Sri Lanka’s sugarcane farmers and domestic sugar production are struggling to sustain themselves with unresolved grievances and many unpaid for the produce and services rendered thus far. Recently, farmers staged a protest outside the Sevanagala sugar factory, accusing authorities of halting sugarcane purchases and worsening tensions in the area. 

Many sugarcane farmers, especially those in Monaragala, have linked the industry’s crisis to government tax policies that distort sugar and ethanol markets. They highlight that four months have passed since their last harvest, yet they remain unpaid. To compound the issue, vital seeds and fertiliser for the upcoming planting season have not been distributed as expected. Usually, this period would be dedicated to fertilising crops and preparing fields for sugarcane cultivation, but these essential activities are currently stalled, The Sunday Morning reported last week. In Monaragala alone, about 25,000 families depend directly on the sugarcane industry, with an additional 10,000 workers involved. There is an urgent need for Government action to address the issue.

Sri Lanka’s sugar market is largely dependent on imports, with the country consuming over 600,000 MT annually, while domestic production meets only about 10% of the demand, according to the Sugarcane Research Institute (SRI) and Lanka Sugar Company. The Government’s recent tax policy, however, has made locally produced brown sugar considerably more expensive than imported white sugar. Earlier this year, the Lanka Sugar Company, the state-owned enterprise (SOE) said that they produce around 40,000 MT of brown sugar annually across its two factories. However, with the VAT applied, the price of brown sugar has increased to approximately Rs. 250 per kilogram, compared to the Rs. 200-220 per kilogram price without the tax. In contrast, imported white sugar, free of VAT, is available at a lower price of around Rs. 220 per kilogram.

The Government has tried to calm the industry, with Industry Minister Sunil Handunnetti urging farmers to wait another three weeks, assuring them that the Government would then be able to sell off the remaining ethanol stock. Nonetheless, farmers insist that the core problem is the Government’s lack of a clear strategy to market sugar effectively. On top of the tax challenges and the resultant effect it has on locally produced sugar in the market, the Government has approved ethanol production from maize but lacks a comprehensive marketing plan for the product. 

Farmers insist that policy reforms are needed to set a sugar price around Rs. 200 per kilogram and ethanol at Rs. 800 per litre. Some have pointed out that the SOE, which has produced over 15,000 MT of locally produced brown sugar, is today unable to sell the stock in hand, resulting in the stock being left unused in warehouses.

Given the industry concerns and the fact that the local consumer has to pay dearly for sugar in the market, the need for a national policy on sugar production, import, and sale is evident. However, such a policy will also need to include a sound understanding of Sri Lanka’s nutritional requirements and the health impact of sugar. This is due to two other crises which have a compounding effect on the national interest due to consumption, or rather, the over consumption of sugar.

Sri Lanka has a serious public health challenge with diabetes and obesity on the rise. It has already affected a significant part of the island’s population and is increasingly impacting young people. Diabetes leads to multiple health problems and complications which have a major impact on the public health system. As such, there is a dire need for a whole of government, and a whole of community approach to contain and reduce the issue. Therein lies the need for well researched and debated national policies, both on the sugar industry and the national consumption of it. As such, the Government must not look at the ‘sugar’ consumption issue, from an isolated point of view of saving an industry. For the industry to be sustainable, the population must be healthy and the use of sugar well regulated. If policies are formulated to reduce the consumption of sugar which brings on diabetes and other non-communicable diseases, then Sri Lanka will not need to import so much sugar. This would aid local industries – if well regulated to be sustainable – while keeping the population healthy, and keeping the tax rupees spent on managing the health crisis at a minimum.