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Scopes to improve the sugar industry |
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July 30, 2000
Dhaka (UNB)- Production cost of local sugar can be easily reduced to Tk 16 to 18 by increasing per acre sugarcane yield and capacity of decades old worn out mills, all run by the state, experts said. Consumers should get sugar at Tk 23 or 24 in open market and low-quality sugar smuggled from across the border phased out, they felt. To meet the existing demand, they suggested importing of 4 lakh tons of sugar every year and fixing the price at Tk 23 or 24 per kg, until local mills achieve the capacity to run viably. Traders, on the other hand, felt that sugar price in local market could be brought down even to Tk 15 or 16 if government withdraws restriction on import, decontrols sugar price and allows private sector to import sugar. They argued why the consumers and food industries as a whole will bear the burden of high cost of running the non-viable sugar mills and pay for the inefficiency of 20,000 workers-employees of state run sugar mills. Government is the sole player in sugar production and import, fixing the selling price of local sugar at Tk 27.50 per kg and imported sugar at Tk 28 kg, which are sold at Tk 32 and Tk 34 respectively in the open market. International price of sugar is around Tk 14,000 (US$ 275) per ton, just half the price food processors getting it from the government. Local manufacturers of processed foods, that use sugar as a main raw material, find it difficult to compete with imported foodstuff due to high price of sugar. If local food industries become non-viable, several thousand people will be rendered jobless, they fear. Annual sugar consumption is estimated at 6 lakh tons while 15 state-run mills together produced 1.25 lakh tons in 1999-2000 crushing season against the target of 1.73 lakh tons, an official of Bangladesh Sugar and Food Industries Corporation (BSFIC) said. Government imported two lakh tons through its two organs-Bangladesh Sugar and Food Industries Corporation (BSFIC) that runs the sugar mills and Trading Corporation of Bangladesh (TCB) last fiscal. The deficit of about 3 lakh tons are exposed to unofficial cross-border trades, deceiving the government of revenue from import duty and forcing domestic and industrial consumers to pay almost double the international price of sugar. However, there remains no room for smuggling if official estimate of annual sugar consumption, which is 3.6 lakh, is taken. Production cost in domestic sugar mills is around Tk 30 per kg and the government fixed the selling price at Tk 27.50 at mill gate, counting the loss in its own account. To match with the irrationally high production cost of domestic sugar, government adds Tk 12 as import and other duties and sets the selling price of imported sugar at Tk 28. Production cost of per kg sugar in India is around Tk 13. Lower production capacity, poor recovery rate, low per acre sugarcane yield causing inadequate sugarcane supply are the main reasons behind the high production cost of local sugar, former director of Bangladesh Sugarcane Research Institute (BSRI) Muhammad Yasin Ali said recently. Production cost of Indian sugar is less than half of ours as each sugar mill in India is capable of crushing at least 25,000 tons of sugarcane daily and producing at least 40,000 tons of sugar every season with 9.5 per cent recovery rate, he said. He said a sugar mill could produce 30,000 tons sugar in each season if its crushing capacity is enhanced to 2500 tons per day and recovery rate to 9 per cent. The government needs to spend Tk 50 crore for each of the 15 state-run mills to raise their crushing capacity to 25,000 tons per day and thus help them become competitive and viable, he estimated. Besides, smooth and adequate supply of sugarcane is to be ensured to the mills during the crushing season, from mid-November to March, the sugar expert said. With existing crushing capacity and 8.5 per cent recovery rate, country's 15 sugar mills need 33 lakh tons of sugar cane to produce around 2 lakh metric tons of sugar. If capacity is raised, each mill will require 3.5 lakh tons of sugarcane in each season. At present 65 tons of sugarcane is produced in 3.5 lakh acre of land, more than 50 per cent of which is used for making gur (molasses). An ordinance of 1956 restricts growers to sell sugarcane to power or bullock crushers for making gur. But growers found it more profitable than selling sugarcane to sugar mills. Conservative estimates show Bangladesh needs 6 lakh tons of white sugar and 6 lakh tons of gur for 120 million population at a rate of 5 kg sugar and 5 kg gur per capita per annum. About 80 lakh tons of sugarcane is required to produce 6 lakh tons of gur and another 85 lakh tons to produce 6 lakh tons sugar, putting the total annual cane requirement at 165 tons. Yasin Ali, a sugarcane expert, said it is very much possible to grow this quantity of sugarcane by large scale adoption and cultivation of spaced transplantation of sugarcane (STP) seedlings, which he pioneered while serving as BSRI director at Ishwardi, Pabna. Adopting recommended agronomic, fertilization and integrated disease management, STP seedlings are capable of growing 30 to 40 lakh tons per acre instead of 15 tons from low-yield traditional seedlings, he said. He also suggested formation of a separate Cane and Gur Development Board, also recommended by the 1999 National Task Force, to develop modern gur mills to help meet the demand. Government's unrealistic firmness to protect jobs of 20,000 workforce of 15 shabby sugar mills costs consumers and food industries to pay unusually high price of sugar. Despite the fact that the 15 decades-old sugar mills have lost bagasse cess
fed by low-yield sugarcane leaves consumers and food industries to pay unusually high price for sugar.
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