Kathmandu, August 5

The government has decided to subsidise sugarcane farmers on their produce for the first time in history. A Cabinet meeting recently approved the Ministry of Finance (MoF)'s proposal to provide subsidy of Rs 60 per quintal to farmers in a bid to assure that farmers get reasonable price for sugarcane.

The decision also intends to boost the morale of sugarcane farmers at a time when they have been complaining about not getting a reasonable price from sugar mill operators.

Chandrakala Poudel, spokesperson for MoF, refused to elaborate on the issue citing that MoF is yet to receive the letter regarding the decision from the Cabinet. “Though the Cabinet has given the nod to MoF's proposal to provide subsidy on sugarcane, we are yet to receive the details. However, subsidy on sugarcane is necessary to encourage farmers,” she said.

Meanwhile, MoF has already forwarded a work plan regarding the subsidy package to farmers to the Cabinet.

As per the Cabinet's decision, sugarcane farmers will be subsidised Rs 60 per quintal for sugarcane crushed after May 30.

Earlier, the Ministry of Industry, Commerce and Supplies (MoICS) and Ministry of Agriculture, Land Management and Cooperatives (MoALMC) had suggested MoF to introduce subsidy package for sugarcane farmers amid farmers increasingly switching to other professions after not being able to recoup even the cost of production in sugarcane.

Sugar mill operators, who are often reluctant to pay reasonable price for sugarcane farmers and often delay payments, had cut the sugarcane price to farmers after the government decided to scrap tax (Value Added Tax) rebate for sugar mills from this fiscal.

The government had fixed sugarcane price at Rs 536 per quintal for last fiscal year. However, sugar mills were reluctant to give more than Rs 465 per quintal to farmers. Moreover, sugar mills in the country are yet to issue more than Rs six billion to farmers so far, as per officials of Nepal Sugarcane Producers' Federation (NSPF).