Sugar mills putting the heat on the government to extend import quotaDomestic sugar producers claim to have over 100,000 tonnes of unsold stock
Domestic sugar mills have started putting pressure on the government to extend the quantitative restriction on sugar imports by two months, claiming that they still have mountains of unsold sugar in their stock.
Last September, the government bowed to pressure from the sugar mills and imposed an import quota on 100,000 tonnes of sugar annually. Although the quantitative restriction was supposed to last till mid April, the government extended it to mid-July.
With the cut-off date approaching, sugar producers are lobbying the government to extend the quantitative restriction by another two months. “We have requested the government to continue the restriction until mid-September so that we can clear the stock of unsold domestic product,” said Shashi Kant Agrawal, president of the Sugar Producers Association.
Agrawal said sugar producers are still struggling to sell their products as the large quantity of low priced imported sugar continues to dominate the market. According to him, the sugar mills have 104,000 tonnes of unsold sugar stock with them.
Agrawal claimed that the cheaper sugar imported from India and Pakistan is being smuggled at notable quantity. “Due to this, domestic producers are unable to sell their sugar at par to their production costs,” said Agrawal, adding that domestic sugar production is sufficient to meet the domestic demand of 250,000 tonnes.
The government time and again has been imposing a number of policies in favour of domestic sugar producers in the name of safeguarding domestic industries and protecting consumers’ welfare.
Two years ago, the government doubled the customs duty to 30 percent on imported sugar. Sugar mills have been lobbying the government to raise the customs duty further to 60 percent. The government compromised and raised the rate to 40 percent instead when it announced the budget for 2019-20.
Despite being favoured by generous government policies, domestic sugar producers neither pay cane farmers on time nor maintain the price stability of sugar..
The lenient government policy has also allowed mills to increase the price of sugar from Rs60 to Rs85 per kg. Despite the government fulfilling almost all the demands of the sugar mills, they are still reluctant to clear farmers’ dues. According to Nepal Sugarcane Producers’ Association, sugar mills paid only Rs2 billion out of the harvest worth Rs9 billion this season. Kapil Muni Mainali, president of the association, said they would launch protests if the sugar factories did not clear dues within the next few weeks.
The mill operators and farmers had entered into an agreement in January at Bardibas where the operators had agreed to pay the farmers within 45 days of purchase. But the operators have not paid the farmers even after the end of crushing season, irking the farmers.
Sugar mills said they would clear the farmers’ dues only after selling the sugar.
However, the sugar mills might not be as successful in pressuring the government to do its bidding this time after Prime Minister KP Sharma Oli charged mill owners of using subterfuge to get the government to hike the rates a few months back.