Loss of duty benefits drives up sugar price

Sugar prices have risen at the wholesale level amid speculations that import costs could go up seeing how the National Board of Revenue (NBR) has not extended duty benefits for importing the sweetener.

Sugar prices have been volatile in the domestic market for several months now. With this backdrop, the commerce ministry sent a letter to the NBR in January, recommending lower duties for refiners in a bid to normalise the market.

Then in February, the NBR slashed the 30 per cent regulatory duty by 5 percentage points.

The revenue authority also removed the import duty on unrefined and refined sugar, which previously stood at Tk 3,000 per tonne and Tk 6,000 per tonne respectively.

These facilities were in effect until May 31, after which importers were required to pay the taxes in full.

As such, the price has increased by Tk 140 to Tk 250 for each maund (37 kilogrammes) of sugar, according to various businesspeople.

Golam Mawla, a wholesale trader in Dhaka's Moulvibazar, said sugar was sold at Tk 4,400 per maund just seven days ago while it is now priced at Tk 4,540.

"The price will increase further," he added.

Abdur Rahim, a trader of the Khatunganj wholesale market in Chattogram, said each maund of sugar cost Tk 4,300 a week ago while it is currently selling at Tk 4,550.

Refiners say they have yet to receive any instructions from the government regarding the possibility of extending the duty benefits, impacting the domestic wholesale business.

However, an NBR official, on condition of anonymity, said they too have yet to receive any letter from the commerce ministry in this regard.

"The price will rise further if the duty benefit on sugar is not retained," a refiner said.

The sugar market has been volatile since July-August last year due to the US dollar and fuel shortages resulting from the ongoing Russia-Ukraine war.

On May 10, the commerce ministry increased the price of loose refined sugar to Tk 120 per kilogramme while the price of packaged refined sugar was set at Tk 125 per kilogramme.

However, sugar is currently being sold for Tk 130 to 140 per kilogramme at retail.

Bangladesh now requires about 20 to 22 lakh tonnes of sugar each year. Of this amount, local mills can produce just 30,000 to 35,000 tones, necessitating imports of raw sugar by the country's five refiners.

Consumers are having to pay more than the government-fixed rate for sugar as local millers and refiners were forced to adjust their prices in line with higher production costs.

About 95 per cent of the imported sugar is unrefined, according to NBR data, which shows that shipments mainly come from Brazil, India, Australia, the UK, and Malaysia.