Pakistan's sugar industry is one of the most controversial sectors of the economy, deeply entrenched in political and economic power dynamics. Despite being the fifth largest sugarcane producer and seventh in sugar production globally, Pakistan's sugar prices remain high.
The blame game of artificial shortages and engineered price hikes dominates headlines, a narrative we have seen play out on TV and digital media for decades. A handful of politically connected sugar mill owners reap billions in protected profits.
In 2024-25, Pakistan produced around 84 million tonnes of sugarcane and seven million tonnes of sugar, yet the benefits of this massive production do not trickle down to ordinary growers or consumers. Instead, a tightly controlled sugar cartel dictates prices, production, and even energy access, all while hiding behind government-imposed barriers to competition.
With sugar selling at Rs160 per kg, molasses and bagasse providing additional revenue streams, and captive power generation through bagasse-fuelled energy plants, sugar mills generate more than Rs1.5 trillion in protected earnings. Thanks to government-imposed bans on new sugar mills, this exclusive club continues to grow richer at the expense of ordinary Pakistanis.
This article explores the economic and political structure of Pakistan's sugar cartel, revealing how this protectionist racket operates, who profits from it, and why breaking their monopoly remains impossible. Pakistan's sugar industry is not just about sugar. The economic ecosystem of sugar manufacturing includes multiple revenue streams, all contributing to staggering profits:
1) Sugar sales – Rs1.4 trillion in revenue: Pakistan produced about 88 million tonnes of sugarcane in 2024-25. With an average sugar recovery rate of 10%, this translates into 8.8 million tons of sugar. At Rs160 per kg, total revenue from sugar alone is Rs1.4 trillion.
Molasses – Pakistan's undervalued gold: Sugarcane processing yields 4-5% molasses by weight. Eighty-eight million tonnes of sugarcane produced 4.4 million tonnes of molasses. At an average price of Rs35,000 per tonne, molasses revenue is Rs154 billion. Molasses is primarily used for ethanol production, with most exported at inflated global prices.
Bagasse – the hidden energy treasure: Each tonne of sugarcane yields 270-300 kg of bagasse. Pakistan's sugar mills generated around 24 million tonnes of bagasse in 2024-25. Bagasse is burned to generate electricity, saving sugar mills from purchasing power at Rs50 per kWh from the national grid. Mills also sell excess electricity to nearby industrial zones at undisclosed, off-grid rates.
Captive power generation – the steel secret: Four to five sugar mills in Pakistan also produce steel, utilising bagasse-based captive power. These mills generate 800 kWh of electricity per tonne of steel. With national grid electricity at Rs50 per kWh, their captive power saves billions while undercutting competitors in the steel industry.
No new competition: govt-sanctioned monopoly: The government has not issued new licences for sugar mills, effectively blocking new entrants. Existing 80-90 sugar mills enjoy zero competition and artificially high profits. Farmers are forced to grow sugarcane to access river canal water and sell to cartel-owned mills, while consumers pay record-high prices.
Who owns the sugar industry?
The same families who rule Pakistan. Pakistan's sugar industry is not controlled by market forces; it is dominated by political elites. The biggest mill owners include members of major political parties, including the Zardaris, Sharifs, Bhuttos, Chaudhris, and Tareens. Influential bureaucrats and business magnates who lobby for tax exemptions and subsidies, and retired military officials with direct stakes in major sugar mills.
These groups ensure that the State Bank of Pakistan (SBP) provides cheap credit to sugar mills, while government policies guarantee their profitability through protectionism, subsidies, and export incentives. Meanwhile, small-scale farmers remain trapped, unable to demand fair prices for their sugarcane because they must sell to the cartel-controlled mills.
Corruption, price fixing, and policy manipulation
Pakistan's sugar industry is a prime example of state-captured capitalism. Key factors include:
Price manipulation and artificial shortages: Every year, the sugar cartel hoards stock, creating artificial shortages. This forces the government to approve exports, allowing mills to sell below international market rates while keeping local prices inflated. Once exports are complete, the cartel demands raw sugar imports, claiming a supply crisis, further inflating prices. The government spends huge subsidies on sugar sales through Utility Stores and 'Sasti Cheeni Bazaar.'
Subsidies and bailouts for billionaires: Sugar mills receive billions in government subsidies, disguised as industry support. When global sugar prices fall, the cartel demands export subsidies, forcing taxpayers to fund their profits. When prices drop internationally, the cartel blocks imports to maintain domestic price control.
No new sugar mills – guaranteed monopoly: The government's refusal to issue new sugar mill licences ensures no new competition. A handful of families control Pakistan's entire sugar supply, securing long-term profits.
Captive power profits: With bagasse-based captive power plants, sugar mills avoid buying expensive electricity from the national grid. Some mills sell excess electricity at rates lower than government-set tariffs, making billions in secret profits. The steel industry also benefits, producing iron metal at lower energy costs than independent steel manufacturers.
Who pays the price?
Ordinary consumers: Forced to buy sugar at Rs160 per kg – far higher than in many countries. Pay inflated prices for ethanol-based products like fuel and alcohol.
Farmers: Cannot demand higher rates for their sugarcane because they are stuck selling to cartel-owned mills. Often face delayed payments and price cuts despite mills making billions.
Independent businesses: Steel and other industries pay higher electricity prices than sugar mills with captive power. New entrants are blocked, ensuring competition remains non-existent.
Breaking the stranglehold
Pakistan's sugar cartel operates with government protection, political backing, and economic manipulation. The ban on new sugar mills ensures that existing mill owners control every aspect of the industry, earning more than Rs1.5 trillion annually under a monopoly disguised as free enterprise. What needs to change?
End the monopoly: Lift the ban on new sugar mills and allow free imports and exports after crushing is completed.
Stop subsidies: Eliminate export incentives that favour the cartel.
Break the cartel: Implement real anti-trust laws against price fixing.
Protect farmers: Ensure fair sugarcane pricing, timely payments, and give growers the right to make jaggery without quantity restrictions.
Unless Pakistan dismantles this protected monopoly, the sugar cartel will continue to drain the country's economy while enriching a select few. It's time to expose and dismantle the sugar mafia; before it's too late.
THE WRITER IS A COMMODITIES CONNOISSEUR, FORMER MEMBER MANAGING COMMITTEE OF REAP AND FORMER VICE PRESIDENT OF KCCI
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