Nawalparasi farmers at receiving end as sugar mills delay payment

Published On: June 13, 2019 09:32 AM NPT By: Rekha Bhusal

BUTWAL, June 13: Farmers of Nawalparasi are forced to sell sugarcane to mills on credit this year as well. 

They say that farmers have not been paid for canes even though mills have already crushed around 1.3 million quintals this season. Mills have shut operation for the season even though about 100,000 quintals of canes are still to be crushed, leaving farmers high and dry.

Mills owe local farmers around Rs 690 million for sugarcane purchased this season. Many farmers, who were already living off on loans, do not know what to do next. Tek Narayan Chaudhary, one of the affected farmers, told Republica that he was unable to afford his daughter’s education. Chaudhary is one of the many farmers who are forced to sell their cash crop on credit and struggling to pay back loans. Early closure of factories has further compounded situation as tens of thousands of canes are left to dry in the sun.

Farmers say the concerned rural municipality and district administration office are doing nothing to resolve the issue.

The government has set minimum support price for sugarcane at Rs 536 per quintal. Of the total price, mills pay Rs 471 per quintal, while Rs 65.5 per quintal comes as government grant. 

Bagmati Khadsari Mill of Kudiya in Susta Municipality-2 has to pay farmers a whopping Rs 330 million. Tanka Nath Kafle, executive director of the mill, said that they crushed 711,000 quintals of sugarcane this season. “We have not been able to pay the farmers as we are not finding buyers for sugar,” Kafle said.

His mill owes local farmers Rs 2.1 million for sugarcane crushed last year.

“We had to use the funds set aside to pay farmers to repair our building which was damaged by the recent storm,” he said, adding: “We will start settling outstanding dues soon.”

He also said that mills were facing difficulty to pay farmers as banks have stopped issuing loans against sugar in godown.

Indira Sugar Mill has outstanding dues worth Rs 170 million to settle. The mill had crushed 360,000 quintals wroth around Rs 160 million this season. The mill has started settling dues worth Rs 40.97 million with farmers for canes crushed last year after they threatened to padlock the mill. 

Likewise, Lumbini Sugar Factory of Sunawal owes farmers Rs 100.73 million for 228,000 quintals of canes crushed this season. 

Most of the mills seem to have taken a strategy of increasing price of sugar before settling dues with farmers. Factory gate price of sugar is Rs 62 per kg plus 13% of value added tax (VAT). However, mill owners are refusing to sell at that price arguing that it won’t meet even their cost of production.

Reluctance of mills to pay farmers on time has affected overall sugarcane production in the district. Local farmers produced only 1.4 million quintals of sugarcane this year, down from 2 million quintals last year. 

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