Sindh opposes immediate sugar deregulation
The Sindh government has rejected immediate deregulation of the sugar sector. It also opposes abolishing crop zoning and a ban on new mills, bringing into question the federal government's commitment to the International Monetary Fund (IMF) to approve the new sugar policy by the end of this month.
The objections raised by the Sindh cabinet, many of which were also supported by farmers' representatives, underscore the challenges the IMF programme faces. Fragmented decision-making and a lack of comprehensive consultations before accepting conditions are at the root of the problem. The provincial cabinet has raised nearly a dozen objections to the draft national sugar policy, which aims to keep tight control over the highly politicised sector. Sindh wants the right to export sugar. But when there is a shortage due to low production or high exports, it wants the federal government to bear the cost of imports.
Sindh has shared its objections with the centre ahead of the June 30 IMF deadline. The federal government must adopt the policy along with all provinces. The draft was finalised by Prime Minister Shehbaz Sharif's government in consultation with provinces and other stakeholders.
Sindh argues that sugar sector regulation is a provincial matter. It says any federal policy must respect provincial authority, especially on price fixation, licensing, zoning and oversight. Sindh's cabinet opposes major changes to current policies. "The provincial government strongly opposes setting up new sugar mills as the existing sugar mills are running much below sanctioned capacity," the objections state.
Sindh is against outright deregulation but would support phased deregulation over five to ten years, said Buland Khan Junejo, a spokesperson for the provincial government on irrigation and agriculture. He warned that sudden deregulation would exploit farmers, who would struggle to earn decent profits when sugarcane supply is high. The federal government had proposed ending the zoning policy. In its current form, the policy keeps tight control over pricing, production and licensing. It has served as a major tool for exploiting farmers while limiting sugar mill ownership to a few families. But the provincial cabinet wants to continue strong provincial control over price fixation, licensing and zoning The draft national policy had proposed removing all processing stage restrictions. It also sought to end limitations on sugarcane crop zoning and approvals for new mills or capacity enhancement, subject to provincial consensus. If the federal government accepts Sindh's recommendations, the purpose of a new sugar policy will be defeated.
The federal government did not consult any farmers' body before finalising the policy, said Tahir Razaq Gujjar, chairman of the Pakistan Kissan Council. He said new mills would benefit farmers, but ending crop zoning would compromise food security and could cause losses.
The sugar sector's total value chain is estimated at Rs1.1 trillion. With average annual production of about 6.13 million tonnes, Pakistan is the world's seventh?largest producer of refined sugar. There are 79 sugar processing mills of various sizes in the country.
The IMF's recent staff?level report said the sugar policy should remove zoning and licensing restrictions, end administered cane and sugar pricing, and liberalise imports and exports under transparent rules within a sequenced implementation plan. Finance Minister Muhammad Aurangzeb assured the IMF that the government was working towards full liberalisation. The government told the IMF that the new national policy would be agreed by federal and provincial governments and adopted by the federal cabinet by end?June 2026.
But the Sindh cabinet has recommended conditional regulation of refined sugar pricing. It said export liberalisation may be supported if buffer stock maintenance and consumer protection protocols are in place. "Duty?free import of raw sugar may be allowed to sugar mills to process and re?export as refined white sugar," according to the provincial proposal.
Sindh said the cost of maintaining a buffer stock should be borne by the federal government. It added that the decision to export sugar should be left to the provinces. The federal government's role should be only facilitative. The decision to import sugar during domestic shortages may be made by the centre in consultation with Sindh and Punjab. Sindh has recommended retaining and strengthening the Sugar Factories Control Act. It wants improved enforcement and greater transparency with stakeholder involvement, rather than abolishing the legislation.
The provincial cabinet said regulatory duties and tariffs on imports must be preserved to shield growers from destabilisation caused by subsidised imports.
Sindh also proposed that provincial oversight should be enhanced through accessible and effective cane commissioner's offices. This would ensure proper regulation and legal recourse for growers. It further proposed that the cost of setting up provincial research and development funds and environmental compliance should be shared equally by the federal government. The provincial cabinet said the Competition Commission of Pakistan must have adequate and compulsory provincial representation.
Pakistan's current sugar policy benefits the rich more than growers. The Sugar Factories Control Act of 1950 empowers the cane commissioner to declare an area as reserved for supplying sugarcane to a particular mill. The commissioner can order any grower in the reserved area to supply sugarcane at notified rates.