Nepal's Sugar Shortage: Seeking Self-Reliance Amid Export Ban

The celebration of Vijaya Dashami and Diwali has become challenging for Nepalese people this year, as the nation faces a sugar shortage due to decreased production and India's export ban ahead of the festivities. Nepal requires 300,000 metric tons of sugar annually but only produces 120,000 metric tons domestically. India has recently banned the export of sugar and rice to meet its own demand but has since allowed non-basmati rice exports to Nepal, offering some relief.

Anjan Shrestha, Senior Vice President of the Federation of Nepalese Industries and Commerce (FNCCI), expressed gratitude for India's decision to allow rice exports to Nepal and requested that India also consider easing its sugar export restrictions, as their citizens are struggling during these important festivals.

In an effort to control retail prices during the festive season, the Indian government had previously banned exports of non-basmati white rice on July 20. Reports of sugar smuggling from India to Nepal have surfaced following this decision. People are lining up at Dashain Bazaar, managed by the semi-government entity Salt Trading Corporation on the outskirts of Kathmandu, where they can purchase 2 kg of sugar at a discounted rate of Rs. 97 per kg. In contrast, black market prices in Kathmandu range between Rs 150 and Rs 160 per kg. Just a few months ago, local market sugar prices were only Rs. 85 per kg.

To alleviate some of the shortage during festival season, the Nepalese government is working on importing 20,000 metric tons of sugar from a third country and has reduced import duty on sugar from 40% to 30%. The scarcity is causing significant issues for large industries in Nepal that rely on sugar for production. Dabur Nepal's marketing head, Abhaya Gorkhalee, acknowledged the challenges they face because of the shortage.

Ultimately, importing sugar will not solve the problem. Nepal must increase its sugar production to become self-reliant. Sugarcane, the primary source of sugar in Nepal, has seen a decline in farming and production this year due to numerous difficulties encountered by farmers and ineffective government policies. Issues like lack of technical knowledge, untimely government subsidies, low sugarcane yield, delayed payments, outdated technology, and limited access to agricultural loans and insurance are all contributing factors.

Given the growing population and increased consumption of essential items like sugar, becoming self-reliant is crucial for Nepal. This means understanding the demand-supply situation and strategizing how best to meet the nation's needs.