Govt plans to deregulate sugar sector

Islamabad (Web Desk): The federal government has reached a consensus to completely deregulate the sugar sector, with a formal proposal likely to be submitted to Prime Minister Shehbaz Sharif in the coming week.

According to sources, the plan, which is currently being fine-tuned in collaboration with industry stakeholders, is aimed at reducing state interference in the sugar market while ensuring supply stability through limited strategic reserves.

As part of the proposal, the government will step back from actively managing the sugar trade, retaining only a strategic reserve of 500,000 tons — roughly one month’s national consumption — to be held by the Trading Corporation of Pakistan (TCP). This buffer will serve as a safeguard against potential market disruptions or shortages.

Officials familiar with the matter said the deregulation initiative is designed to encourage competition, enhance sugar production, and create opportunities for export. If the strategy leads to price instability, authorities are considering an expansion of the Benazir Income Support Program (BISP) to help cushion the impact on low-income households.

The draft also recommends enabling sugar exports during periods of surplus. This move is intended to ensure farmers receive better returns for their sugarcane, particularly in years of overproduction.

To further boost output, sugar mills will be encouraged to operate at 50 to 70 percent of their production capacity, potentially adding 2.5 million tons to the national sugar output. Should this target be met, officials estimate the country could earn up to $1.5 billion annually through sugar exports.

All commercial sugar dealings, aside from the strategic buffer maintained by the TCP, will be left entirely to the private sector.