Sugar prices increase on low production

- Rajesh Khanal, Kathmandu
Household sugar now costs Rs85-90 per kg compared to Rs70-75 per kg a month ago

Aug 1, 2016-Sugar has become dearer as factories have hiked prices of their products citing a drop in production and transportation difficulties during the Indian blockade. 

Household sugar now costs Rs85-90 per kg compared to Rs70-75 per kg a month ago, said retailers. 

Manufacturers said the production of sugarcane had reached the lowest point of its three-year cycle and sugarcane shipments had been affected during the blockade which pushed up prices.

“Sugar mills have hiked the factory gate price of sugar by Rs5-7 per kg in recent days,” said Shashi Kant Agrawal, president of the Sugar Producers’ Association. “As sugarcane production goes down every three years, it has affected sugar production as well.”

Besides the cyclic decline in sugarcane production, many farmers could not deliver their crops to factories during the blockade for lack of fuel and political unrest. “This delayed the production process by almost two months,” said Agrawal.

Vijay Kumar Sarawagi, chairman of the trade committee at the Federation of Nepalese Chambers of Commerce and Industry, said that sugar factories were unable to repair their broken machinery on time as the blockade prevented deliveries of spare parts.

The hike in sugar prices coincides with a decline in sugar stocks held by Salt Trading Corporation (STC), a government-owned enterprise. An STC official said the company was fresh out of sugar.

Chief Executive Officer of STC Urmila Shrestha said that the corporation had been out of stock for the last three days. 

“We will be importing 20,000 tonnes of sugar from India by next week. We are working on setting the price of the new shipment,” he said.

Retailers said that sugar manufacturers might have jacked up prices just as STC had run out of stock.

Pabitra Bajracharya, president of the Retailers Association, said that a cartel might be the reason behind the price hike, but STC should have been proactive to ensure it would give competition to private sector manufactures and not allow sugar prices to surge. “The corporation has failed to import the product on time,” he said. 

The Department of Supply Management said it had been receiving a growing number of complaints about the rising price of sugar in recent days. Laxman Shrestha, director of the department, said retailers had been blaming sugar factories for the price hike. 

“We have intensified market monitoring of the concerned sugar suppliers to check if any market anomaly has led to the price hike,” said Shrestha. 

Published: 01-08-2016 10:03

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