Nine govt sugar mills to run despite record losses

The government will continue operations in nine state-owned sugar mills this season despite incurring record losses over the years. Of these mills, which lost Tk 3,976 crore in the last five years alone, four have already resumed production.

North Bengal, Natore, Rajshahi, and Zeal Bangla are currently running production, while Thakurgaon, Joypurhat, Mobarakganj, Faridpur and Carew & Co will resume operations in the coming days, a Bangladesh Sugar and Food Industries Corporation (BSFIC) notification said.

The corporation incurred Tk 1,005 crore of losses in Fiscal Year 2020-21, which was Tk 970 crore in FY2019-20, the BSFIC data shows.

Bangladesh has 15 state-owned sugar mills, but the government had shut six – Setabganj, Shyampur, Panchagarh, Rangpur, Pabna and Kushtia – last year after recording Tk 35 crore in losses caused by mismanagement and high production costs.

The BSFIC will however buy sugarcane from farmers located in areas near the closed mills, so that the crop can be threshed in mills that are running operations this season. It is planning to produce 50,000 tonnes of sugar this season, insiders told the Business Post.

In FY21, the BSFIC produced around 48,000 tonnes sugar at a production cost of Tk 233 per Kg, but sold the essential at Tk 75 per Kg in that period, incurring a net loss of Tk 158.

Besides, the corporation initially produced 10 lakh tonnes of sugar each season, but now it struggles to meet less than one per cent of Bangladesh’s annual demand – which is around 18 lakh tonnes.

Speaking to The Business Post, BSFIC officials said due to the low production of sugarcane this season, the corporation might fail to meet its target and could incur record losses yet again.

Insiders added that in FY21, the corporation collected around 8.7 lakh tonnes of sugarcane at Tk 3,500 per tonne. But many sugarcane farmers faced difficulties in selling their crops as six mills shut down. So, only a handful of farmers cultivated sugarcane this season.

A BSFIC official, on condition of anonymity, said, “It will be difficult to collect 5 lakh tonnes of cane this season.”

Another official said, “The quality of Bangladeshi sugarcane is poor, and sugar collection ratio from sugar cane is around 5.5 per cent, while Brazil gets around 12 to 13 per cent. Besides, to get more sugar, sugarcane needs threshing within 24 hours of the crop’s harvest.

“But it will take more time to transport sugarcane from one place to another. Due to such issues, the sugar production ratio from sugarcane crops will be less this season compared to the normal figure.”

BSFIC Director (Production & Engineering) Md Enayet Hossain, however said, “It is true that it will be difficult to meet our target due to a lack of sugarcane crops. But we will try our best to achieve the goal. “The production cost would go down further if we could run all 15 state-owned sugar mills.”