Pakistan's sugar industry, once a cornerstone of agricultural productivity and rural livelihoods, has devolved into a nexus of political patronage, economic exploitation, and institutional capture.
Despite being the fifth-largest sugarcane producer globally, Pakistan's domestic sugar prices remain among the highest in the region, with retail rates soaring to Rs 180–210 per kilogram in July 2025, nearly double the international benchmark of Rs 104/kg.
This staggering 88% markup is not attributable to logistical costs or market volatility but reflects a systemic pattern of rent-seeking behavior, cartelization, and state-enabled profiteering.
At the heart of this crisis lies a deeply entrenched sugar cartel, composed of politically connected families who dominate both the production and policy-making apparatus.
These actors have leveraged their dual roles as industrialists and legislators to manipulate supply chains, distort pricing mechanisms, and extract disproportionate profits from both farmers and consumers. The result is a regressive wealth transfer estimated at Rs 610 billion annually, equivalent to 1.22% of Pakistan's GDP, drained from ordinary households into the coffers of elite mill owners.
The mechanics of this exploitation are multifaceted. Mill owners routinely underpay farmers, delay procurement, and hoard stocks to engineer artificial shortages. For instance, Ramzan Sugar Mills and Al Arabia Sugar Mills, controlled by Prime Minister Shehbaz Sharif, owe farmers Rs 975 million in unpaid dues, according to records from the Punjab Cane Commissioner.
These debts, accumulated over years, represent thousands of growers who delivered sugarcane without receiving full compensation. The mills, meanwhile, generate annual revenues of Rs 8–12 billion, effectively using farmers as involuntary creditors while selling sugar at cartel-inflated prices.
The arithmetic of this exploitation is stark. A farmer delivers 40kg of sugarcane worth Rs 182 at official rates but receives only Rs 120, if at all. The mill processes this into 4kg of sugar and sells it for Rs 780, instead of the fair market value of Rs 416. Thus, Rs 62 is extracted from the farmer and Rs 364 from the consumer, an aggregate markup of Rs 426 per 40kg of cane, or 234% above fair pricing. This dual-channel extraction exemplifies the systemic nature of corruption in the industry.
The problem is not confined to one political faction. Jahangir Khan Tareen, a prominent financier of the Pakistan Tehreek-e-Insaf (PTI), controls six mills through his JDW Group, which reportedly earns Rs 48.8 billion annually in excess profits.
Federal Minister Makhdoom Khusro Bakhtiar's RYK Mills group generates Rs 36.6 billion in cartel profits, while the Akhtar Khan brothers, Haroon and Humayun, owe Rs 70 million to farmers through Tandlianwala Sugar Mills. In Khyber Pakhtunkhwa, Abbas Sarfaraz Khan owns five mills, making him the province's largest producer.
These individuals span political regimes, illustrating how the sugar cartel transcends party boundaries and operates with bipartisan impunity.
What makes Pakistan's sugar cartel uniquely pernicious is its legal insulation. Since 2005, the government has refused to issue new mill licenses, creating an artificial monopoly that guarantees inflated profits for existing owners. The Competition Commission of Pakistan (CCP) has identified the industry as a "multi-layered cartel" characterized by coordinated pricing, production quotas, and distribution manipulation. Just six elite groups control 51% of national sugar output through only 6.7% of total mills, a concentration ratio that would trigger antitrust action in any functional democracy.
The Auditor General of Pakistan recently exposed a Rs 300 billion profit surge from sugar price hikes, triggering a political storm in the Public Accounts Committee (PAC). The PAC revealed that sugar was exported at high prices only to be re-imported later, exacerbating domestic shortages and inflating retail prices.
This deliberate over-export, followed by costly imports, reflects a calculated strategy to manipulate supply and maximize profits. PAC members noted that every Re1 increase in sugar price yields Rs 44 billion in profit for mill owners, underscoring the scale of extraction.
Government subsidies further entrench this inequity. Mill owners receive billions in public funds while failing to pay farmers or stabilize consumer prices. The sugar industry also benefits from captive power generation using bagasse, molasses exports, and steel production, revenue streams that remain largely unregulated and untaxed.
These privileges are compounded by outdated milling technology, inefficient resource allocation, and inconsistent regulatory oversight, which collectively undermine the sector's global competitiveness.
Policy responses have been inconsistent and often counterproductive. In 2023/24, the Punjab government raised the support price for sugarcane to Rs 400 per 40kg, a 33% increase aimed at incentivizing production.
However, the support price for the 2024/25 season remains unannounced, with the crushing season imminent. Delayed payments and procurement failures continue to discourage small farmers, who face extended payment cycles and cash flow uncertainty. This financial vulnerability prevents reinvestment in future crops, while large mill owners consolidate their market dominance.
The government's export-import policy has also contributed to volatility. In 2024, Pakistan exported 750,000 metric tons of sugar, earning $402 million. However, climate-induced yield declines reduced actual production to 5.8 million tonnes, below the projected 7 million.
This shortfall necessitated imports of 300,000 tons at a cost of $150 million, further straining foreign reserves. The Sugar Advisory Board, tasked with overseeing these decisions, has been criticized for opaque operations and preferential treatment of cartel interests.
Recent government interventions, including the seizure of 1.9 million metric tons of sugar stocks and the deployment of Federal Board of Revenue (FBR) officials to mill warehouses, signal a belated attempt to curb profiteering.
Eighteen mill owners have been placed on the Exit Control List (ECL), and a track-and-trace system has been implemented to monitor supply chains. However, the Pakistan Sugar Mills Association (PSMA) continues to deflect blame onto hoarders and retailers, denying responsibility for retail price inflation.
Despite these measures, retail prices remain elevated, and public trust in regulatory institutions continues to erode. The sugar crisis is not a natural disaster but a man-made economic calamity rooted in elite capture, political manipulation, and institutional failure.
Without transparent reforms, robust enforcement, and political will to dismantle entrenched interests, Pakistan will remain trapped in a cycle of artificial shortages, inflated prices, and systemic exploitation.
The corruption that marks Pakistan's sugar industry is emblematic of broader governance challenges.
It reflects a political economy where public office is leveraged for private gain, regulatory institutions are subordinated to elite interests, and economic policy serves the few at the expense of the many.
