Sugar prices have maintained an upward trend at retail levels despite the ongoing sugarcane crushing season, which consumer rights activists say has been inflated artificially, allowing mills to make exorbitant profits.

The retail price of sugar has increased by Rs15 per kg to Rs100 per kg in the market.

The sugarcane crushing season in Nepal’s southern Tarai plains generally starts in mid-October or November and continues till mid-April.

“The retail price should not be more than Rs85 per kg, but it costs Rs100 kg in the Kathmandu Valley. The domestic sugar producers have hiked the price on their own,” said Prem Lal Maharjan, president of the National Consumer Forum.

Ignoring the existing laws, the sugar producers have increased the price, but the government is least bothered to intervene in the market, he said, adding that the state seems to protect the sugar mills, said Maharjan. “Such an act is against good governance.”

The consumer forum, on February 8, had written to the government to store at least 50,000 tonnes of sugar to prevent the potential shortage.

“We have been assured by the industry minister that they have taken the issue seriously,” Maharjan said.

Last year, the Finance Ministry ignored the call of the rights activists that failure to import sugar could cause a shortage in the market and eventually a price hike.

Traders say sugar smuggling has become rampant from the southern neighbor, due to the price differences.

“Sugar mills are selling sugar at Rs93 per kg in wholesale,” according to retailers.

Consumer rights activists have raised concerns with the government regarding the unjustified price hike by domestic sugar mills under the pretext of maintaining price uniformity.

To control inappropriate business activities and to prevent the shortage and price hike, the activists had earlier advised the government to buy at least 50,000 tonnes of sugar and store them.

The current hike shows the failure of the government to maintain stock for market intervention, said Maharjan.

“There is sufficient availability of sugar during this time due to the ongoing sugar-crushing season,” said Maharjan. He said that sugar producers take incentives and subsidies from the government but give troubles to farmers and customers.

India banned sugar exports from June 1 to October 31, 2022, and subsequently extended the ban until October 31, 2023.

The consumer faced sugar scarcity and sharp price hikes during Dashain and Tihar.

The price of sugar, which was Rs75 per kg in the retail market a few weeks before the Dashain, surged to Rs130 per kg after India’s export restriction.

Subsequently, the price jumped to Rs160 per kg and the commodity was not easily available in the market.

Even the government entity, Salt Trading Corporation which was selling sugar at Rs97 per kg before the Dashain festival, raised the price to Rs115.50 per kg.

On November 2, 2023, New Delhi allowed the export of 25,000 tonnes of sugar on a quota basis. The privilege will remain valid till September 30 this year.

However, according to traders, the Indian government-allocated agency quoted a high price for sugar resulting in traders not buying them under a government-to-government arrangement.

Government officials, however, had planned to source sugar from other countries, including India’s rival Pakistan. There is, however, no development to buy sugar from markets other than India.

Nepal’s annual sugar requirement is around 270,000 tonnes.

The country faces an annual deficit of about 100,000 tonnes of the sweetener, which is fulfilled through imports by the private sector and sometimes by state-owned companies.

The annual import of sugar is worth nearly Rs3 billion, according to the Department of Customs.

Nepal used to produce 155,000 tonnes of sugar annually till a few years ago, which has now declined to 120,000 tonnes after sugar mill owners failed to pay sugarcane growers on time, according to the Salt Trading Corporation.