Islamabad, Sep 1 : Pakistan's sugar industry has turned into a nexus of political patronage, economic exploitation, and institutional capture dominated by the politically connected families of the country, a report cited on Monday.

It added that these groups control both the production and policy-making of the sector, which was once a cornerstone of the South Asian nation's agricultural productivity and rural livelihoods.

According to the Greek publication Directus, at the centre of this crisis lies a deeply entrenched sugar cartel leveraging its dual roles as industrialists and legislators to manipulate supply chains, distort pricing, and pocket excessive profits from both farmers and consumers.

It stated that this amounts to a regressive wealth transfer of Pakistani rupees 610 billion annually, equivalent to 1.22 per cent of Pakistan's GDP, siphoning funds from ordinary households into the coffers of affluent mill owners.

'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 kilogramme 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," the report detailed.

"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," it added.

The report stressed that a Rs 300 billion profit surge from sugar price hikes exposed by the Auditor General of Pakistan sparked a political storm in the Public Accounts Committee (PAC) of the country. The PAC found that sugar was exported at high prices only to be re-imported later, worsening domestic shortages and driving up retail prices. PAC members noted that each Re1 increase in sugar price earned mill owners Rs 44 billion in profit, highlighting the systematic scale of extraction.

'The sugar crisis is not a natural disaster but a man-made economic calamity rooted in elite capture, policy 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 report noted.

"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," it emphasised.

/IANS