Punjab’s sugar production in the current crushing season is on the rise. In the month and a half since the crushing season began, 41 operational mills were able to process 15.06 million metric tonnes (MMT) into 1.36 MMT of sugar. The figure for sugarcane processed represented a 1.14 MMT increase over last season, and the figure for sugar production was higher by 156,000 MMT.
On the surface, this seems like a good thing. But one must look at the costs of this rise to obtain a fuller picture. And this picture is more bitter and less sweet.
The sugar industry’s storied history of undue political influence, corruption, market manipulation is well-known. The industry is deeply tied in with the political elite, who have been able to influence the government – on the off chance that they are not part of the government themselves – to provide support to the industry at the expense of other considerations.
Another major reason why the rise of the sugar industry is not an unadulterated cause for merriment is that of cotton. Traditionally one of Pakistan’s most significant crops, and fuel for the largest export-oriented industry in Pakistan (textile), it has suffered at the expense of sugarcane production. And sugarcane production takes up considerable amounts of water, raising questions around the long-term sustainability of this crop.
At the same time, the proposed IMF reforms calling for the deregulation of the sugar industry do not appear to be making the situation easy for consumers anytime soon. Given the influence and power of the sugar lobby and the removal of protections for consumers, the general population might be left at the mercy of the ravenous sugar barons, raising questions about how welcome this rise in sugar production really is.
The Rise of the Sugar Industry:
Sugar is used everywhere in Pakistan. For a country with a high prevalence of diabetes and other diseases that interfere with the human body’s energy processing mechanisms, it is a bit unironic, perhaps a little sad too. But the case is what it is: Pakistanis have sweet jaws. And to satiate these cravings, local mill owners – often owned by powerful people – process massive amounts of sugarcane.
At the time of independence, there were only two sugar mills in Pakistan. Reliant upon imports to satisfy most of its local demand, Pakistan through a heavily regulated system encouraged the private sector to boost local production. Incentives from the government, combined with the great gap in the market, led to the strong expansion in the number of mills. By 1962, the number of mills had grown to 6; by 1971, the number was 20; and by 1980, there were 34 sugar mills.
In the initial decades, it was usually the landed elite, controlling sugarcane production, who also came to set up sugar processing mills. Later, especially with the Sharifs, hardened industrialists – not the farmers – entered the market, and changed the mechanics of the industry. Non-agriculturalists with political wield also came to influence the market of this necessary commodity.
The problem, however, was that while the government encouraged the expansion in these mills – the number had grown over 90 by the mid-2000s – the corresponding product was not very competitive. Local sugarcane production was lower compared to international yields, and the sugar extract percentage from the crop wasn’t exactly high either.
But the industry continued to thrive on the back of the government’s protectionist policies. These policies, driven by political patronage and the machinations of the sugar lobby, included restrictions on imports and generous subsidies. At one point, the government even banned these imports while subsidising local sugar mills to cushion their production.
For what a crop that had its limitations, and for a product that was frequently a subject of controversy, the government, influenced by vested interests, was fond of protecting the industry. Eventually, this resulted in excess capacity. Increased pressure from imported sugar, which could – since local sugar production wasn’t very efficient – compete against local sugar, combined to induce the government to ban the setting up of new sugar mills.
One result of this move was the consolidation of the industry in the hands of those who were. The sugar barons’ club was closed to newer members, and in an industry which was already characterised by well-connected protagonists, one can easily imagine why the interests of the purveyors of this crop continued to be overweighed in the official policy calculus.
Cotton, the Forgotten:
One of the ways in which sugar’s rise was achieved was neglect towards cotton. Farmers increasingly came to abandon the fluff of cotton for the rod of sugar.
Traditionally, cotton has been one of the major crops of Pakistan, and one that through the textile industry helps to considerably ease the burden on our balance of trade. Yet this crop – often known as ‘white gold’ – has been losing ground in the country. Two stats tell a stark tale: in 2005, Pakistan’s cotton yield stood at 14 million bales; in 2024, this number was 5 million bales.
There are certain reasons for this. While the cotton crop is vulnerable to weather shifts, the sugarcane is more resistant to any atmospheric changes. Moreover, while the cotton crop requires more manpower and supervision than the sugarcane, which needs attention mostly during the harvest time. At the same time, cotton, which has been ravaged by pests, hasn’t seen much support from the government in terms of seed development and R&D initiatives to bulwark its production against threats.
