Hike in price of sugar as festive season nears is tensing the consumer

Hike in price of sugar as festive season nears is tensing the consumer

        

                                     www.eamap.com

         Recently, issue of sudden surge in sugar price has surfaced our broadsheets. Consumers are putting down Rs 100 and even more differing from place to place per kg of sugar which incurs Rs 72 before lockdown. Keeping an eye into it many analysers and researchers are giving their words on it. Illicit import from india, black marketing, protracted lockdown, scam trade, shortage of sugar at warehouse, stringent legal transportation and high demand for upcoming festive hour seems to be the cause of price soar of sugar  in Nepal. Flactuation and scam in the price of sugar is not a newly emerged problem. We have been tackling this for past decade.

               According to the portfolios of Sugarcane research program under NARC, sugarcane production at commercial scale was started since 1991 in Nepal. Since then to 2015 both the area of production, production and yield increased  at the rate of 2.70, 4.04 and 1.30 percent per annum respectively (NARC). Afterward, Sugarcane production in term of area, production and productivity declined leading Nepal to rank 34th in term of harvested area (71466 hectares ),  39th in term of yield (3234711 tones) (FOASTAT,2018) and is in declining trend to the till date (Sugarcane Research program). Due to the annual decline in the production of sugarcane, sugarmills are producing  only around 0.10Mt of sugar annually which is less than the domestic demand i.e 0.16Mt. So every year Nepal importing 0.11Mt  sugar from other countries mainly India both legally and illegally which is more than our annual production ( Ministry of finance).

              There are many loopholes and  fissures at farmers to consumer level racking up the constraint in sugarcane/sugar production and it's marketing in Nepal. Low access to finance, low yield of sugarcane, Competition of sugarcane with other high potential crops, high cost of production ( main crop NRs 238912.32 and Ratoon crop NRs 104650), border effect on sugarcane, small size and traditional technology of machinery, manual labour-based farming, poor  management of disease, pest, scarcity of quality inputs, lack of improved variety, poor pricing mechanism, mills prioritizing imported  than domestic cane and delayed payment by sugar mill has been discouraging many farmers to hold on to sugarcane production in Nepal.

      According to research data the yield per hectare (45tonnes/ha) is extemely low as compared to India (64.5 tonnes/hac) even at high potential zone Sunsari and Morang. Similarly sugarcane has to compete with several other food and crash crops like oil seeds, rice, pea, coriander etc in term of cost of production ( Average cost of production of sugarcane NPR. 4687/Mt whereas NPR.2500/Mt and even less of other crops) and rate of recovery. Every year before peak sugarcane season farmers should scramble for loans which are mostly collateral based and charge average of 17-20% as interest. On the other hand, farmers are financially throbbed when sugar mill hesitate to pay them with their penny on time citing losses. As impact came up with intolerable surge farmers from Eastern Tarai(Sarlahi) came down to Singadarbar striking for Justice and subsidy in January 2020.

               Unlike farmers rue, sugarmill company  posed their own woos that derail them away from their responsibility towards sugarcane farmer and sugar production. Insufficient domestic sugarcane suppy every year compelled sugar mills either to work under the capacity of mill or nudge their transaction to Indian farmers. Beside, supplied domestic canes which mostly are of poor quality because of unimproved local setts contribute less to sugar quantity and quality enhancing cane import.

                 On the other hand, due to very less amount of margin and big investment in new installment mills are working with very old machinery. This has brought an ultimate effect on quality and quantity of sugar. As manufacturing of sugar is seasonal phenomenon with short crushing season i.e 4-7months in a year, mill and labour force remain idle during remaining period of the year leading to financial problems for the industry. This has created problems to the mill to pay judicious price to the farmers on time. Out of 14 sugarmill company some has already gone dead(Shreeram sugar mill of Rautahat) and some are in the way to belly down (Lumbini sugar mill, Annapurna sugar mill and Indira sugar mill).

            Actually the ad hoc reasons for reccurrent conflict among sugar manufacturers, sugarcane farmers, consumers and goverment are corruption, deeper political clout, scam trade, black marketing, previous distorted government decisions and public policies serving the interests of crony capitalists. Controversy implicated on Diwakar Golacche a member of federal parliament representing Nepali congress and Birendra Kanodia in past year clearly reveal excessive political influence on sugarcane business fostering illicit trade through porous border, black marketing and scam trade. In order to enhance use of domestic canes, encourage domestic farmers, mills and to  arrest the cane import, P.M instructed for immediate restriction on the import of canes and sugar in September 2018. As this instant policy added to distort the market rather than to stabilise,it didn't last long. 

