Sugar mills lobby ‘strongly’ to hike priceSugar producers have been lobbying strongly to hike the wholesale price of sugar by Rs13 per kg following the revision of the sugarcane floor price by the government.
Sugar producers have been lobbying strongly to hike the wholesale price of sugar by Rs13 per kg following the revision of the sugarcane floor price by the government.
If the price demanded by sugar producers is agreed, the wholesale price of sugar could go up to Rs78 per kg from Rs63 per kg at present. The retail price of sugar could jolt consumers out of their comfort zone as it may touch Rs90 per kg.
In the first week of January, the government announced the floor price of sugarcane at Rs536.56 per quintal. Of the total rate, sugar mills have to pay Rs471.28 to farmers for a quintal of cane, while the government will pay the farmers Rs65.28 per quintal as subsidy.
Dissatisfied by the government’s decision, sugar mills have stopped purchasing the raw materials from farmers during the key harvesting season. They have been demanding the government to raise the factory gate price of sugar as well.
Shashi Kant Agrawal, president of the Sugar Producers Association, said they have asked the government to review the sugar price as the production cost has increased.
“The government increased the minimum wage of workers last year, creating additional burden on us. Besides, we have been struggling to make up our losses of Rs10-12 per kg previously,” said Agrawal, adding that the government’s recent announcement to fix the floor price of sugarcane at Rs536.56 per quintal has further hit the financial health of sugar mills.
Agrawal claimed that the sugar price was still not at par with their production cost. “We are still facing a loss of Rs4-5 per kg,” he added.
According to Agrawal, sugar factories still have an unsold stock of 40,000 tonnes of sugar from the previous year. “We have no options. The sugar price should be reviewed so that mills can pay their bank loans.”
Last year, to address the demand of sugar producers, the government had doubled the import duty on sugar to 30 percent. Since September this year, the government has been imposing a quota of Rs100,000 tonnes annually to safeguard domestic producers.
The restriction quota was imposed after sugar producers promised not to raise the sugar price. But the producers have on several occasions, tried to increase the price of the sweetener.
Trade analyst Posh Raj Pandey criticised the government’s move to impose the quantitative restriction on sugar import. “Instead of making the market competitive, the government has favoured a handful of producers,” he said.
The annual sugar demand in Nepal is estimated to be 225,000 tonnes. In 2016-17, Nepal imported 56,100 tonnes of sugar worth Rs3.68 billion. A total of 106,200 tonnes of sugar worth Rs5.72 billion was imported in the last fiscal year.