The sugar industry in Pakistan has been highly protected since the mid- 1970s. The nature of support prices has ensured a high private return to investment in sugarcane — despite the high cost of production resulting from low and stagnant yield levels and low sucrose content. Estimates of welfare gains and losses cast doubt on the social profitability of this protection. Government policy should encourage increased output through higher yield levels and sugar recovery, and consumers should stop subsidizing an in-efficient industry