Prashant Khadka

KATHMANDU, August 13

The price of sugar has started to surge in the domestic market with the festive season just around the corner. This price hike is primarily due to the repeated failure of the Government of Nepal to import sugar under the quota allocated by the Indian government.

The Nepal Retailers Association (NRA) has raised the price of sugar by Rs 10 per kg, bringing it to Rs 120 per kg, effective from today (Tuesday).

Although India had halted sugar exports for some time, it granted Nepal an import quota of 25,000 tonnes last year. However, Nepal failed to fully utilize the quota. There is a high chance that the same thing could repeat this year.

In addition to the import failure, the low sugar stocks held by the state-owned Salt Trading Corporation (STC) and the Food Management and Trading Company Limited (FMTC) suggest that sugar prices may continue to rise, according to traders. The STC and FMTC can only intervene to stabilize prices if they have sufficient stock.

Amulkaji Tuladhar, general secretary of the NRA, stated that government agencies responsible for market intervention lack adequate stock and have not succeeded in securing imports. He also pointed out that wholesalers have increased the price of sugar.

“It now costs us at least Rs 115 per kg when we buy from wholesalers,” Tuladhar said. “So, we have set the price for consumers at Rs 120 per kg.” Tuladhar expressed frustration that retailers are often blamed for price hikes, when the government should have taken steps to import sugar months before the festive season.

Retailers fear that the price of sugar could exceed Rs 145 per kg during Dashain and Tihar, similar to last year when consumers had to pay around Rs 150 per kg.

Currently, the STC has only 1,800 tonnes of sugar in stock, according to its Information Officer, Kumar Rajbhandari. FMTC officials stated that they currently have no sugar in stock. Both companies are still awaiting government permission to import the necessary sugar for the festive season.

Rajbhandari remarked that sugar prices tend to rise every year as festivals approach. “If the state fails to take responsibility, consumers will be affected during the festivals,” he said.

Two months ago, on June 12, the Ministry of Industry, Commerce, and Supplies sent a letter to the Department of Industry to initiate the process for the private sector to import 19,000 tonnes of sugar from India. In response, the department invited applications from industries that use sugar as a raw material.

Although 10 private companies, including Agro Thai Foods, Goodlife Beverages, and others, received import permits, they later refused to import sugar, citing the high costs due to the lack of customs exemption.

On August 7, the Department of Commerce, Supply, and Consumer Protection issued a new call for applications from private firms to import the 19,000 tonnes of sugar, with a five-day deadline. A total of 71 private firms applied for the import, according to Rakesh Pandey, Information Officer at the department. He added that the deadline set by the Indian government for Nepal to import the sugar ends on September 30.

“The government is, therefore, obliged to ensure the import of the specified quantity,” Pandey said. “Of the companies that applied, seven will receive permission to import no less than 2,600 tonnes of sugar, which must be sold to consumers at the price set by the STC.”

Nepal can only import the specified quantity of sugar from India's National Cooperative Export Pvt. Ltd., which stakeholders claim drives up the cost in Nepal. Although sugar prices in India are around INR 40 or Rs 64 per kg, Nepali companies must purchase it at INR 50 per kg, or Rs 80 per kg, from the Indian company.

Government officials are skeptical about whether the companies that applied for sugar import will follow through, as the total cost, including transportation, is high, and importers are required to sell it at the government-fixed price.

Data from the Ministry of Agriculture and Livestock Development shows that both the area of sugarcane farming and production have declined in recent years. The farming area has decreased by 1,521 hectares over the last three years, and production has dropped by 53,834 metric tons. In the fiscal year 2021/22, the sugarcane cultivation area was 64,354 hectares, which shrank to 62,833 hectares in 2022/23. According to the STC, Nepal's annual sugar consumption is approximately 250,000 metric tons.