The Sindh government is said to have rejected the federal government’s proposal to deregulate sugarcane pricing, opting instead to retain the Sugar Factories Control Act that governs the industry. Rather than scrapping the law, it has emphasised stronger enforcement, greater transparency, and stakeholder involvement to protect farmers’ interests.

Instead of abolishing provincial legislation, the Sindh government has proposed strengthening the Act through a phased approach to deregulation, beginning with export facilitation and followed by a careful review of import policies and regulatory duties. It maintains that tariffs must be preserved to shield growers from the destabilising effects of subsidised imports.

Sindh wants to control price fixation and licensing to ensure local oversight and protect farmers. It said deregulation of the sugar sector presents both opportunities and substantial risks. “Provincial legislative authority must be preserved, regulatory safeguards strengthened, and stakeholder voices integrated into all stages of reform,” said its subcommittee.

Suggestions were part of a set of recommendations submitted by a ministerial subcommittee, formed to review a draft deregulation report on the “Pakistan Sugar Sector and Policy Framework,” which was approved by the Sindh cabinet. The Sindh agriculture department communicated the provincial government’s position to the federal industries and production ministry on April 15, according to Sindh Minister Syed Zulfiqar Shah.

A sugar glut may be seen if international prices remain low, as the Pakistani market is not competitive enough to normalise prices

The provincial government’s document showed that Sindh opposed the establishment of new sugar mills, as existing mills were operating well below their sanctioned capacity. It has been argued that decisions on sugar exports should be left to provincial governments, with the federal government acting solely as a facilitator. In case of a shortage, the federal government may import sugar after consulting the provinces. The Competition Commission of Pakistan must have adequate and compulsory provincial representation.

Furthermore, the ministerial subcommittee shared the report with the Pakistan Sugar Mills Association, the Sindh Abadgar Board (SAB), and the Sindh Chamber of Agriculture (SCA). The report seeks to “lift price control and administrative prices of sugar by December 2026”, in addition to lifting the restriction on the export of sugar by November 2026. Pakistan was among the leading global sugar producers, ranking among the top 10 countries.

The report notes that Pakistan exported 5.78 million tonnes of sugar and imported 681,000 tonnes between 2012 and 2024. Over roughly the same period, production and consumption rose by 46 per cent, outpacing population growth of 31pc between 2011 and 2023. With 38 sugar mills, Sindh accounts for 26pc of sugarcane production, based on reported government figures, compared to Punjab’s 66pc share.

Moreover, sugarcane pricing has been an issue in the country, with millers arguing that provinces should regulate sugar as well, not just sugarcane. The crop itself, however, has remained protected under provincial legislation.

The Sugar Factories Control Act 1950 (amended in 2009) governs mills through due process, overseeing price fixation, the commencement of the crushing season, quality standards, and premiums. However, the indicative sugarcane price has not been fixed in Sindh over the past two years, reportedly in line with International Monetary Fund conditions tied to the loan programme.

Sugar mills usually purchase sugarcane at government-set prices. However, in years of a bumper crop, millers tend to gain the upper hand and purchase cane at lower rates, while in periods of reduced output, farmers push for prices above the official benchmark.

A reading of the draft deregulation policy suggests the federal government views the sugar industry as having come under provincial control only after the 18th Amendment. However, the Act itself dates back to 1950 and has long been invoked by the province to notify sugarcane prices, regulate the industry, and protect farmers on an annual basis.

Both SAB and SCA submitted rejoinders to the report. On sugar price determination, SAB noted that there has been limited effort to independently analyse sugar costs. However, given that sugarcane yields byproducts such as molasses, press-mud and bagasse, as well as value-added products like ethanol, it is argued that pricing should account for these additional revenue streams.

On concerns around excessive regulation, government footprint, and trade restrictions, it stated that the state’s regulatory role cannot simply be withdrawn, and should instead be made more efficient and progressive. It added that the failure to ensure a minimum price for farmers does not, in itself, justify scrapping the Act.

The federal government noted that trade restrictions bind domestic consumers to purchase expensive sugar rather than the cheaper sugar available in the international market. “Sometimes the government bears the burden by paying millers export subsidies as domestic sugar is costlier than international sugar,” said the report.

SAB contended that a sugar glut could emerge if international prices remain low, given that the Pakistani market is neither mature nor competitive enough to self-correct and stabilise prices. It added that the presence of numerous informal players, often exploiting regulatory loopholes, further distorts the market.

Secondly, SAB noted that sugar prices in 2025 rose by Rs40 per kg, generating an estimated Rs110 billion in additional profits for millers, which it argued should have been reflected in higher sugarcane prices. Instead, cane prices were reduced.

It further alleged that millers influence purchase prices by limiting crushing, delaying the crushing season, and engaging in cartel-like behaviour in violation of the law. SAB also described the policy approach as being rooted in academic and theoretical economic principles, without adequately accounting for ground realities.

It was also noted that growers recognise that, even under the existing system, they are only marginally protected against powerful sugarcane processors. “The question then is, if regulation is not able to protect growers, how can an unprotected market, entirely in the hands of sugarcane processors, be expected to do so?” it asked.

Published in Dawn, The Business and Finance Weekly, May 4th, 2026