“Bad management, benefits for traders who destroy our sweets”

Photo by Moshahida Sultana: courtesy

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Photo by Moshahida Sultana: courtesy

Moshahida Sultanaassociate professor in the Department of Accounting and Information Systems, University of Dhaka, has been researching sweets in Bangladesh since 2015. In a conversation with Sumon Ali from The star of the dayshe talks about the state of sugar mills and sugar production in the country.

We have a strong demand for sugar. We also have sugar mills. Why is the industry in shambles, then?

Since independence, the Bangladesh Sugar and Food Industries Corporation (BSFIC) and sugar mills have taken out loans worth Tk 6,044 crore. The interest incurred on these loans amounts to Taka 3,085 crore. At present, around Taka 7,946 crore of debt including interest needs to be paid. If the government had given subsidies to the sugar mills, the interest on the loans would not have been so high and the industry would not be in such bad shape. The government lacks planning and will when it comes to our sweets. He is keen on offering special benefits to traders, which destroys our sweets.

Why do business people get special benefits?

Today, the interests of government cannot be separated from the interests of businessmen. Businessmen have become politicians. The public interest has taken a back seat. Income tax no longer benefits the public interest. People’s money is diverted to individual accounts, thanks to our corruption-riddled economy. Our sweets pay the price. There has always been a lack of foresight in sustainable management, anti-corruption measures and effective planning in this sector.

How much sugar does 100 kg of sugar cane produce in Brazil, India and Bangladesh?

Brazil and India both produce 12-14 kg of sugar from 100 kg of sugar cane. Meanwhile, Bangladesh only produces 6-7 kg.

Why does Bangladesh perform so poorly compared to Brazil and India?

This is because our high-yield sugarcane cultivation is limited. The Bangladesh Sugarcrop Research Institute (BSRI) claims that the seeds it supplies are capable of a sugar yield of 12-14%. But the loss of the system, the old machines and the delays in the delivery of the sugar cane to the mills cause the drop in the yield. If the sugar cane cannot be delivered to the mills within a day of cutting, their sucrose level drops. This affects sugar production.

What is the cost of producing sugar?

It varies from mill to mill. Debt-ridden factories have higher production costs. Some factories can reduce costs by using by-products. Some factories are affected by loan interest. Previously, the amount of debt (including interest) in production costs was 6-7%, but after the closure of six sugar factories in 2020, it rose to 37% on average.

How to reduce the cost?

I propose to equip all the sugar factories to valorize the by-products in order to diversify the production. For example, Carew and Co has a distillery where they produce alcohol and sanitizers. They also produce organic fertilizers and electricity from the by-products. Some sugar factories have their own land; they can grow other crops on the unused land. Surviving on sugar production alone is difficult all over the world. We need specific policies that emphasize the uniqueness of sugar production.

What type of support do farmers receive to improve the supply of sugar cane?

Usually, farmers grow more sugar cane and the overall production and supply increases if they get fair prices. Sugar cane growers must receive incentives every year. They must be provided with a regular supply of seeds, fertilizers and loans. They have to be assured that the government will buy their products. They get demotivated if they don’t get the right price at the right time. In the 2010s, farmers were not paid properly for a few years, which demotivated them. High quality sugarcane must get better prices. This will encourage farmers to grow high quality sugarcane.

What is the impact of the current situation?

The vulnerable state of the sugar mills has proven to be a boon for private refiners. As a result, the market passes into the hands of corsairs. If the private sector controls supply and demand, it can raise prices at will, which we have seen happen with edible oil. The government is unable to control these companies. The sugar produced in our sweets is of high quality and much healthier than refined sugar. But even if people in general want it, they can’t have healthy sugar. If all our sugar mills were open and equipped to increase sugar production, traders could not manipulate market prices to their advantage. While the government is busy providing benefits to traders, people are being deprived of a healthy option.

Can we make our sweets profitable?

Sure. It only needs the will of the government. Until now, the people who have been at the helm had little or no knowledge of our sugar industry. People involved in the process, e.g. farmers, workers, retired officers – people who are familiar with the pros and cons of overall management – should be brought in to develop new plans, and their implementation should be a priority.

Is there a government initiative to make sweets profitable?

No, the government has not yet taken action to remedy the current situation. Our economy will benefit from investments in this sector. Many people will be employed, and our farmers will benefit. This has been recommended over and over again, but to no avail.

Sugar International, a consortium of three companies from the UAE, Japan and Thailand, has proposed to invest Tk 5,500 crore in our state-owned sugar mills to make them profitable. Will it work?

There is a rumor that the Japan Bank for International Cooperation and Thailand’s Exim Bank will provide 70% of the consortium’s funds as a loan. If this initiative is implemented and then fails, the Consortium and BSFIC will have to bear the burden. In case of failure, the guarantors will have to repay the loan. It is still unclear which banks will be guarantors and which properties of sugar mills will be mortgaged in this initiative. If that fails, the mills may have to sell their land to pay off the debt. Businessmen can obtain these lands at reduced rates. On the other hand, if foreign investors want to make a quick profit, they will raise the price of sugar. We should do something on our own instead of looking for outside help. The government must subsidize this sector to improve its condition, which will reduce our dependence on imports. It will also prevent public assets from being sacrificed for debt servicing.

Translated by Mohammad Ishtiaque Khan.

Rachel J. Bradford