Sugar producers’ intent to make the most of festive season and hike sugar prices just leaves a bitter taste in mouth

Just as the festive season is knocking on the door, the price of sugar has now started surging in domestic markets as the government has imposed quantitative restriction on its import with a view to supporting domestic producers so that they could recoup their losses. In order to address the problems faced by sugar mills and their outstanding dues owed to sugarcane farmers, the government on September 17 agreed to impose a quantitative restriction on the import of sugar, limiting it to around 1,00,000 metric tonnes for the current fiscal year. The government has also increased customs tariff to 30 per cent from the previous 15 per cent at the request of domestic producers who owe over Rs two billion to sugarcane farmers. There are 12 sugar mills in the country whose total production capacity stands at around 130,000 metric tonnes per annum. On an average, Nepal’s annual sugar demand stands at around 280,000 metric tonnes. Hence, the country imports sugar from outside the country, which is cheaper than the domestic produce. Domestic sugar mills had promised to sell their stock at Rs 70 till their stock lasted. With the quantitative restriction on sugar import, sugar is being sold at retail shops for Rs 80 to Rs 85 per kg, which is more than the price the mill owners had agreed upon.

Before the government imposed the quota limit on sugar import and doubled the tariff on the intermediary commodity price, one kilogram of sugar was being sold at Rs 65, as sugar imported from India and Pakistan was quite cheaper. While sugar mills operators are making quick buck by raising price of sugar taking advantage of the government incentives, they are still reluctant to pay the farmers who have demanded early payment of the outstanding dues from the mill owners. Rajesh Kedia, general secretary of Nepal Sugar Mills Association, stated sugar mills were supplying sugar in the markets “on the basis of their production cost” and were also paying back dues to the farmers. However, his words do not match with the ground reality.

This festive season, sugar has gone bitter due to soaring prices, which vary from shops to shops. When the mill owners held negotiations with the government about four months ago, they had pledged to stabilise sugar price even if quantitative restriction was imposed on it. Now, they are fleecing consumers. And the government has been ineffective in controlling rising sugar prices because of its weak monitoring mechanism. Consumer rights activists are now flaying the government’s “immature” decision to set import quota on it. It has now become imperative that the government take the mills owners to the task for failing to maintain the price as per the agreement. Had the government not set the quota limit, the price of sugar would not have skyrocketed. The government decision to impose quota limit and to raise customs tariff on sugar import was aimed at supporting the ailing domestic industries. But sugar mill owners have failed to abide by the business ethics. The government’s concession to the sugar mill owners has put the farmers and the consumers at the receiving end. This just leaves a bitter taste in the mouth.

Don’t talk, act

Just as Dashain ushers in festive mood among the Nepalis, some unscrupulous transport operators’ attitude to make most of the festival season and fleece people plays the spoilsport. Transport operators in the third week of September refused to open pre-booking, calling on the government to unfreeze their bank accounts and hike transport fares. After reaching a deal with the government on raising transport fares, pre-booking finally opened. But chances of some transport operators taking advantage of the Dashain rush and charging passengers more than the fixed fares are high.

In this context, the Department of Transport Management’s announcement that it would fine public transport operators if they are found overcharging the passengers is a welcome move. The department has also urged the travellers to lodge complaints if they are being cheated. But such announcements in Nepal are largely unimplemented. It will be difficult for passengers, who would be pressed for time, to register complaints. The state agencies should rather focus on putting in place strong monitoring mechanisms to save passengers from being overcharged.