Moaaz Manzoor

Pakistan is preparing to phase out long-standing sugar price controls as part of a broader plan to deregulate the sugar sector, marking a major policy shift after decades of government intervention in pricing, trade, and market operations, according to a detailed study issued by the Institute of Cost and Management Accountants of Pakistan (ICMA).

The document notes that sugar has remained one of the most heavily regulated commodities in Pakistan since independence, with successive governments fixing sugarcane support prices, influencing ex-mill and retail sugar prices, and intervening in exports and imports. These controls, introduced to protect farmers and consumers, have gradually expanded into a complex system of administrative decisions affecting production, milling, trade, and stock management.

According to the ICMA study, the government is now considering a phased withdrawal from direct price controls as part of wider economic reforms aimed at reducing market distortions, improving efficiency, and aligning domestic markets more closely with international practices. The proposed deregulation would represent a structural change in how sugar prices are determined, shifting greater responsibility to market forces.

The document explains that under the existing regime, sugar prices are influenced by multiple official interventions, including government-set sugarcane prices, provincial controls, export permissions, import approvals, and periodic price caps. This framework, the study states, has contributed to inefficiencies, stakeholder uncertainty, and repeated disputes among farmers, millers, traders, and regulators.

ICMA notes that despite extensive controls, sugar prices in Pakistan have frequently experienced volatility, shortages, and sudden increases, prompting repeated government intervention. The study observes that price controls have not consistently achieved their intended objectives of price stability and consumer protection, while also placing fiscal and administrative burdens on the state.

The report highlights that the proposed move toward deregulation is not envisioned as an abrupt withdrawal of the government from the sector. Instead, the transition is described as phased, allowing time to develop supporting regulatory mechanisms, improve data availability, and clarify rules governing competition and market conduct.

According to the document, the deregulation plan is being discussed alongside reforms in related areas such as stock monitoring, trade policy, subsidy rationalisation, and sugarcane pricing. These elements are presented as interconnected components of a broader restructuring of the sugar economy rather than isolated policy changes.

The study notes that the rationale for deregulation includes reducing recurring government involvement in operational decisions, encouraging efficiency within the sugar industry, and limiting discretionary interventions that have often led to uncertainty and policy reversals. It also notes that prolonged regulation has not eliminated recurring issues such as hoarding allegations, disputed stock levels, and calls for emergency imports or exports.

ICMA states that international experience shows sugar markets functioning under a variety of regulatory models, but emphasises that any move away from price controls must be carefully sequenced. The document stresses that deregulation discussions are taking place in the context of Pakistan’s broader economic reforms, including market liberalisation and reduced administrative price setting.

The report concludes that ending decades of sugar price controls would represent a significant shift in policy direction. However, it underscores that the success of such a move depends on how the transition is managed, particularly with regard to transparency, enforcement capacity, and the establishment of clear, predictable rules for all market participants.

Credit: INP-WealthPk