Sugar crisis: Ensure supply of raw materials before Ramadan

In the last few months, the sugar market has not stabilised despite several price hikes and market control drives. The government first fixed the price of sugar in September after the instability emerged in July to August. The price was increased twice.

But the sugar market has become unstable again in the past few days as supply falls short of demand. Packaged sugar almost disappeared from the market. Even if available in open market, the sellers ask an arbitrary price.

The post-Covid global economic recovery process and the newly emerged Russia-Ukraine war made the import and export trade wavering, leading to dollar and energy crises in the country. Amid this, the companies involved in sugar import and refining said that they had adequate raw material in case the market became unstable.

Over the past few months, sugar supply to the market had been ensured despite the raw materials being 'controlled'. But the import of sugar decreased significantly in December compared to October-November. According to Bangladesh Bank, while the import of unrefined sugar was about 164,000 tonnes in October, only 69,000 tonnes were imported in December.

The sugar mills established during the British and Pakistani era are dependent on local raw materials but their productivity is low due to lack of modernisation. Where the demand of sugar is around 2 million tonnes per year, the country produces only 30,000 to 35,000 thousand tonnes. Mainly five companies control the market of imported sugar. The sugar market has become unstable again due to the global market situation and internal reasons as well in the new year.

Brazil, the biggest sugar producer, had less production this year due to heavy rains. And due to the dollar crisis in the country, importers are facing various difficulties to open letters of credit. As a result, the sugar mill owners are struggling in supplying sugar to the market at the price set by the government.

The demand for sugar increases during Ramadan. The government has already taken initiatives to keep the consumer goods market stable ahead of Ramadan. Bangladesh Bank had ordered that traders can open LoC by depositing less money for eight products including sugar in December. The market situation construes the instructions of the central bank are not being implemented much.

The Covid pandemic and the war in Ukraine have shown the drawback of import-dependent economy. Long-term planning is necessary to create opportunities for developing industries to use raw materials available in the country to produce consumer goods.

The government needs to take special initiatives to address the crisis in the sugar market. If the difficulty in opening letters of credit for import of sugar on an urgent basis is not eased, the situation will deteriorate further during Ramadan.

A certain quarter of businessmen have the tendency to destabilise the market by forming syndicates. Under no circumstances should such unscrupulous people be allowed to make extra profits by causing the consumers to suffer. It has to be ensured that the supply of raw material to the sugar mills continues.

The government should take effective measures before the start of the holy month of Ramadan so that traders do not face problems while opening letters of credit for the import of sugar and other consumer goods.

Government must ensure strict supervision to tackle the daily commodity crisis in the market. Action should be taken against the traders responsible for creating artificial crisis in the market.