Sugar crisis hits market hard before Eid due to government-mill owner tension

A sugar crisis has emerged in the market due to escalating tensions between the government and mill owners over the pricing of this essential kitchen item ahead of Eid ul Azha. The demand for sugar typically surges in the market during both Eid ul Fitr and Eid ul Azha.

This has led to hike in price of sugar with reports of the item being sold as high as Tk 150 per kg. Despite the government's regulations setting the price of loose sugar at Tk 120 per kg and packaged sugar at Tk 125 per kg, mill owners are not complying with that.

During a visit to various wholesale and retail markets, it was observed that packaged sugar has become scarce in the market over the past few days. Additionally, loose sugar is also unavailable at most grocery shops due to its excessively high price.

The Trading Corporation of Bangladesh (TCB) has substantiated the prevailing price situation by confirming similar prices at 13 markets in the capital. The commerce ministry has noted a substantial 77 percent increase in sugar prices over the past year.

Speaking about this to Prothom Alo, Md Hridoy Hossain, proprietor of Hridoy Store at the kitchen market at New Market said, “There remains a high demand of sugar before the Eid. But I could not keep the item in my shop this time as the price in the market is higher than the price the government has fixed. Directorate of National Consumer Rights Protection will fine me if I sell the item at a higher price though I do not see their drives at the company level.”

The mill owners at the beginning of June proposed the government to fix the price of loose sugar and packaged one at Tk 140 and Tk 150 per Kg respectively. The government did not take that into cognisance. The mill owners, however, decided to implement that price from 22 June.

Following this the government held a meeting with the mill owners and said that the price cannot be increased before the Eid.

Commerce minister Tipu Munshi on Thursday instructed the Directorate of National Consumer Rights Protection (DNCRP) to keep an eye on the market to check whether the item was being sold at the price the government fixed.

The price of a 50-kg sack of sugar was sold at Tk 6,700-6,850 in Dhaka’s Moulvi Bazar on Saturday. The price at the wholesale level was Tk 134-137. The wholesalers said the mill owners are releasing smaller amount of sugar saying that they are incurring loss. As a result the price is increasing.

The government started taking initiatives to rein in the sugar price in September last year. Despite fixing the price for six times after holding meetings between the government and traders, it could not be implemented even for once.

Mill owners said the sugar that is entering the market now was bought at US $665 per tonne. They are settling the letters of credit at an exchange rate of Tk 114 for each dollar which was less during opening the LCs. With this they have to pay Tk 38,000 as duty for each tonne of sugar and spend another Tk 20,000 for refining the item. Overall it costs them Tk 133,810 (Tk 134 per Kg) to prepare each tonne of sugar. But the government is not paying heed to this, they added.

The government, however, has already reduced the duty rate once but this had no impact on the market price.

Speaking about this to Prothom Alo, Bangladesh Sugar Refiners Association secretary general and Deshbandhu Group managing director Golam Rahman said the price of sugar at the local market is high due to increased price at the international market. Besides, the energy price has been hiked several times. The LCs are being opened with over 100 per cent margin; at the same time the dollar price is also high. Doing business has become harder. The government has to take all these into consideration, he added.

Though the government has imposed high duty rate to protect the local industries, the local firms produces only 1 per cent (around 30,000 tonnes) of the annual demand of sugar. Currently 2 to 2.2 million tonnes of sugar is being imported to meet the demand. That means the sugar market is almost completely dependent on import.

Only five groups import unrefined sugar. They are – City Group, Meghna Groups, S Alam Group, Deshbandhu Group and Abdul Monem.

Slamming the market management, Consumers Association of Bangladesh (CAB) president Golam Rahman told Prothom Alo that instead of fixing the price the government can import sugar.

He also emphasised the need to take legal measures against any company that deliberately creates unrest in the market by causing an artificial crisis.

* The report, originally appeared in the print edition of Prothom Alo, has been rewritten in English by Shameem Reza