Decision of Banning Imports of Sugar Turns Bitter for Nepal Government

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With cheaper sugar from India and Pakistan flooding in the Nepali market, the sugar mills were finding it difficult to clear their stocks, as Nepali sugar, which is comparatively costlier has failed to compete with cheaper imported sugar, resulting in low demand for domestic production in the market. As a result, sugar mill operators were not only reluctant to clear pending dues of farmers but were also claiming that they will not be able to purchase sugarcane from farmers this year.

In March 2018, the government had raised import duty on sugar to 30 percent from 15 percent to promote domestic sugar under pressure from sugar mill operators. However, the import of cheaper sugar did not fall even after that step. The Nepal Government after that banned the import of sugar from India and Pakistan in October 2018 to assure a market for domestic produce. The ban was in effect till mid-April. However, the Ministry of Industry, Commerce, and Supplies extended the ban until mid-July now.

According media reports, with the domestic sugar demand standing at 280,000 tonnes and the domestic produce at around 120, 000 tonnes, the government imposed a quantitative restriction on sugar imports at 100,000 tonnes for the current fiscal at the request of the domestic mill owners hoping that they would be able to pay back the dues owed to the sugarcane farmers by selling their sugar stocks.

Prime Minister KP Oli lamented that the sugar mill owners became dishonest when it came to stabilizing the retail price of the commodity during the festive seasons. Currently the sugarcane farmers, however, have yet to recover millions of rupees from the mills although their stocks of sugar have been sold at a price higher than the one fixed by the government.

And on the other hand, the country needs to import sugar to meet the shortfall. Despite the PM’s public anger over the mills’ ill-practice, the government yet decided to extend the quantitative restriction on sugar import till the end of this fiscal, a move opposed by the Consumers’ Rights Forum. The consumer rights activists have asked the government to bring an end to the quota system for import of sugar that has failed to support the sugarcane farmers due to the non-compliance by some sugar mills with the agreement reached with the government.

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