Sugar price hike looms large
Price may go up Tk 10 a kg as govt stocks run out month-end
M Abdur Rahim
Sugar price may go up by at least Tk 10 a kg from May as private sector importers will take control of prices when government stocks run out at the end of this month, sources in Bangladesh Sugar and Food Corporation (BSFC) said.Production shortfall in mills under the corporation, the lone sugar producer in the country, this year leads to early shortage of government stocks. The government set production target of 1.8 lakh metric tons (MT) for 2003-2004 crushing season but ended up with only 1.18 lakh MT. The sugar price soared by Tk 10 in May last year when the government stocks ran out. Only Carew & Carew Company Ltd is now in production as 14 other mills under the corporation stopped production in this season due to supply shortage of sugarcane. The corporation sells sugar at Tk 26.5 a kg to wholesalers, a rate fixed by the government to rein in price in retail market. The price in the retail market now ranges between Tk 31 and Tk 32 a kg. The corporation injects 28,000 to 30,000 MT to market every month through its dealers across the country until its stocks run out to keep prices stable. The corporation is capable to inject sugar from its stock in six months of a year. "But the price will go beyond government control from May as the corporation will not be able to inject sugar to market as stocks expire in April," a high official of the state-owned body said seeking anonymity. According to unofficial estimate, the country now needs 8 lakh MT of sugar every year for domestic consumption. Until 2002, the Trading Corporation of Bangladesh and BSFC were solely responsible for import to meet the shortfall. The government withdrew import restriction on sugar by private sector on June 8, 2002. Sugar is imported mainly from India, which produces over 1.85 crore MT sugar a year in 500 mills. "But when the government will fail to infuse sugar in market, the private importers will dictate the price," the official said. He said sugar production plummeted this season, spreading over November and March, as farmers supplied sugarcane to local molasses producers violating the contract with government mills. The government through BSFC provides farmers with Tk 300 crore in loans a year to grow sugarcane. The farmers get Tk 41.50 for a maund of sugarcane at mill gates. But the farmers supply sugarcane to molasses producers, who offer high prices. Police action cannot be taken due to political interference though law prohibits running any mechanical device for processing sugarcane in mill areas, the official said.
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