Sugar producers in Nepal have warned that they will stop making payments to sugarcane farmers if the government fails to address the increasing smuggling of sugar.
At a press conference on Tuesday, the Nepal Sugar Producers’ Association (NSPA) raised concerns that sugar mills are overwhelmed with excess stock due to illegal cross-border sugar trade. Shashi Kant Agrawal, president of the NSPA, stated that domestic sugar mills unsold sugar stock.
Agrawal explained that sugar mills are unable to sell their produce domestically because of the influx of cheaper imported sugar. “With this year’s production added to last year’s unsold stock, we will be unable to pay the sugarcane farmers,” he said.
There are 13 sugar mills operating in the country, and according to the NSPA, about half of them started production in the third week of November. The country requires 220,000 tons of sugar annually. Last year, domestic mills produced 178,000 tons, and the NSPA forecasts a 20% increase in production this year.
The government imposes a 30% customs duty on sugar imports. However, in anticipation of a possible sugar shortage during the festival season, the government allowed public enterprises like the Salt Trading Corporation and the Food Management and Trading Company to import sugar with a 50% waiver on customs duties.
The NSPA claims that high customs duties have led to increased illegal sugar imports. Agrawal warned, “If smuggling is not controlled, both sugar producers and sugarcane farmers will suffer.”
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