By RUDRA PANGENI
Last year, it had all been easy. A rate of a minimum of Rs 481 per quintal was set quite early and farmers say this encouraged them more to take up sugarcane farming this year. They had also expected the prices to go up. But the sugar mill operators said they couldn’t even afford to pay last year’s prices what with sugar prices bucking the trend of other commodities and going down.
Farmers accuse the operators of trying to take advantage of the bump in supplies, about 20 percent more sugarcane was harvested this year, they say.
“Sugar mills have taken the growth in the production as an opportunity to bargain with us,” Kapil Muni Mainali, the president of Federation of Sugarcane Farmers of Nepal, says. They have demanded at least a 10 percent increase in prices this year based on inflation.
Mills, on the other hand, want the market forces to determine the rates.
“Price of sugarcane should be decided on the basis of the market price of sugar,” Sashi Kanta Agrawal, the president of Sugar Producer’s Association (SPA), says.
“The factory-gate rate was Rs 58 per kg last year but has decreased by Rs 6 to 8 this year. Therefore we can not pay more than Rs 460 per quintal.” A quintal of sugarcane gives about 9 kg of sugar. Last year’s total sugarcane production was 29 million quintals, which was worth Rs 13.94 billion.
The wrangle between about 500,000 families involved in sugarcane farming in 13 districts of the Tarai and the 10 sugar mills in the country have dragged on for four months.
Rounds of meetings between farmers and mill operators could not reach a deal. They agreed on an advance payment of Rs 400 per quintal on December 24 and started delivering the sugarcane to the mills after a delay in supply by a month from the normal sugarcane harvesting and supplying season, which runs till the third week of April. Later, both groups sought government’s assistance for mediation on February 15.
Industry Secretary Krishna Gyawali formed a taskforce led by Ministry of Industry joint-secretary Jit Bahadur Thapa to propose a minimum price. However, two rounds of meetings have yielded no result. The last meeting of the taskforce, which also comprises representatives of concerned ministries, farmers and sugar mills, was held on Tuesday.
Multiple sources say that sugar mills are trying to benefit from the significant growth in production by bargaining with the farmers. Moreover, the farmers’ representative Mainali has accused sugar mills of artificially keeping sugar prices low.
“Last year, we had agreed on minimum price of Rs 58 per kg sugar but mills were selling sugar at up to Rs 70,” Mainali says. The variation in sugar prices also affects the minimum price paid to farmers as sugar mills pay 70 percent of the VAT as a subsidy to farmers and the subsidy is calculated according to the factory-gate price on the day of price fixation.
Economist Bishwambher Pyakuryal says the government should not leave sugarcane prices to the moods of free market as sugarcane farming is a sensitive business and farmers cannot bargain with sugar mills.
“Therefore, the government should set the minimum floor price and protect farmers,” added Pyakuryal. He also suggested subsidizing of insurance premium to insure sugarcane farms and support the farmers’ bargaining capacity.
In an application to Ministry of Industry (MoI), SPA has cited the sugarcane price of Rs 408 (Indian Rs 255) per quintal in Bihar should be taken as the basis. By adding 70 percent of the VAT SPA has proposed Rs 460.
Vijoy Kumar Mallick, joint-secretary at the Ministry of Agricultural Development (MoAD), says the ministry can not set prices based on the Indian market as Indian farmers get a large amount of subsidies where Nepali farmers do not. Mallick is also a member of the taskforce, which is mandated to set the standard for the future sugarcane prices.
BY-PRODUCTS
Molasses, press mud and bagasse are by-products of sugarcane at the sugar mills and are regarded as good sources of income for the mills. However, they are not considered while setting prices. Mainali wants income from by-products to be considered. Mallick is also of the view that the products should be counted as income of sugar mills while setting prices as is done in India.
Agrawal says mills earn a paltry amount from the by-products and the money is not even enough for machinery maintenance.
MIDDLE MEN
Farmers also complain that sugar mills use middle men to collect sugarcane from farmers. “With good production growth, industries have used middle men are buying sugarcane from farmers at Rs 250 to Rs 300 by harassing them and saying that their production will not be sold,” said Umesh Chandra Yadav, a sugarcane farmers’ leader in Nawalparasi. Middle men collect ‘permission letter of delivery of sugarcane’ from mills and cheat farmers by hiding the permission and bargaining with them, Yadav accuses.
Agrawal says the SPA has also heard of middle men cheating farmers and are ready to issue a code of conduct for containing such malpractices.
SUGARCANE AND SUGAR DEVELOPMENT BOARD
Rajan Khanal, joint-secretary at the Ministry of Finance, says that there should be a board to deal with sugarcane farming and plan for the sugar economy of the country. Khanal is also member of the taskforce. The board also a should fix the minimum floor prices of sugarcane to assure farmers for sugarcane farming.
The government instituted Sugarcane and Sugar Development Committee to draft the law for the board some six years ago. The first committee, led by Raj Narayan Yadav, had also drafted a statute for the board but the statute is gathering dust at MoAD. Mainali says a nine-member committee was instituted but it does not represent any sugarcane farmers.
“Committee has been occupied by the cadres of political party and not a single task is done for the welfare of farmers,” blamed Mainali.
The Government has earmarked a Rs 6 million budget for this year. The office of the Committee in Parwanipur Bara did not respond telephone call on Wednesday.
Officials say that contract farming law can also be a measure for safeguarding the mutual interest of both farmers and sugar mills. The law has been drafted by MoAD is yet to be tabled in the parliament.
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