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The continued spiralling prices of sugar, which has more than doubled since 2020, is making it dearer for the general people who are already struggling amid a price hike of essential commodities.
Sugar Price Hits Fresh High
Sugar price has hit a fresh high at Tk 125 per kilogram in retail shops in Dhaka and Chattogram during the second week of November amid lax monitoring by the government agencies over the private refineries. The price was at Tk 90 in October and Tk 80 a year ago. Private sugar refineries dominating the growing market have cited a shortage of gas for production shortfall and eventual price hikes of the item. They had cited a price hike of sweetener in the global market for a gradual price hike of the item from Tk 60 a KG from 2020. The government has hardly any control over the market as the state-owned mills are on verge of extinction as far as production is concerned.
Private Refineries Rule The Roost
The state-owned sugar mills under Bangladesh Sugar and Food Industries Corporation which met a significant portion of the local demand in 1980s failed to meet the growing demand from the 1990 onward due to falling production. They can now supply less than 10 per cent of the annual demand of around 25 lakh tonnes of sugar as refiners rule the roost. According to modern marketing dynamics, at least 25 per cent supply capacity of a stakeholder enables it to dictate market price of any product. There is now doubt that sugar supplied by the BSFIC has no say on market price. The sorry tale of the public sugar mills is disappointing as many of those were established in the British era and had flourished even after the county’s independence in 1971.
History Of Local Sugar Mills
There was presence of at least three sugar mills– North Bengal Sugar Mill in Natore (1930), Setabganj Sugar Mill in Dinajpur (1933) and Carew and Co Bd Limited in Chuadanga (1938) — before the departure of the British from the Indian subcontinent. Nine more sugar mills — Rangpur Sugar Mill in Gaibandha (1954), Thakurgaon Sugar Mill in Thakurgoan (1956), Jhil Bangla Sugar Mill in Jamalpur(1958), Joypurhat Sugar Mill in Joypurhat (1960), Khustia Sugar Mill in Khustia (1961), Rajshahi Sugar Mill in Rajshahi (1962), Shyampur Sugar Mill in Rangpur(1964), Mobarakganj Sugar Mill in Jhenaidah (1965) and Panchaghar Sugar Mill in Panchaghar (1966) — were established during county’s days as East Pakistan. Three more factories — Faridpur Sugar Mill in Faridpur (1974), Natore Sugar Mill in Natore (1982) and Pabna Sugar Mill in Pabna had been added to the local sugar industry that used to play an important role in the county’s economy as sugarcane firming and crushing ensured 100 per cent value addition.
Raw Sugar Imports
In 2012, the annual production capacity of these mills was about 2,15,000 tonnes. Mismanagement and corruption have largely been blamed for the downfall of the public sugar mills. The liberalisation of sugar import since 2002 and establishment of private sugar refineries since 2004 hastened the decline of the public sugar mills. The government allowed private sugar refineries to operate in the country on condition that they would export half of their output and help the country keep the sugar price stable. But the raw sugar importers have never complied with the condition, putting the local industry under stress by selling cheap sugar. In 2005–06, the government reduced the regulatory duty on sugar import to 46 per cent from 103.38 per cent in 2003–04. In 2007, the regulatory duty was waived with the fixing of specific duty for each tonne of import — Tk 5,000 for refined sugar and Tk 2,250 for raw sugar. The import of raw sugar increased astronomically after 2006 when 1.44 lakh tonnes were imported. In 2010, the raw sugar import reached more than 12 lakh tonnes, enough to meet the total national demand with the imported cheap raw sugar alone.
Closure Of Sugar Mills
Since December 2020, the current government has kept production suspended at six state-run sugar mills to minimise the accumulated losses of the BSFIC. The factories are Pabna Sugar Mills Ltd, Shyampur Sugar Mills Ltd, Setabganj Sugar Mills Ltd, Kushtia Sugar Mills Ltd, Panchagarh Sugar Mills Ltd and Rangpur Sugar Mills Ltd. Closure of more factories has been considered by the policymakers. The government has not only failed to protect the public mills but also failed to force the local private refiners to participate in sugarcane production to substitute the imports. Compared to the local state-owned sugar mills the Indian sugar industry is vibrant. The sugar industry is an important agro-based industry that impacts the rural livelihood of about 50 million sugarcane farmers and around 5 lakh workers directly employed in sugar mills, according to the Department of Food and Public Distribution of India.
Indian Sugar Industry
India is the second-largest sugar producer in the world after Brazil and the largest consumer. Today the Indian sugar industry’s annual output is worth approximately Rs 80,000 crores. There are 732 installed sugar factories in the country as of 31.07.2017, with a sufficient crushing capacity to produce around 339 lakh MT of sugar. The capacity is roughly distributed equally between private sector units and cooperative sector units. The foundation of the modern sugar mills in India, the country’s neighbour, began during the British period. Unlike Bangladesh, India has been expanding its sugar industry through private owners. There in India, private owners hardly import raw sugar but rely on crashing cranes grown locally. Neighbouring India is responsible for around 15 per cent raw sugar Bangladeshi factories refine, according to local entrepreneurs. They fear if the sugar supply from India stops abruptly because of the export ban, the price of the item in the local market may face wheat or edible oil-like volatility.
No Shortage Of Raw Sugar
SM Mujibur Rahman, head of accounts of Meghna Group of Industries, told a local daily that they faced complexities in opening letters of credit to import raw sugar owing to the dollar crisis. Besides, they can refine just half of their capacity due to a reduction in gas supply to factories, he added.
A report from the Directorate of National Consumer Rights Protection said the country had a stock of more than 375,000 tonnes of sugar as of October 23 this year, and there was no shortage of raw sugar.
