugar mills had not paid farmers from export proceeds, violating government rules.
The ECC initially approved sugar exports under strict price conditions. However, when those limits were breached, the Cabinet Committee on Monitoring Sugar Exports recommended a complete halt.
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