Imports are sufficient, but sugar prices hit record highs as fuel crisis cuts refining

Despite sufficient imports of unrefined sugar compared to the demand in the country, the price of the product continues to rise due to disruption of refining due to gas and power shortages, said people inside the industry.

To control the price of the product, the government set the price of sugar at Tk90 per kg, but it is being sold at Tk125 per kg. The price at the retail level has increased by at least Tk20 in the last three days.

Biswajit Saha, director of City Group, a sugar importer and refiner, said that the amount of sugar imported so far is in line with the demand but the biggest problem is that the sugar refining has reduced up to 50% due to shortage of gas and electricity.

Amitabh Chakraborty, advisor to City Group, said, "Although we have a daily refining capacity of 5,000 tonnes of sugar, it has come down to below 2,000 tonnes due to gas shortage. We need gas pressure of 15 psi (unit of gas pressure per square inch) in the sugar factory but we get 4 psi."

Similarly, the Meghna Group's sugar refining capacity of 3,000 tonnes per day has now come down to below 2,000 tonnes, said company insiders.

According to the data of the Tariff Commission and Bangladesh Sugar and Food Industries Corporation (BSFIC), the annual demand for sugar in the country is currently 19 lakh tonnes or about 1.58 lakh tonnes per month.

Private mills imported 7.86 lakh tonnes of sugar in the first four months (July-October) of 2022-23. As such, the average monthly import of sugar was 1,96,500 tonnes, which is higher than the average monthly demand, said the National Board of Revenue.

On Thursday, sugar was sold at Tk125 per kg in Chattogram, which was below Tk105 last week.

Nurul Abshar, owner of Jannat Store in Chattogram, said, "Compared to last week, the price of sugar per kg in the wholesale market in Khatunganj has increased by Tk19. As a result, we also have to sell at a higher price."

Sugar trader Aman Ullah, proprietor of Aman Enterprises in Khatunganj, said that a maund (37.32 kg) of sugar was sold at Tk4,200 on Thursday, which was only Tk3,500 till Monday. Traders in the market fear that the price of sugar may increase further if the supply is not normal.

Trading Corporation of Bangladesh data shows that sugar prices rose by 22% to Tk110 to Tk115 per kg, from Tk90 to Tk95 a month ago. The price has increased by 45% compared to last year.

Closure of sugar mills

Alamgir Parvez, owner of RM Traders in Khatunganj, one of the agents of the sugar refining mills, said that at one time, 15 state-owned sugar mills used to supply a part of the domestic demand. Besides, TCB played a role in keeping the sugar market stable through imports. 

But in recent times the inaction of the two organisations and various crises have reduced the refining capacity of private mills to less than half and the supply of sugar from the mills to the open market has decreased, due to which the price of this product is increasing almost every day, he added.

In this regard, BSFIC Chief Marketing Officer Md Mazhar Ul Haque Khan said that out of 15 mills operated at the government level, the production of six mills has been stopped for two years. Besides, the production of the running mills has decreased. As a result, even in the current crisis, the BSFIC is not able to ensure an adequate supply of sugar.

According to BSFIC data, at one time 15 mills produced an average of more than two lakh tonnes of sugar every year. Last year, nine mills produced only 24,500 tonnes of sugar. The production target of nine mills has been set at 50,000 tonnes in the new season starting later this month.