Nepal | December 17, 2018

‘Supply-demand situation of goods will remain intact during upcoming festivals’

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Sujan Dhungana

Along with the onset of the festive season, the demand of essential goods has surged notably in the domestic market. And in conjunction, anti-consumer activities have also gone up. As a result of weak government regulation and market monitoring mechanism, different forces are active in the market making brisk business amid higher demand of goods. Among others, price of sugar has increased illogically in recent weeks despite the availability of enough stock. Sujan Dhungana of The Himalayan Times caught up with Nabaraj Dhakal, joint secretary and spokesperson for the Ministry of Industry, Commerce and Supplies, to know about the current supply-demand situation in the market and other issues. Excerpts:

What is your view of the current supply situation in the domestic market?

As the festive season is around the corner, the demand for goods in the domestic market has increased notably. Among others, demand for goods like apparels, sugar, salt, dairy products and other foods have witnessed notable rise since the past few weeks. In this situation, the government is using all its mechanisms to ensure robust supply-demand chain in the market. Similarly, we are also committed to control possible anomalies in the market (in terms of quality and quantity of goods) ahead of the festive season. For this, we have been deploying market inspectors in major markets across the country in coordination with various other line agencies of the government. Basically, the government adopts two major ways to assure effective supply of goods in the market. The first one is through physical monitoring of the market and the Department of Supply Management and Protection of Consumer Interest (DoSMPCI) is doing this regularly. The second measure to ensure effective supply in the market is through government’s intervention in supplying goods and services. In this front, the government is running fair price shops in major cities and markets across the country. These outlets supply goods that are in high demand during the festive season at subsidised rate. This year, the government has also arranged for fair price shops to be set up through different cooperatives across the country. This ensures that people get essential goods at affordable rate during the festive time. Similarly, we are also committed to ensure uninterrupted supply of petroleum products during the festivals. We have already directed Nepal Oil Corporation (NOC) to make its supply mechanism effective and efficient. Similarly, other government firms like Salt Trading Corporation (STC), Nepal Food Corporation (NFC) and Dairy Development Corporation (DDC) have been directed to ensure smooth supply. In a nutshell, the supply situation in the market at present is good and the government is committed not to let the situation deteriorate.

What are the challenges facing the market at present?

The challenges seen in the domestic market are quite similar to those witnessed in other developing markets. It includes trading of date-expired products and sales of low quality and substandard goods. Especially during the festivals, anti-consumer activities like those mentioned above are rampant. Similarly, traders are also found to be not issuing vouchers to customers and deceiving them through other anomalies. Likewise, trading of various goods which do not comply with the legal standards is also rampant. However, these issues are common in developing markets and can be addressed through effective monitoring and government policies. The DoSMPCI has been regularly inspecting the market to control such anomalies and is also mooting action against the offenders in the market. The mode of action against the offenders includes issuing a warning, sealing the outlet or scrapping the licence of the offender. We have different government agencies responsible for controlling malpractices in the market. While the Department of Food Technology and Quality Control (DoFTQC) looks after the quality issues in food, the Department of Drug Administration (DoDA) deals with the issue regarding standards of drugs. Likewise, we have Nepal Bureau of Standards and Metrology (NBSM) to look after quality of goods and services other than food. These government agencies have their own laws to control the domestic market. These bodies have been inspecting the market on a joint basis and independently every day to control possible anomalies.

Amid your claim that the government is working to ensure smooth supply of goods during the festive season, the supply-demand situation of sugar has been affected recently. What is your take on this?

Regarding the sugar issue, the government imposed quantitative restriction on sugar import on September 17. Under this decision of the government, traders can import only around 95,000 tonnes of sugar in the ongoing fiscal year. The government took this decision mainly for two reasons — to ensure that sugarcane farmers are paid their dues by the sugar mill operators before Dashain and protect the country’s sugar industry that had been in trouble following the inflow of low-cost sugar in the market. As sugar mills had enough stock of sugar and traders had already imported huge amounts of cheaper sugar before the government’s decision, the market should not face any type of supply constraints in sugar. Going with the statistics maintained by sugar mills, country produces almost 175,000 tonnes of sugar annually, while the yearly demand of the sweetener stands at around 240,000 tonnes. Of the total demand, around 55,000 tonnes are utilised by industries and around 186,000 tonnes of sugar is consumed in the market. Along with domestic production of 175,000 tonnes of sugar annually, statistics show that almost 235,000 tonnes of sugar has already been imported in the ongoing fiscal year. This shows that there is surplus sugar in the market.

So, why is the sugar price ballooning then?

With regards to the price of sugar, sugar mills have committed that they will make sugar available in the market at Rs 57 per kg (without value added tax). However, we have been receiving complaints that sugar price has been surging illogically. This is a very serious issue. We will seek updates from sugar mills on sugar price and will also monitor the market to curb the unscientific rise in price of sugar. Meanwhile, the Public Accounts Committee (PAC) of the Parliament has also expressed its concern over theprice of sugar and has directed our ministry to determine sugar price at logical rate. However, fixing price of sugar or any other product in the market is a cross-cutting issue and has to be dealt with properly. We have sent a letter regarding the sugar price and direction of PAC to the Office of the Prime Minister and Council of Ministers (OPMCM). With due respect to PAC’s direction and decision, we will act according to the suggestion of OPMCM on sugar price issue.

Farmers have been saying that sugar mills are still reluctant to release payments of sugarcane. When will farmers get their payments?

The farmers should get paid before Dashain, as the sugar mills have made a commitment to us to release all dues to farmers. We will soon cross-check this issue and take necessary action if sugar mills are dilly-dallying in releasing the payments to farmers.

Meanwhile, lawmakers have been saying that the government is also lagging in implementing the agreement reached with sugar mill operators to maintain sugar price under Rs 63 per kg. How true is this?

I have no idea about any agreement as such. However, the House panel has directed our ministry to maintain sugar price at Rs 63 per kg and we are committed to implement the direction of PAC. But as mentioned earlier, determining sugar price by the government is a cross-cutting issue and we will wait for the direction from OPMCM on this issue.


A version of this article appears in print on October 09, 2018 of The Himalayan Times.


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