No end in sight to sugar woes

The sugar shortage in the market is expected to persist until the Tihar or Chhath festivals due to the government-owned trading companies’ inability to secure sugar supplies.

The government has entrusted the Salt Trading Corporation (STC) and Food Management and Trading Company (FMTC) with the task of importing 10,000 tons of sugar. Although these companies initiated a global tender for procurement, the quotations from suppliers came in at an exorbitant price, according to a high-ranking official from the industry ministry. The official revealed that the suppliers quoted a price of $832 per ton before factoring in the 40 percent duty imposed on sugar exports by the Indian government. This would have led to significantly inflated sugar prices in the local market. As a result, the state-owned companies abandoned their procurement process.

Mukunda Prasad Nirauala, the secretary at the Ministry of Industry, Commerce, and Supplies, said it would be difficult to import sugar until the Indian government loosens sugar exports. Speaking at a meeting of the Agriculture, Cooperatives, and Natural Means Committee of the parliament on Tuesday, Nirauala acknowledged that despite the government's best efforts to ensure a smooth supply of the popular sweetener, the situation has remained difficult.

India has imposed export duties on sugar to stabilize domestic prices after experiencing a drop in sugar production. According to Reuters, sugar prices in India have reached a six-year high. Maharashtra State, the largest sugar producer in India, has projected a 14 percent reduction in sugar production this year.

Nepali sugar mills produce around 120,000 tons of sugar annually, while the demand is estimated to be around 270,000 tons. The supply shortfall is met through imports by private sector entities as well as state-owned trading agencies. To ensure smooth availability of sugar during the Dashain-Tihar-Chhath festive season, the cabinet meeting authorized STC and FMTC to import 10,000 tons each.

Sugar industry representatives had previously urged the government to import 40,000 tons of sugar to address supply concerns in late July. In response, the Ministry of Industry, Commerce, and Supplies (MoICS) forwarded import proposals to the finance ministry on Aug 3 and Aug 16. However, the finance ministry delayed its decision on these proposals.

It wasn’t until Sept 13, when the market was already grappling with a sugar shortage, that the finance ministry finally gave the green light to import 20,000 tons—half of the quantity initially requested by the industry ministry. Sugar prices, which were around Rs 105 per kg in late August, have surged to as high as Rs 150 per kilogram at some retail outlets.