Sugarcane farmers wait for last year’s subsidy as new harvest begins
Every December, shivering in the Kathmandu Valley’s cold sugarcane farmers stage a sit-in protest to highlight their grievances against their delayed payment by their buyers, the sugarcane mills.
This year too, as the sugarcane harvest season begins, farmers say they have not yet received the promised subsidy money for the harvests sold last year.
Farmers say the government has added fuel to the fire and the sit-in episode may repeat this year too.
The government has promised to pay sugarcane growers a cash subsidy of Rs70 per quintal.
The Ministry of Agriculture and Livestock Development is preparing to recommend the minimum support price for sugarcane for this fiscal year. According to the officials at the ministry, they will be taking the proposed minimum support price to the Cabinet this week.
Last year, the floor price of sugarcane was set at Rs610 per quintal. This is the minimum price sugar mills have to pay the farmers for their crops. Out of this amount, the government chips in Rs70.
The government announced a cash subsidy scheme in 2018 after the farmers complained that the money they get from the mill owners was not sufficient to cover their costs.
In Nepal, sugarcane harvest normally begins in mid-November.
“We have not received the government-announced subsidy for last year’s harvest, though the festival seasons—Dashain, Tihar and Chhath—are already gone,” said Kapil Muni Mainali, president of the Federation of Sugarcane Producers Association. “Farmers need money during festivals, but they were not paid.”
According to Mainali, out of the Rs1.32 billion subsidy amount, only Rs800 million has been dispatched by the Finance Ministry. “Farmers are yet to get Rs490 million.”
“The sugarcane farmers met with the minister and government officials concerned on different occasions, but their plea has gone unheard,” said Mainali.
Sabnam Shivakoti Aryal, spokesperson at the Ministry of Agriculture and Livestock Development, said that most of the sugar mills did not provide the details of the sugarcane they had purchased from the farmers last year, so the government could not release subsidy money.
“We used to provide subsidy amounts to the farmers once the sugar mills provided the purchase details.”
According to Aryal, out of Rs1 billion payouts, Rs800 million has already been paid to farmers. “We are requesting for the remaining subsidy amounts with the Finance Ministry to settle the payments row.”
Sugarcane farmers in Bara, Mahottari, Siraha and Sunsari have received the payments so far.
Farmers in Sarlahi, Rautahat, Nawalparasi and Kanchanpur, however, are yet to receive the subsidy amounts.
The sugarcane farmers in mid-July met the members of a sub-committee formed by the agriculture ministry and requested to provide the subsidy amounts before the festival.
The sub-committee has been formed to listen to the grievances of the farmers.
As the government is preparing to fix the minimum support price of sugarcane, farmers are optimistic that they would get a handsome deal considering the current higher price of sugar, which is retailing at Rs115 per kg. In the same period last year, the sugar price was at Rs90 per kg.
According to the agriculture ministry spokesperson, they are set to send the proposed minimum support price of sugarcane to the Cabinet by this week.
The sugarcane farmers had demanded to fix the new rate at Rs705 per quintal last year. “As our voices are unheard [and the government fixed the price at 610], we haven’t proposed any rates this year,” said Mainali.
As a result, out of 14 sugar mills, five have been closed due to the lack of sugarcane to operate in full capacity, said the association.
According to the association, the sugar mills that crushed 292 million quintals of sugarcane in the preceding year crushed just 172 million quintals last year.
Sugarcane production has been declining at a faster pace, said the association.
Sugarcane production has been on a declining trend for the last few years. In 2019-20, Nepal produced 3.40 million tonnes of sugarcane and this dropped to 3.18 million tonnes in 2020-21, according to the agriculture ministry statistics. In 2021-22, the production further dropped to 3.15 million tonnes.
Low production led to a shortage of sugar this festive season.
This year, sugar prices reached a record Rs160 per kg in the market.
As shortage was rampant, the state supplier Salt Trading Corporation rationed the sweetener distributing 2 kg of sugar at Rs115 per kg per consumer.
Neighbour India, too, imposed restrictions on sugar exports for the first time in seven years by capping this season’s exports at 10 million tonnes, to prevent a surge in domestic prices after mills sold a record volume on the world market.
With India’s restriction and domestic production failing to meet the demand, the sugar price went sharply high during this festive season.
Due to perennial hassles in getting payments and the government fixing an ‘unsustainably lower’ price for their produce, farmers have started looking for alternative crops. Many sugarcane farmers are planting mustard and others.
“I have started dragon fruit farming on 2 bigha and earned Rs7.2 million in the first year. It is only 30 percent of production. The traders will come into my field to buy dragon fruit from next year,” said Mainali.
He hopes to earn Rs10 million from dragon fruit next year.
Mainali, who has been planting sugarcane in 8 bigha, said sooner or later he would quit sugarcane farming.
Nepal used to produce 155,000 tonnes of sugar annually until a few years ago but this has now declined to 120,000 tonnes after sugar mill owners failed to pay sugarcane growers on time,
according to the Salt Trading Corporation.
Nepal’s annual sugar requirement is around 270,000 tonnes. The deficit is met by imports.
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