               Still and all, sugarcane production  has unavoidable scope to Nepal. Beside various loopholes and fissure, many positive changes has also been introduced since an early decade and  has reached to  more in the recent year. International financial corporation through pilot project for climate Resilient has been working for the increment of sugarcane in the Eastern region of Nepal since 2013 (PPCR 2014). Similarly IFC, DADO, NARC, sugar mills and Golcha group has been entered into partnership with large agri-business firms for sugarcane production and marketing since 2015. On the other hand, improved varieties like COS 8436,COSe 96436 and BO91 are made handy to farmers specially in Morang and Sunsari (SQCC 2018). Likewise, sugarcane practices with germplasm trials on Varieties COS 8315 (mid late variety), UP1 (Early variety) and Jeetpur 2 (early variety) with potential 104 mt/hac, 105 mt/hac and 110mt/hac respectively released by NARC (NARC diary). 

                  Recently Soil testing practices has also came into account at most sugarcane growing zone. Efforts has been done through the introduction of high yielding, early maturing,frost resistant, less irrigation needed and high sucrose content variety of sugarcane as well as by controlling disease and pest of sugarcane. By prioritizing the importance of research on sugarcane, Sugarcane Research Program Jitpur has been established under Nepal Agricultural Research council(Chaudhary 2014). Similarly,  it has been recorded that out of  fourteen sugar mill, twelve are running at full capacity and has collaborated with NARC and National Sugarcane and Sugar  Development Committee (NSSDC) has also extended hand of cooperation to disseminate the generated technology through NARC (MOAD).

               Beside NGos INGos and private organizations, Government also recently has set better policy to enhance cane and sugar production, their  marketing and trade in Nepal. In order to hose down the protest and agitation by the farmer in January, government has endorsed policy supporting and encouraging the farmers and also sugar mill company. This year government has allocated 950 million added with 414 million of unused budget of 2019/2020 through MOALD for the fiscal year 2020/2021 which exceed the previous amount by 30 million and 414 million additional for the sugarcane production. 

                 Addressing the  rue and opine of illiterate farmers in coming up with the  dispatched subsidy in 2019/2020, government has further improved the policy under subsidy which this year directly goes to the farmer. Subsiding policy this year contain detail of farmers, area of cultivated land, plot no. and boundaries of sugarcane land. Sugarcane farmers in 2020/2021 can enjoy with their produce as government has fixed cane price 536.56 per quital with extra Rs 65.28 per quintal subsidy. With the view to protect consumer right and shut down the illegal trade through porous border, Ministry of finance, Minitry of Industry and commerce are working with Food Management trading company and Salt trading corporation judiciously.

           Though sugarcane production and issues regarding it has been highly  attended and prioritize in the parliament for the fiscal year 2020/2021, it's not easy to wipe out the constraint regarding it. Stringent and intellectual government action can be Silver bullets for arresting the ad hoc problems of sugarcane products. Responsible authority should Regulate  optimum price for the consumers. Bill settlement for farmers seems acute problem therefore receipt financing product should be developed by financial institutions to protect the sugarcane producer. Similarly uncertain payment by sugar mill to farmer seems to be another major problem in the sector. Therefore Warehouse receipts financing (WRF) must be brought into account that has potential to improve the supply of rural finance by directly easing collateral constraints and simultaneously enhancing the risk profile of farmers by fostering improvements in output markets that can lead to higher farm incomes.  

               Furthermore, In order to reduce high production cost encouraging public based policy for the utilization of by-product will be worthy. Various by-products of the industry like bagasse, molasses etc can be utilised for the extraction of wax, cattle feed, generation of electricity, toilet preparation and manufacturing paper pulp, insulating board, plastic, carbon cortex, alcohol, DDT, acetate rayon, polythene, synthetic rubber etc. Sugarcane actually have high potential in context to Nepal. Nevertheless, cordial cooperation between govenment, crony industrialist, farmers, sugar mill company,  consumers, researchers, social activist, and sugar traders is very crucial. 

JAY NEPAL