The price raise had hit consumers as soon as state-owned Salt Trading Corporation and National Trading, through which the government was supplying the product at lowered rates, announced end of their stock. [break]
Traders said they had to revise the prices upward because of short supply of the product. But, concerned officials tagged the way the sugar price rose in the market as a gross result of cartel by the traders.
“Crushing seasons have already commenced and we are also receiving sound volume of sugar from India as well. There cannot be shortage of sugar until and unless the traders themselves created it,” stated a senior official of Department of Commerce (DoC).
Irrespective of what he says, this is not the first time consumers have been forced to bear the brunt of unfair play by sugar traders. Rather records of price movement in the market show that sugar has become one of those products in which consumers have been left vulnerable.
Unfortunate for the consumers, it is the apathy of the DOC, the market monitoring unit, and the government´s inability to ensure fair market operations that have cost them dearly.
How much profit is justifiable?
About a dozen sugar manufacturers operating in the country recently fixed their ex-factory price at Rs 52 per kg for wholesalers. One month down the lane, sugar prices in the market have almost doubled the factory rate.
Given that the traders pay Rs 6.76 (13 percent) as VAT while buying sugar from factories, additional Rs 3 (5 percent) per kg on transportation up to retailers and another Rs 3 (5 percent) on storage and warehousing in the process, officials say the cost of sugar, excluding profit margin, stands at Rs 64.76 per kg at the retailer level.
"Unfortunately, traders are presently enjoying exorbitant profit of well over Rs 25 per kg (40 percent) on the product," said the DOC official.
For sugar that enters Nepal illegally through the porous border with India, the profit margin is still higher.
“This extent of profit margin is not fair,” admits Ganesh Dhakal, joint secretary at MoCS.
Govt bans profit taking above 20 pc
Amid soaring prices, MoCS on Tuesday, stepping on the law related to black market, decided to intervene into the market and limit profit margin for traders of all essential products to 20 percent.
"The law tags the act of taking profit by more than 20 percent as black marketing and hence, punishable. We have decided to enforce it immediately," Dhakal told myrepublica.com.
The ministry on the day also instructed DoC to swiftly step up its market inspection to enforce the Black Marketing Act, expressing hope that it will force prices of sugar and other essential commodities to go down.
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