Instead, the government has been busy incentivising what doesn’t really need incentivising. In the calculations of what to grow, the short-term advantage of the sugarcane is clear. In fact, one of the main way sugarcane production has been expanding is through the unchecked spread of sugarcane crops in zones designated for cotton production.
The main problem with this is that this conversion isn’t environmentally sustainable. The cotton merely sips water; the sugarcane is a guzzler. While cotton, on average, needs water six to eight times per season, the sugarcane needs to be watered up to sixteen times. In terms of water consumption, cotton is also more economically viable. Each litre of water used in cotton production brings in a more than 2.3 times higher net return than sugarcane. Similarly, each litre of water used in the production of raw cotton generates 3.8 times more revenue than sugarcane at the second stage of the value chain.
This cuts in the already precarious local reserves of water depleting groundwater, further exacerbating Pakistan’s looming water crisis.
Then there is the issue of exports. Cotton allows for much more value addition than sugar – on its own – and therefore represents a significant potential for international, a potential that was reality just a few years ago.
Exports of sugar, on the other hand, are tantamount – in terms of environmental impact – to exporting water, given the water needs of the sugarcane crop. Moreover, the export mechanism for sugar in Pakistan has been working in a way that can only be described as wonderful (derogatory).
For context, local production is roughly similar to local consumption. Local consumption of sugar in 2025 was 6.4 MMT, while the local production was estimated to be 6.8 MMT, just a fraction more.
Pakistan often – as in 2025 – allows for the exports sugar, without meeting domestic demand first. This creates a shortage in the local market, which drives prices up. Then, the government resorts to imports to fulfil the shortfall, heavily reducing the impact sugar exports might have had on Pakistan’s mountainous trade deficit. This (usually) tariffed sugar turns bitter on the purse of the population.
The average consumer hurts. The sugar barons make their bucks. A never-ending story.
And this pattern has continued as the government has continued vouchsafes its blessings on the sugar barons’ shoulders. Meanwhile, poor cotton patiently tufts itself in a neglected loneliness under the sharp sun of the Pakistani sky.
Is the rise in production good, then?
Considering these costs, does the rising yield of sugarcane give room for optimism for the common man? Not exactly, if we go by the history of price fixing and the sugar industry’s patterns of conduct. And if we account for the environmental impact – given Pakistan’s projected water shortages, the reality might give us cause for concern rather than induce us to brandish pom-poms at the rise in sugar production.
At the same time, IMF has been pushing for deregulation in the sugar sector as part of its push for economic reforms in return for the USD 7 billion loan. These reforms – expected to be applied by June 2026 – include the removal of government controls on the use and sale of sugarcane, and call for the abolition of licensing requirements for new sugar mills. The demands also stipulate the government to eliminate price controls and reduce import duties and liberalise exports. One of these conditions is also that the government reduces the ban on setting up new sugar mills.
While some of these – such as opening the market to newer players – might in theory reduce the influence of the sugar barons, the political heft of the existing players will probably pile heavy pressure on any newcomers. Government, forced by these reforms to curtail its own intervention, might not be able to institute enough protection in the market to protect these newcomers, leaving them exposed to weather the storms largely on their own.
Similarly, the removal of price controls would likely lead to higher sugar prices for the common consumer. First, the removal of support pricing the government had instituted to protect the sugar industry would mean that fluctuations in the price of the raw material would be passed directly to the consumer. And, secondly, government had in recent years tried to remove tariffs from imports – necessitated by sugar shortages caused by exports – in order to reduce price for the customers. The last time it did so – in 2025 – IMF expressed its displeasure. One can easily imagine its attitude if this sort of thing happens again.
While the reforms might be geared towards opening up the market, they might not be instrumental in really opening the market up, and might further entrench power in the hands of the sugar barons. In theory, the stipulation for government deregulation would also mean abstinence from protecting these sugar barons. But given that these barons are closely tied to the political elite, and that these policies – whatever their motives – in some cases did try to protect the consumers, the prospect of deregulation, in the short term at least, does not give cause for unmitigated joy.
If we consider this possible course of events, along with Pakistan’s water table depleting, it paints a more sober picture of what this rise in sugar production means. Of course, this time it might be different, but this is a statement more in hope than expectation. The sway of the sugar barons hasn’t seen any reduction. Sugarcane doesn’t consume any less water. And Pakistanis aren’t going to be consuming less sugar anytime soon.