Sugar Mill Operators In Nepal Struggle To Clear Stocks

Owing to increasing flow of cheaper sugar from India, local sugar mill operators are finding it difficult to clear the stocks of domestic sugar piled up in their warehouses.Though the fresh crushing of sugarcane will begin in less than five months, sugar mill operators said that almost 70 per cent of sugar produced last year have yet to be cleared from their warehouses.

Of the 178,000 tonnes of sugar produced in the country last year, Nepal Sugar Mills Association (NSMA) has claimed that only 54,000 tonnes of sugar have been sold so far.

“It is unlikely that the piled up stocks of sugar will be cleared within the next few months amid excessive flow of Indian sugar in the domestic market. We will not be in the position to purchase sugarcane from farmers prior to clearing the stock,” said Rajesh Kedia, general secretary of NSMA.

In such a context, the government should either purchase sugar from mill operators or seek other alternatives of consuming farmers’ sugarcane, according to him.

Mill operators have said that the crux to this problem is the increasing flow of cheaper Indian sugar in the domestic market.

While Indian sugar is available at almost Rs 60 per kg in Nepal, mill operators claim production cost of Nepali sugar is more than Rs 70 per kg.

In May, the Indian government had decided to subsidise INR 55 for every tonne of sugarcane, thereby assuring reasonable price for sugarcane farmers and making Indian sugar cheaper still.

“Due to open border with India, Indian sugar has flooded the markets in Tarai region,” added Kedia.

Citing that sugarcane production is likely to surge by almost 30 per cent this year, he urged government to timely curb rising flow of Indian sugar into Nepal to ensure that mill operators buy sugarcane from farmers and release their payment on time.

Though the government had recently increased customs tax on sugar imports from 15 per cent to 30 per cent, mill operators claim that the move failed to reduce Indian sugar imports as it became even cheaper following Indian government’s subsidy package to sugarcane farmers.

Sasikanta Aryal, a sugar mill operator, opined that government should ban import of sugar for a certain time till stocks of local sugar is cleared.

Meanwhile, Nabaraj Dhakal, joint secretary at Ministry of Industry, Commerce and Supplies, said that the government would soon hold discussions with sugar mill operators on this issue.

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