Nepal | April 05, 2020

Curb on sugar import to hurt consumers

Sujan Dhungana

Govt sets 100,000-tonne import quota for sugar for fiscal 2018-19

Kathmandu, September 17

In a bid to limit excessive supply of cheaper foreign sugar in the domestic market, which has lowered the demand of comparatively costly Nepali sugar, the government has fixed a quota on sugar import for the ongoing fiscal year.

The Cabinet meeting held on Sunday evening determined an import quota for sugar at around 100,000 tonnes for fiscal 2018-19.

Though such import limitations on sugar might provide relief to sugar mill operators in the country who were claiming that they were facing difficulties in clearing their sugar stock and help domestic sugarcane farmers find a market, consumers are sure to bear the brunt, as limitations in sugar import will certainly raise the domestic price.

Consumer rights activists have said that limiting imports will encourage anomalies in the market and prices could rise significantly.

“The annual consumption of sugar in Nepal is around 280,000 tonnes, while the domestic production stands at around 120,000 tonnes. So, import restriction will result in a shortfall of 60,000 tonnes of sugar in 2018-19,” informed Prem Lal Maharjan, president of Nepal Consumer Forum, adding that this deficit will encourage hoarding of sugar and arbitrary hike in its price.

Citing that domestic sugar was unable to compete with cheaper sugar imported especially from India and Pakistan, which had made it difficult to purchase sugarcane from farmers and issue their payments, sugar mill operators had been urging the government to halt sugar import. Earlier, the government — coming under pressure from both sugar mill owners and sugarcane farmers — had raised the import tax on sugar by 15 percentage points to 30 per cent.

However, the government adopted the measure of fixing import quota on sugar after the flow of cheaper foreign sugar could not be controlled even after the import duty was raised. Meanwhile, the government had even planned to halt import of sugar for a short time, but seems to have aborted the plan following immense criticism against the move.

“The government should have prioritised reducing the cost of production of sugar in the country instead of introducing a threshold on import of cheaper sugar,” added Maharjan.

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

Meanwhile, Nabaraj Dhakal, joint secretary at the Ministry of Industry, Commerce and Supplies, said that the government’s decision intends to provide relief to domestic farmers and sugar mills and does not necessarily mean that sugar price will go up in the market. “We won’t let sugar price go up. If sugar mill operators try hoarding sugar and raise sugar price arbitrarily, the government will take relevant decision again,” he added.

Sugar mill operators have welcomed the decision to limit sugar import. “However, there is still no clarity on the quantity that an individual trader can import and whether traders need to acquire import licence or not,” said Rajesh Kedia, general secretary of Nepal Sugar Mills Association.

A version of this article appears in print on September 18, 2018 of The Himalayan Times.

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