Shortage of sugarcane has forced sugar mills in Nepal to shut down before the end of the crushing season this year. Industrialists say that the decline in production is primarily due to farmers showing lack of interest in sugarcane cultivation after facing repeated payment delays from sugar mills. An official from the Ministry of Agriculture and Livestock Development stated that this has had a direct impact on sugarcane availability for processing.
“As production declines, industries are now facing a shortage of sugarcane for crushing,” said Rajkumar Agrawal, General Secretary of the Sugar Producers Association, in an interview with New Business Age. “This is why factories had to shut down early this year.”
Sugar mills typically operate from mid-November to mid-May, but this year, they closed by mid-February, far earlier than usual.
Government data confirms that sugarcane cultivation has been decreasing over the past few years. According to the Ministry of Agriculture and Livestock Development, both the area under cultivation and total production have declined in the last four years. Officials attribute this decline to low prices and delayed payments, which have discouraged farmers from continuing sugarcane farming.
In Fiscal Year (FY) 2019/20, Nepal produced 3.4 million metric tons of sugarcane on 68,565 hectares of land. By FY 2023/24, the cultivated area had shrunk by 6,340 hectares to 62,225 hectares, while total production fell by 290,084 metric tons, reaching 3.1 million metric tons.
Kapilmuni Mainali, President of the Nepal Sugarcane Producers Association, said sugarcane production has been continuously declining due to unfair pricing and payment delays. “In past years, farmers had to travel to Kathmandu just to demand payment for sugarcane they had already sold on credit,” he said. “Frustrated by these issues, they started switching to alternative crops.” Farmers who cultivated sugarcane on hundreds of hectares five years ago have now shifted to paddy or wheat, as sugarcane farming is no longer profitable due to the lack of fair pricing.
The government has not adjusted sugarcane prices to match rising production costs since 2017. That year, the government set the price at Rs 536 per quintal. Despite rising labor wages and seed costs, the price has only been increased by Rs 119 per quintal in the past seven years. For the current fiscal year, the government has set the minimum support price at Rs 655 per quintal, which farmers argue is still insufficient to cover costs.
Previously, sugar mills provided subsidies to farmers, but due to repeated complaints of non-payment, the government now directly transfers subsidies to farmers’ bank accounts through district treasury and government offices. However, many farmers are still struggling to receive payments from sugar mills, discouraging them from continuing sugarcane cultivation.
The Ministry of Agriculture and Livestock Development has identified inadequate irrigation and the lack of high-yield sugarcane seed imports as major factors behind declining production. Although the government has launched irrigation projects under the Sugarcane Promotion Program, these initiatives have not been effective.
A study by the Federation of Sugarcane Farmers found that cultivating sugarcane on one bigha of land costs Rs 350,000, and farmers need to produce at least 600 quintals per bigha to turn a profit. However, the varieties currently cultivated in Nepal yield only about 350 quintals per bigha, making sugarcane farming financially unviable for many.
Unless pricing and payment issues are resolved, experts warn that sugarcane production will continue to decline, worsening Nepal’s sugar shortage and leading to further factory closures in the coming years.
