The National Assembly, in a June 19 hearing, unanimously demanded reinstatement of the ₹70 subsidy, asserting that farmers cannot be so abruptly undermined. Legislators stressed that this policy, in place for nearly 30 years, should not be curtailed without supporting alternatives.
A wave of anger and disbelief has swept across Nepal’s sugarcane belt following the government’s decision to slash the long-standing production subsidy by half – from ₹70 to just ₹35 per quintal – effectively withdrawing nearly 50 per cent of a crucial farmer lifeline.
For over three decades, the ₹70 subsidy (styled as a production incentive) was dispensed via sugar mills to growers, bolstering their incomes amid rising input costs. This year, however, while the Ministry of Agriculture proposed maintaining the subsidy, objections from the Ministry of Finance and the Prime Minister’s office led to its omission in the federal budget –a move ominously framed as stemming from fiscal constraints.
“This is betrayal,” said Kapil Muni Mainali, President of the Federation of Sugarcane Producers. He warned that the cut, coming even after a modest ₹20 hike in the final support price, will leave farmers with ₹50 less per quintal in hand compared to last year. For Mainali and many farmers, this represents more than lost income; it threatens the farming decision itself.
A senior agricultural official corroborated the story, stating that while the support price was adjusted upward, the subsidy was shelved by cabinet consensus. Stakeholders fear that, without it, sugarcane cultivation will become untenable.
Economic Ripples in Tarai
Sugarcane is one of Nepal’s largest commercial cash crops, with total production reaching approximately 3.4 million tonnes in 2019–20, declining to around 3.15 million tonnes by 2021–22. The Tarai region hosts 13 operational sugar mills, with Everest and Indu Shankar among the largest. Without the ₹35‑₹70 subsidy, cultivation margins narrow sharply, prompting farmers to consider crops like paddy, maize, mustard, and even dragon fruit, as earlier coverages have shown.
Mainali warned that if cultivation decreases, sugar mills will struggle and rural economies could unravel. Mills have already begun closing early during previous years when cane slumped.
Farmers in Mahottari reveal the scale of subsidy disruption: in the prior season, Everest Sugar Mills disbursed ₹217 million to nearly 14,500 growers. This year’s ₹70 rate suddenly vanished, leaving many unpaid.
Debt Pressures and Arrear Concerns
A significant underlying problem has been the chronic payment delays by sugar mills, notably noted in March 2025, compounding distress. Farmers claim mills often fail to pay even the government-mandated Minimum Support Price (MSP) of ₹585 per quintal, forcing them into debt and chronic uncertainty.
Adding insult to injury, the withdrawal of the subsidy coincided with a slashing of customs duties on sugar and jaggery – down from 30 per cent to 15 per cent – through this year’s Economic Bill, further exposing growers to cheaper imports. Domestic sugar now fights both government sting and global price pressures.
Political Backfire
The National Assembly, in a June 19 hearing, unanimously demanded reinstatement of the ₹70 subsidy, asserting that farmers – especially in Rautahat, Sarlahi, and Mahottari – cannot be so abruptly undermined. Legislators stressed that this policy, in place for nearly 30 years, should not be curtailed without supporting alternatives.
Simultaneously, the Mahottari-based Federation warns that unpaid subsidies from previous seasons – amounting up to ₹1.6 billion for 24 million quintals – remain unresolved. The new cut only worsens this backlog.
Farmers across Tarai are anguished.
Devendra Yadav, Godaita mayor and cane farmer, said the subsidy was effectively their thin profit margin. Without it, cane farming becomes loss-making and they may quit altogether.
Others have pivoted to alternative crops like dragon fruit and mustard—some profitable, some speculative. This signals a slow but steady shift away from cane farming.
There are growing demands for protests, with threats of strike action and farm blockades if the government fails to restore the subsidy or establish strong MSP guarantees.
Broader Economic Consequences
Nepal’s sugar consumption totals around 270,000 tonnes annually, compared to a domestic output near 120,000 tonnes – meaning half of consumption must be imported. The import bill is already hitting ₹2.55 billion over 10 months, with ₹788 million revenue raised in duties. With subsidy removal and protective duty reduction, analysts fear imports may snowball – threatening both food security and balance of trade.
In addition, rural employment, spurred heavily by cane cultivating and milling, may dwindle further, intensifying agrarian decline.
Farmers’ demands and the government’s options include:
- Full subsidy reinstatement: a non-negotiable demand. Farmers argue the policy wasn’t reviewed; it was rescinded.
- Clear MSP policy: to guarantee returns adequate to cover escalating input costs. Without an enforceable MSP, uncertainty persists.
- Disbursement of previous arrears: immediate settlements of unpaid subsidies and cane dues.
- Economic safeguards: tariffs, import limits, or buffer mechanisms to shield domestic farmers and the industry.
Agriculture Ministry spokesperson Januka Pandit admitted the policy change but refrained from predicting reversals. Meanwhile, Finance Ministry and Cabinet remain silent beyond noting budgetary constraints.
Yadav says, “Nepal’s sugarcane farmers stand at a dangerous intersection. Years of diminishing support, rising input costs, payment delays, and now a halved subsidy threaten to push them off the tractor.” He says that unless the government reconsiders, cane acreage could decline sharply, mills may shut, and imports will rise – worsening economic and environmental balances.
