The government on Wednesday increased the price of sugarcane by 4 percent to Rs635 per quintal.

A cabinet meeting fixed the minimum support price of sugarcane at Rs635 per quintal for this fiscal year’s harvest, according to Minister for Communications and Information Technology Rekha Sharma, who is also the government spokesperson.

Of the total Rs635 per quintal, Rs565 is the support price, which includes transportation and production costs, and profit.

Similarly, Rs70 is the subsidy provided by the government per quintal.

The minimum support price is the government-guaranteed price for farmers set annually.

The government announced a cash subsidy scheme in 2018 after the farmers complained that the money they get from the mill owners was insufficient to cover their costs.

In Nepal, sugarcane harvest normally begins in mid-November.

The floor price of sugarcane in the last fiscal year was set at Rs610 per quintal.

The decision comes on the heels of a protest by farmers in Sarlahi demanding the subsidy amount for the sugarcane sold last year and the minimum support price for the fresh harvest.

Farmers said they have received only Rs21 out of Rs70 per quintal as a subsidy announced by the government for last year’s harvest.

They had demanded the sugarcane price at Rs750 per quintal, considering the increase in the price of sugar and farmers’ production cost. Sugar sold for a record Rs160 per kg during Dashain after India banned the export of the sweetener.

Sugar at present costs Rs115 per kg in the market. In the same period last year, the price of sugar was Rs90 per kg.

Sugarcane production has been on the decline over the last few years. In 2019-20, Nepal produced 3.4 million tonnes of sugarcane, which dropped to 3.18 million tonnes in 2020-21, according to the Agriculture Ministry statistics. In 2021-22, the output further dropped to 3.15 million tonnes.

Low production led to a shortage of sugar this festive season.

As shortage was rampant during the Tihar festival, the state supplier Salt Trading Corporation rationed the sweetener to 2 kg at the unit price of Rs115 per consumer.

Neighbour India, too, imposed restrictions on sugar exports for the first time in seven years by capping this season’s exports at 10 million tonnes, to prevent a surge in domestic prices after mills sold a record volume on the world market.

With India’s restriction and domestic production failing to meet the demand, the sugar price shot up during this festive season.

Due to perennial hassles in getting payments and the government fixing an ‘unsustainably lower’ price for their produce, farmers have started looking for alternative crops. Many sugarcane farmers are planting mustard, for instance.

According to Minister Sharma, the government decided to dole out Rs520 million in subsidy to sugarcane farmers immediately.

The prime minister’s secretariat said that a meeting chaired by Prime Minister Pushpa Kamal Dahal with the ministers and officials concerned had decided to release the amount.

In 2018, the government started the practice of fixing the floor price for sugarcane in a bid to end the lingering conflict between sugarcane farmers and sugar producers.

Sugarcane growers and sugar mills routinely engaged in a bitter dispute over the floor price during the harvest time every year.

Before the government began setting the floor price, sugarcane prices in Nepal were normally based on the rates paid by Indian mills to their farmers.