The two ministries made the proposal after sugar mills told farmers that they won’t be able to give continuity to incentive of Rs 25 per quintal to the farmers. The mills had been giving the incentive to farmers since 2009 in a bid to encourage sugarcane production.
Talking to Republica, Minister for Industry Ma-hesh Basnet said his ministry has written to MoF to allocate Rs 600 million for distributing incentive of Rs 25 per quintal to pave the way for fixation of minimum support price of sugarcane.
The government has not been able to fix minimum support price of sugarcane as sugar mills have been refusing to provide incentive of Rs 25 per quintal to farmers.
MoF, however, is yet to respond to the proposal.
Several tripartite meetings among government officials, sugar mills and sugarcane farmers were held over the past four months. But the meeting has failed to fix minimum support price. Because of the delay in fixation of minimum support price, farmers have not been able to harvest their canes. Some mills have been using middlemen to pile pressure on farmers to sell canes at a lower price.
Sugar mill operators have been saying that they cannot purchase sugarcane at last year’s rate (Rs 476 per quintal), citing drop in the price of sugar. Farmers, however, are demanding hike in minimum support price citing increasing cost of production.
The government had fixed minimum support price at Rs 481 quintal in 2012/13 and Rs 476 per quintal in 2013/14. The government allows sugar mills to pay 70 percent of VAT collected by them to farmers. The amount is incorporated in the minimum support price. The government had introduced the provision as a subsidy to sugar mills.
Sugar mills are saying that they cannot purchase canes from farmers at last year’s rate also because their collection from VAT has been falling due to falling sugar price. MoI officials say farmers and mills operators are likely to settle for minimum support price of Rs 461 per quintal. However, sugar mill operators said in a statement issued on Tuesday that they were not in a position to pay more than Rs 411 per quintal. Jit Bahadur Thapa, joint secretary of MoI and also the coordinator of sugarcane price fixation committee said the government should encourage sugarcane farmers by announcing different subsidies.
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