State sugar mills resume operation, ahead of reform

Like most other state-owned entities, Bangladesh Sugar and Food Industries Corporation (BSFIC) has also been incurring continuous losses for a long time.

Six of its 15 sugar factories were shuttered in 2020 in the face of piled-up losses. Eight of the remaining nine mills are also bleeding money. 

Amid this situation, this year's sugar production season has begun with sugarcane collection and threshing activities.

With the interim government looking to implement reforms across the whole government machinery, it was expected that the sugar industry would also undergo some reform efforts to break out of the cycle of persistent losses.

However, government officials say the reforms are a long-term process and hope that losses might be less this time, riding on the increased sugarcane production and a 'motivated' workforce.

Reforms long overdue

In 2019-20 FY, 14 sugar mills, except Carew & Co, incurred losses of around Tk8,000 crore. Due to continuous losses, the government suspended sugarcane threshing in six mills in December 2020, keeping the nine others running. 

BSFIC has suffered a staggering loss of thousands of crores over the years. The accumulated losses of these government-owned mills have reached around Tk11,500 crore till FY24, according to an earlier TBS report.

The corporation has still been counting heavy losses despite halting production in six mills.

Among the 15 state-owned sugar mills, only one is not incurring losses – Carew and Company Limited – but the profit is not coming from sugar per se. Carew witnessed around Tk58 crore profit after paying taxes in FY23 as its distillery unit sold a record amount of 57.73 lakh proof litres of liquor during that period, according to sources at the company.

BSFIC reports on mills mentioned old, rickety machinery, low productivity, high management cost, shortage of raw material etc as the main problems of the mills. They also recommended establishing modern equipment, employing skilled workers, etc, to increase the production of sugar.

Sugarcanes take a long time (up to 18 months) to mature, and farmers are losing interest in cultivating them. Not getting adequate prices for sugarcane due to corruption or delayed payment further pushed farmers away from sugarcane cultivation. Measures like paying through MFS and increasing the prices are still struggling to attract farmers towards growing sugarcane. 

Md Anowar Kabir, the secretary of BSFIC told TBS that modernising factories will be taken up in phases. But he is hopeful that production will increase this season. 

"Compared to last year, we are threshing a greater amount of sugarcane this year. Our target is to thresh 7 lakh and 50,000 tons of sugarcane and produce 45,000 tons of sugar. Last year, the amount of sugar produced was a little more than 30,000 tons. It's a positive thing that the production is increasing by 50% this season," he said.

"The corporation does not own enough land to grow all the sugarcane we need. We have to motivate farmers to grow them. We are now paying attention to encourage them," he explained the process.

Among the 15 state-owned sugar mills, only one is not incurring losses – Carew and Company Limited – but the profit is not coming from sugar per se. Carew witnessed around Tk58 crore profit after paying taxes in FY23 as its distillery unit sold a record amount of 57.73 lakh proof litres of liquor during that period, according to sources at the company.

The company's net profit that year was around Tk9 crore higher than its profit of around Tk49.17 crore in FY22.

For others, the scenario is rather grim, but some measures have been taken, officials said. 

"We are paying a higher price for sugarcane now. Besides, the farmers are now aware of the misery of the locals dependent on the closed mills. They want their mills to continue to run. That's also a great motivation," Anowar Kabir continued.

"The sugarcane cultivators are asking us to reopen Setabganj and Shyampur sugar mills saying they will supply enough sugarcane for sugar production. These two mills may be reopened three years from now, once sugarcane is grown commercially," the secretary said, adding that the sugar production in the mills decreased due to falling supply of the crop.

The interim government is eyeing to reopen all closed sugar mills in the country, Adviser of Ministry of Industries Adilur Rahman Khan said in November during a visit to Setabganj Sugar Mill in Dinajpur.

Setabganj Mill is among the six state-run sugar mills that were closed in December 2020 because of a heavy financial burden. The others are Pabna Sugar Mills, Shyampur Sugar Mills in Rangpur, Panchagarh Sugar Mills, Rangpur Sugar Mills and Kushtia Sugar Mills.

The government formed a task force committee to address the reopening of the closed sugar mills. The committee assessed the constraints on the re-operation of those mills and filed a report to the ministry.

A task force member seeking anonymity said the report is positive about reopening the sugar mills but refused to share further details.

The chairman of the Corporation, Lipika Bhadra, did not respond to a request to comment on the matter. Texts to the adviser of the ministry and his PS were also unanswered, leaving us in the dark regarding the government's next step.

In July this year, S Alam & Co adopted a master plan of various projects with the government for sugarcane production and modernisation of sugar mills in Bangladesh to revive the sugar industry. A memorandum of understanding (MoU) was signed between BSFIC and S Alam Group. 

The interim government cancelled the MoU on 25 August.

The annual demand for sugar in the country exceeds 20 lakh tonnes. The miniscule amount of sugar produced in the country fails to control the prices in the market dominated by private enterprises. Private producers refine raw sugar imported from countries like Brazil and India before the latter banned export last year.