The government on Tuesday said it has decided to resurrect two state-owned sugar mills in Birgunj and Lumbini and operate them through cooperative model, a move largely aimed at cracking down on prevailing cartels in the sugar business.

Under the cooperative model, sugar produced by the two mills will intervene the market price, said Minister for Industry, Commerce and Supplies Matrika Prasad Yadav, speaking at a programme on Tuesday. “We have been formulating necessary policy to operate them in the cooperative model.”

He said that both mills would resume operation by next year. “We have also planned to promote sugarcane farming in Province 7.” The Finance and the Agricultural ministries are positive on our proposal, he added.

Cane farming in the eastern Tarai started with the establishment of state-owned Birgunj Sugar Mill. However, cane farmers had to suffer after the government dissolved the state-owned sugar factory in Birgunj citing lack of profit.

Since then, it failed to take care of sugarcane growers. Although proliferation of private mills has helped cane farming to grow, farmers are still suffering they are forced to sell their sugarcane on credit most of the time.

Although sugarcane has been declared a national crop, the issue of fixing prices has become a matter of concern for farmers.

The floor price of sugarcane has been traditionally fixed by farmers and sugar mills. The cane price is normally determined in Nepal based on the price offered by Indian mills to farmers and the provision often flares up tensions between the two sides each harvest season. Cane producers have been complaining that sugar producers take advantage of the absence of a base price by delaying fixing of cane prices. This forces farmers to sell their produce at cheaper rates.

The import statistics of the Department of Customs show that Nepal imported sugar worth Rs6.72 billion in the last fiscal year 2016-17, a jump of 38 percent. If the import figure of the first six months of the current fiscal year is calculated, sugar and sugar related products might hit Rs10 billion this fiscal year. Production of sugar in Nepal currently meets only about 50 percent of domestic demand, with the deficiency being made up with imports from India.

The government has been intervening the market price of sugar through Salt Trading Corporation. However, it has not been effective. As a result, price hike by the cartels of the sugar factories has been hitting the consumers. 

After a marked success at ending cartels in the public transportation sector, the government has also moved towards checking the markets.

“There are cartels in the market. From the petroleum to sugar business, there are cartels which need to be ended,” Yadav said. “We have planned to streamline the petroleum business-ranging from tankers to gas bullets and petrol pumps. We are also opening the doors for new players in sector.”