Can't you just buy sugar from outside of the country then?
Good question. All the sugar mills are owned by politicians who make policies in parliament. Remember, these are not the normal small sized farmers who actually grow sugar cane. These are big industrialists like Nawaz Sharif, Zardari etc. So they made a very sweat deal for themselves; they buy the raw material i.e. sugar cane at a low price and then sell the finished good i.e. sugar an artificially high price. And as a final nail in the coffin they do not allow sugar import in name of "food security and self sufficiency".
Its a beautiful business model. You can never loose money. Same model is used in most agri products. These same people own flour mills etc.
Your next question might be, if this business model is so lucrative then why aren't other businessmen setting up sugar mills all over the country? Answer: Because these are "protected industries" and you need a special permit from these very same people if you want to set up a sugar mill or flour mill.
they are very well connected with rich industrialists and powerful corrupt politicians
They are not well connected, they ARE the corrupt politicians. Nawaz Sharif, Zardari, Tareen etc own most of the sugar mills.