Low cost sugar posing threat to sugar industries

Sarlahi, Feb. 10: 

The sugar mills that suffered multitudes of challenges due to cheap imported sugar for the last couple of years now have a new problem to fight with – the low cost sugar produced by a few domestic industries.

The producers of the white sweetener are worried about the market of their products since they are paying the government announced price – Rs. 471.28 per quintal to the sugarcane farmers while some mills have been paying less by Rs. 35 to 40 in a quintal.

The government has announced the floor price of sugarcane at Rs. 536.56 of which the industries will pay Rs. 471.28 and the government will provide Rs. 65.28 subsidy per quintal to the farmers. 

"The price of sugarcane varies by almost Rs. 40 per quintal in the country. Some mills have bargained with the farmers to buy the raw materials at the lower price," said Rajesh Kumar Kedia, General Secretary of Nepal Sugar Mills Association (NSMA). 

"It means our production cost is higher than those mills. We are facing difficulty in selling our products," added Kedia who is also the Chairman of Sarlahi, Hariaun-based Indu Shankar Sugar Mills Limited. 

Two sugar mills in the east and two in the west are paying less to the sugarcane farmers. Recently, the Eastern Sugar Mill in Sunsari bargained with the farmers and settled the sugarcane price at Rs. 441.56 – Rs. 30 less in a quintal. Similarly, the Sarlahi-based Mahalaxmi Sugar Mills is paying Rs. 36.28 less per quintal to the farmers. There are 14 sugar mills across the country. 

The farmers said that they agreed to sell the sugarcane at the industry-set prices as it was better to sell at cheaper price than to let the product decay in the fields. 

Likewise, two mills in the west – Bhageshwor Sugar Mills and Mahakali Sugar Mills in Kanchanpur – are paying just Rs. 385 per quintal to the farmers. 

Executive Director of Himalaya Sugar Mills S. K. Saraf said that the mills have to invest about Rs. 486 for a quintal of canes as it takes about Rs. 15 to process the raw materials. 

"The disparity in the price of the raw materials has created challenges to us while supplying sugar in the market. If a sugar mill is buying canes at Rs. 30 less in a quintal, their sugar production cost will be less by Rs. 4 per kg," he said. 

We have more than 15,000 tons sugar in the stock from last year which demands about Rs. 3-5 per kg to refine it before sending it to the market, he said. 

The industries had urged the government to look into the matter and maintain the parity in the sugarcane price. 

But a senior officer at the Ministry of Industry, Commerce and Supply said that the government did not interfere in the business as the mills and farmers set the price mutually. 

However, the industrialists said that the ministry's version was unjustifiable and against the latter's own decision. They said an immediate action from the government was required to create a level-playing field to all industries.

Published in The Rising Nepal daily on 11 February 2019.