Home ›› 04 Jan 2023 ›› Front
The Bangladesh Sugar and Food Industries Corporation (BSFIC) has been counting heavy losses due to irregularities and unskilled management despite halting production in six mills in fiscal year 2020-21.
On the other hand, the state-owned agency that incurred around Tk 1,000 crore losses has also failed to control the local market with sugar produced in the country. As a result, private sugar mills are capitalizing on its weaknesses, intensifying the market volatility.
With an aim to deal with such a situation, BSFIC has put forward a set of proposals to the Ministry of Industries.
Recommendations of BSFIC
The recommendations BSFIC made were inventing high-yielding variety of sugarcane, balancing, modernisation and replacement (BMR) of sugar mills, ensuring proper use of immovable assets of sugar mills, making skilled manpower with training and ensuring their proper distribution, producing by-product oriented profitable goods, establishing new industries with local and foreign investments, ensuring repayments of bank loans with interest, ensuring regular payment of subsidies and 25 per cent price of sugarcane, securing salary and allocations of staff from revenue board, providing revolving funds to sugarcane farmers for purchasing seeds, pesticides, fertilisers and other equipment and prompt decision on six closed sugar mills.
Annual reports of BSFIC
Corporation’s annual reports of last 16 FYs showed that 15 sugar mills continued to suffer losses. At the end of the last fiscal year, its accumulated losses stood at around Tk 9,778 crore. Besides, the state-run agency also owed different banks around Tk 8,000 crore.
BSFIC saw Tk 140 crore loss in the FY 2007-08 with 163,843 tonnes of sugar production, Tk 134 crore loss in FY 2009-10, Tk 933.46 crore loss in FY 2019-20 and subsequently, incurred highest Tk 1,035 crore loss in FY 2020-21, despite halting production in six sugar mills. Regardless of a sharp decline in sugar production, BSFIC witnessed Tk 888.66 crore loss in the last fiscal year. In the past 15 years, 15 sugar mills incurred Tk 939.20 crore loss except Carew and Company Limited that has made Tk 50.54 crore profit.
Once BSFIC produced 2 lakh tonnes of sugar, but its sugar production declined sharply in the past three years. The corporation produced 82,140 tonnes of sugar in the FY 2019-20 while in next FY, its production dropped below 48,133 tonnes with closure of six mills and came down to 24,509 tonnes in the last FY which meets only 1.36 per cent of domestic demand, according to BSFIC.
The sugar market in the country has become volatile as sugar production by state-owned mills declined abruptly, experts said.
Although BSFIC set target to produce 125,200 tonnes, 115,000 tonnes and 50,000 tonnes of sugar in the past three years but managed to produce only 66 per cent, 42 per cent and 49 per cent respectively.
According to the data available with the Commerce Ministry, the country’s annual demand for refined sugar is from 18 to 20 lakh tonnes while imported sugar controls the entire market although Trading Corporation of Bangladesh (TCB) has been working to control the market. TCB has been selling sugar at subsidised rate of Tk 55 per kg after buying them from private companies as it is not getting sugar at cheaper rate from the state-owned companies.
Currently, one kg of sugar is being sold at Tk 115 to Tk 120 in the local market which was Tk 75 to Tk 80 in the last year, posting a 45 per cent year-on-year hike. In the last FY, BSFIC spent Tk 1660.45 crore and earned Tk 77,179 crore. Retail price of sugar was fixed at Tk 99 per kg.
Cause of losses
Explaining the cause of continuous losses, BSFIC said the production of sugarcane dropped significantly in the country while the prices of raw materials are also on the rise. The production cost of sugar is higher than its market price, the corporation said, adding that, undeveloped sugarcane varieties, lack of skilled manpower,
old machinery and increasing interest rate on bank loan reduced sugar production.
Rizwan Rahman, president at Dhaka Chamber of Commerce & Industry, said that the government don’t need to do business; these industries should be handed over to the private sector or should be operated by private sector under the government supervision.
This will also help local industry expand further and reduce dependency on imports, he said, adding that the sugar industry can draw investment and can expand if the government provides policy support.
All industries, including sugar, will be booming if the government focuses on providing necessary support to entrepreneurs instead of commercialisation, he added.
Private sector booms
The private sugar mills flourished and made persistent profits amid such conditions. Private sugar mills, including Rupganj City Sugar Industries, Deshbandhu Sugar Mills, United Sugar Mills, Abdul Monem Refinery and S Alam Refined Sugar Mills are supplying sugar in the domestic market after refining crude sugar.
Companies of BSFIC
The 15 sugar mills are Jil Bangla Sugar Mills, Thakurgaon Sugar Mills, Shampur Sugar Mills, Setabganj Sugar Mills, Rangpur Sugar Mills, Panchagarh Sugar Mills, North-Bengal Sugar Mills, Natore Sugar Mills, Mobarakganj Sugar Mills, Kushtia Sugar Mills, Joypurhat Sugar Mills, Faridpur Sugar Mills, Rajshahi Sugar Mills, Pabna Sugar Mills and Carew and Company Limited.
History of sugar mills
According to BSFIC, out of 15 sugar mills in the country, three were established in the thirties, three others in the fifties, seven in the sixties and two after the independence of Bangladesh. Bangladesh Sugar Mills Corporation was established in 1972 and later, was merged with Bangladesh Food and Allied Industries Corporation to form BSFIC.
