Effect of input factors and price policy in Nepalese sugarcane

Abstract

The present study examines the effect of price policy, payment period and production factors in sugarcane production. Data were collected from 200 sugarcane producers in Nawalparasi and Kapilvastu district of Nepal. Linear multiple regression was used as the analytical technique. Findings revealed positive and significant effect of labour, chemical fertilizers, weeding and irrigation frequencies at 1% and 5% level of significance. The impact of Minimum Procurement Price (MPP) and direct cash subsidy were found insignificant, and delay in payment to the farmer was negative and significant at 5% level of significance. Similarly, the coefficient of multiple determinations (adjusted R2) was 0.93, which indicated that 93% variation in sugarcane yield was explained by all explanatory variables. The results showed delay in payment as major challenge disrupting the effective implementation of price policies (Minimum Procurement and direct cash subsidy) and farmer economy. The delay payment was responsible for the consequences of losses, financial distress, shift of sugarcane cultivation and ultimately decreasing the sugarcane area and production. Thus, scientific MPP, strict regulation and monitoring of sugar-mills, stock clearance of surplus sugarcane by government, incorporation of local crushers under sugarcane policies and activities, and release of direct cash subsidy during the sugarcane cultivation period could be a better solution to maximize sugarcane production.