Pakistan committed under its IMF program to adopt a national sugar market liberalization policy by the end of June 2026. The IMF’s Third Review, published in May 2026, listed the reform as “in progress.” The proposed policy aims to remove zoning and licensing restrictions, end administered sugarcane and sugar prices, and liberalize imports and exports under transparent rules (IMF Country Report No. 26/101, May 2026).
Policy development has progressed, but formal adoption remains an important step to confirm. In a response to the National Assembly, the government stated that three provinces had agreed to the draft deregulation policy, while Sindh’s reservations were still under consideration. Clarifying the outcome of these consultations and announcing an implementation timetable would help businesses, farmers and consumers understand the way forward (National Assembly, official response on sugar sector deregulation).
On October 7, 2026, the IMF announced a staff level agreement on Pakistan’s fourth review under the Extended Fund Facility. As the reform process advances, sugar market liberalization offers an opportunity to improve market efficiency, encourage investment and provide greater certainty to farmers, businesses and consumers (IMF, October 7, 2026). In September, the Economic Coordination Committee (ECC) approved the export of 200,000 metric tonnes of sugar. The arrangement was intended to support the sugar industry and sugarcane farmers, earn foreign exchange and protect domestic consumers. The State Bank of Pakistan (SBP) issued implementation instructions on October 2 and revised them on October 13 following changes in province wise and mill wise quotas submitted through the Ministry of National Food Security and Research.
The revised instructions confirmed that Punjab and Sindh had endorsed their respective mills’ allocations, while endorsement from Khyber Pakhtunkhwa was still awaited at that time. The SBP also required exports to be made by sea against a sight letter of credit or advance payment, with applicable requirements for receiving export proceeds and reporting transactions (SBP, EPD Circular Letters Nos. 14 and 15 of 2026). These arrangements provide a framework for managing exports while domestic market conditions are monitored. The longer-term opportunity is to complement such controls with transparent and predictable rules based on verified supply and demand, enabling businesses to plan with greater certainty.
Reliable information is essential for effective sugar market reform. Export decisions should be supported by credible figures on production, available stocks, domestic consumption and expected demand. A regularly published national sugar balance sheet, supported by independent verification, would provide a common information base for government, industry, farmers and consumers. The latest quota process illustrates the value of a clear verification framework. According to the SBP’s October 13 circular and accompanying ministry correspondence, the Pakistan Sugar Mills Association (PSMA) submitted revised province wise and mill wise quota details on October 3. The Ministry of National Food Security and Research asked provincial Cane Commissioners to verify mills’ crushing performance and provide feedback by October 4. PSMA subsequently corrected the names of three mills on October 8, and revised quotas were communicated on October 9 (SBP, EPD Circular Letter No. 15 of 2026). This sequence provides a useful basis for explaining how verification was conducted and what supporting records were examined. The dates alone do not establish that the checks were inadequate. Rather, they highlight the importance of a process that is timely and sufficiently robust to support decisions with significant commercial implications.
The success of reform should ultimately be measured through stronger competition, more predictable trading arrangements, timely payments to farmers and reliable domestic supplies.
Publishing the verification methodology, relevant quota calculations and resulting allocations would further strengthen confidence in the system. Clear criteria for measuring crushing performance and resolving discrepancies would also help ensure consistent treatment of participating mills. Export quotas have significant commercial value because they determine how much sugar individual mills may sell in overseas markets under an approved arrangement. The industry has estimated that exports of 1.25 million tonnes could generate US$600 million to US$700 million. This is an industry estimate for that larger quantity, not a verified forecast of proceeds from the 200,000 tonnes currently approved for export. A transparent allocation framework would help assess the actual economic benefits. The government could publish the criteria used to determine quotas, the data supporting allocations and the quantities ultimately shipped. Reporting actual export proceeds against approved quantities would also help establish the contribution of sugar exports to foreign exchange earnings.
