Sugar production at state-run mills hits 23-year low
With sugar currently retailing for as much as Tk 140 per kilogramme (kg), production at mills of the Bangladesh Sugar and Food Industries Corporation (BSFIC) has hit a 23-year low due to reduced supply of sugarcane.
The state-run mills produced 21,313 tonnes of sugar so far in the ongoing fiscal year (FY), down by some 13 per cent from 24,509 tonnes in FY2021-22.
The BSFIC had produced 48,000 tonnes of the sweetener in FY2020-21, when it shut down six mills in a bid to curb losses.
The corporation still suffered provisional losses of Tk 880 crore in FY2021-22 but it was around 15 per cent less than the Tk 1,036 crore registered the previous year, according to the Bangladesh Economic Review 2022.
BSFIC officials say sugarcane acreage in areas surrounding the mills has long been on the decline and reached 50,000 acres in the current fiscal year as farmers prefer growing maize, which is easier to raise and offers more profit.
"For this reason, we are not getting sufficient sugarcane from farmers," said BSFIC Chairman Md Arifur Rahman Apu.
The lower production comes at a time when sugar is selling for a historic high of Tk 140 per kg as private sector imports have slumped in face of record prices in the international market.
The price of sugar soared by 66 per cent per kg at retail in Dhaka over the past year, shows data from the Trading Corporation of Bangladesh.
Asked, Apu said they do not have a sufficient stock of sugar to make any significant contribution to domestic sales as BSFIC mills lack the scope for direct imports.
At present, the BSFIC has 9,633 tonnes of sugar in stock, which will be released by December before the mills start crushing a fresh batch of sugarcane.
Of the total stock, just 1,300 tonnes are scheduled for release to the public by June.
BSFIC officials say they provide loose sugar to dealers for Tk 100 per kg while the packaged version is priced at Tk 105 per kg.
The corporation distributes the sweetener through 2,500 active dealers across the country with each dealer getting just 500 kgs annually.
Besides, the BSFIC has to provide a supply of sugar to some government institutes immediately after refining the product at the beginning of the year. After distributing sugar to the government agencies, there is only a nominal amount left to supply dealers, they said.
The BSFIC produces sugar from locally grown sugarcane. Meanwhile, five private firms refine and market the product by importing raw materials to meet a majority of the country's annual requirement of about 20 lakh tonnes.
Currently, just nine of 15 sugar mills under the BSFIC are operational as the government closed six of them in December 2020 on the grounds that they were continually incurring losses and thereby requiring modernisation.
However, Apu said production would increase within the next two years as they are providing high-yield sugarcane seeds with the help of British American Tobacco (BAT).
"We started implementing the best farming practices like BAT as we are giving all kinds of support, including high-yield seeds, and other logistics support for better production," he added.
Apu went on to say that the BSFIC increased the price it pays for sugarcane to Tk 180 per maund (37 kgs) in 2021 from Tk 120 previously to encourage farmers.
He said they aim to eventually produce 50 tonnes of sugarcane from each acre of land, up from a maximum of 20 tonnes at present.
At the same time, they will increase the recovery of sugarcane to 6 per cent from the existing 5 per cent, Apu added, citing how the mills can currently extract five kgs of sugar from 100 kgs of sugarcane.
"Chronologically, the recovery target is to reach 10 per cent within the next five years but we need to modernise the machineries of the mills," he said.
He also said low production of sugar will continue for the next two years as there is no way to increase production overnight.
About 98 per cent of Bangladesh's annual demand for sugar is met through imports.
Ghulam Rahman, president of the Consumers Association of Bangladesh, stressed on ensuring competitive prices so that the mills can survive.
"If it is not possible to make them competitive, then there is no need to pay hundreds of crores of taxpayer money each year to keep them afloat," Rahman added.
He also suggested the mills could be handed over to the private sector or run under public-private partnerships with foreign investors.
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