Sugar mills raking in extra

KATHMANDU: Nepali sugar producers are gleaning more profit by fixing price, a Ministry of Commerce and Supply (MoCS) commissioned report has revealed. According to the report, the factory-gate-price of one kilogram of sugar is Rs 55 while the current price is Rs 65.

“The current price is not realistic,” said MoCS undersecretary Jiva Raj Ghimire. MoCS will talk to Nepal Sugar Producers’ Association (NSPA) to revise the rate, he added. On January 12, MoCS formed a three-member committee coordinated by Department of Commerce (DoC) director Dr Khila Nath Baskota to find out the production cost of sugar after the sugar price rose to an all-time high of Rs 80-90 per kg.

According to the report, sugar mills are buying one quintal sugarcane from farmers for Rs 4,566.67 and add the factory value — processing, salary and wage, administration and sugar development tax — Rs 928.81. “At this rate the factory-gate-price of one kg sugar should be Rs 55,” the report read.

The market price of sugar is set adding 13 per cent value-added-tax (VAT) and transportation cost, which varies from place to place. “If we calculate it, the market price of sugar will go down to 65,” said Ghimire. The current government-approved market price is Rs 80 kg.

The demand for sugar is 1,40,000 metric tonnes and 60 per cent of the demand is fulfilled through domestic production. Nepal imports nearly 50,000 metric tonnes of sugar from India and abroad. However, the import ban or market fluctuation in exporting countries is directly affecting the domestic market.

The government must reduce foreign dependency on sugar to regulate the market price, said Bastakoti, coordinator of the study. “If that is not done, the market won’t stabilise,” he said. The committee has advised the government to give subsidies to farmers in fertilizers and seeds, and guarantee the market in coming years.

The recent sugarcane price hike has boosted the morale of farmers, said Ghimire. Sugarcane price doubled to Rs 411 per quintal this year compared to last year’s Rs 200. The high production cost and low factory rate has compelled farmers to change crops and last year’s sugarcane production was limited to 59,000 metric tonnes.

Nepal has 12 sugar mills and nine of them are in operation. The committee has studied the production pattern of five major sugar mills — Sri Ram, Indu Shankar, Everest, Lumbini and Eastern.