The SBP’s existing safeguards provide a useful foundation for monitoring transactions. These can be complemented by transparent reporting on the surplus available for export, the criteria used to allocate permissions and the actual shipments completed. Together, these measures would support commercial certainty and public confidence. Consumer protection remains an essential part of sugar market reform. Under the export decision reported in September, exports were to be suspended if the national average retail price exceeded Rs. 155 per kilogram. The Pakistan Bureau of Statistics reported an average sugar price of Rs. 142.11 per kilogram for the week ended October 15, 2026, compared with Rs. 142.99 in the preceding week. The latest reported average was therefore Rs. 12.89 below the stated threshold (PBS, Weekly Sensitive Price Indicator, week ended October 15, 2026).
This comparison provides a snapshot of the market at that time; it does not by itself establish the current enforcement status of the suspension mechanism. Regular publication of retail prices alongside the applicable threshold would help stakeholders assess market conditions and understand how the safeguard is being applied. The industry has expressed concern that the Rs. 155 threshold may not adequately reflect its costs. This issue can be examined through evidence on production costs, market prices, domestic stocks and consumer affordability. Any adjustment should follow a transparent assessment that considers the interests of both producers and consumers. The objective should be to allow exports when a genuine surplus is available, without compromising domestic supply or placing unnecessary pressure on household budgets.
Pakistan’s recent experience with sugar imports offers another opportunity to strengthen forward planning. In August 2026, the ECC considered a proposal to invite international tenders for the export of 108,000 tonnes of sugar held by the Trading Corporation of Pakistan. This was the remaining stock from 300,000 tonnes imported during the previous year following a projected domestic supply shortfall. The announcement concerned a proposal to invite tenders; it did not confirm that the remaining quantity had already been sold or exported (ECC, August 19, 2026; Radio Pakistan).
A public account of this intervention would provide useful lessons for future policy. The government could disclose the original import cost, storage and handling expenses, tender proceeds and any resulting gain or loss once the relevant transactions are completed. Such information would help assess the financial implications of the earlier decision and identify improvements in supply forecasting and emergency planning. The purpose is to draw practical lessons from the circumstances prevailing at the time and strengthen future decisions, while reducing the risk of avoidable public sector costs. A well-functioning sugar market should benefit farmers as well as mills and exporters. Sugar exports can help mills manage surplus stocks, improve liquidity and earn foreign exchange. They may also support timely payments to sugarcane growers, although these benefits need to be demonstrated through actual results.
The government could publish regular information on payments to growers, export shipments, foreign exchange receipts, domestic stocks and retail prices. Compliance with applicable payment obligations could also be considered when designing future export arrangements, provided any such mechanism is fair, transparent and independently verifiable. These measures would help ensure that export opportunities contribute to the wider agricultural economy and that sugarcane growers remain an important part of the reform framework. Pakistan has an opportunity to develop a sugar market framework that supports commercial activity while safeguarding domestic supplies and consumer interests. The next steps could include clarifying the status of the national sugar policy, completing the necessary federal and provincial consultations, and communicating a practical implementation timetable.
During the transition, export decisions should be guided by transparent criteria based on verified stocks, domestic demand and clearly defined safeguards. Publishing the methodology for mill wise allocations, together with information on actual shipments and export proceeds, would improve accountability and predictability. Regular reporting on payments to growers and domestic retail prices would help assess whether the intended benefits are being achieved. The success of reform should ultimately be measured through stronger competition, more predictable trading arrangements, timely payments to farmers and reliable domestic supplies. These outcomes would support the government’s broader objectives of improving market efficiency, encouraging investment and strengthening Pakistan’s economic resilience.
Pakistan’s commitment under its IMF program provides an opportunity to advance sugar market reform in a way that reflects the country’s economic priorities and domestic market needs. With reliable data, transparent rules and effective safeguards, Pakistan can develop a more predictable sugar market that supports exports, protects consumers and strengthens confidence across the agricultural value chain.