Decision to import sugar was unrealistic

Update:

A huge amount of sugar has been sitting idle at the depot of Bangladesh Sugar and Food Industries Corporation (BSFIC) for the last two years. BSFIC officials could not provide a meaningful answer to a parliamentary standing committee, who asked on whose interest this sugar had been imported.

The question was logical and so the dissatisfaction was justified too. A report published in Prothom Alo on 16 May, however, provides a clue to the role of BSFIC. It said the state-run corporation had imported 105,000 tonnes sugar in 2017 as the sugar mills under the institution failed to produce the required amount of sugar. They feared local sugar traders may increase the price of the commodity creating an artificial crisis in the market, the report said.

But in two years only half of the sugar was sold with 44,000 tonnes remaining. This proves that the decision to import sugar was unrealistic. It is the BSFICI's responsibility to produce sugar from sugarcanes at its mills. The government had imposed a high rate of duty on sugar import only for the financial security of this organisation, but they imported sugar borrowing Tk 5 billion. They did not even verify whether this was actually required or not.

The state-run organisation actually did not need to spend foreign currency and import the sugar. Bangladesh is capable of producing more sugar than the total demand. The total annual demand for sugar here is 1.4 million tonnes. Though the 15 sugar mills, under the BSFIC, can produce about 60,000 tonnes annually, the private sugar mills and sugar refining factories can produce more than double of the total demand. This means there is no dearth of sugar in the local market. Also, if crisis emerges, the BSFIC would not be able to solve the problem by importing 100 or 200 hundreds tonnes of sugar.

Actually, the government has no scope to control the demand and supply system in the country. The thought to exert control over this is also unrealistic. If the dishonest sugar traders form a syndicate and create artificial crisis to raise the price, the effective method to solve this is to increase the production capacity of the state-run sugar mills and supply that at a competitive price in the market. But the solution does not lie in importing sugar. The production at the state-run sugar mills is much less than the total demand. The production cost is so high that they cannot sell all the sugar produced. Total losses of the state run sugar mills accounted to Tk 31.79 billion in the last 16 years. BSFIC is also running on loans which amount to around Tk 40 billion.

The state-run organisation was already afflicted with so many loans that it was very unrealistic to import sugar on a new loan. This should be scrutinised as to whether the import was to serve the interest of any person or a community.

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