Soaring sugar prices and revitalization of public sugar factories

The list of the most expensive essentials is quite long. The media these days have stopped describing rising prices as new highs, as readers would not appreciate the same headlines repeating themselves day after day. Now they prefer to put new prices for single items right in the headlines of news stories. Some newspapers simply say that “prices have gone up again”. The prices of edible oil have increased by 100% and rice by 25 to 35% in one year. Lately, the egg is the item that has gotten all the attention, due to a price increase of almost 100% in a few days. Following a tentative decision announced by the Ministry of Commerce to import eggs, however, egg prices have started to fall. But often, importing many items proved ineffective against price increases. Rice is a good example.

Sugar is an essential element of everyday life that deserves the attention of policy makers. Prices for this item have also been rising for months beyond the notice of many. A kilogram of sugar now costs between 95 and 110 taka, a notable increase. Excessive consumption of sugar is bad for your health, no doubt. But it is an item that cannot be removed from the list of essentials either. Everyone knows the reasons. But should sugar be so expensive in Bangladesh when there are options to reduce its price and help reduce the huge burden on consumers?

One option could be a reduction in duties and taxes imposed on imported sugar. According to a report published in this newspaper on Friday, the cost of importing sugar now stands at around Tk 60 per kg. The government charges him duties and taxes worth Tk 31. The government could consider lowering duty and tax rates for the greater benefit of consumers in general. The second option—reviving state-run sugar mills, while time-consuming, could prove rewarding in the long run. The estimated demand for sugar in the country is around 2.0 million tons and only 25,000 tons are produced locally. Private millers meet the remaining demand by refining imported raw sugar.

Many state-owned sugar mills are now closed and some are on the verge of closing due to long-standing neglect, mismanagement and corruption of all kinds. Their cost of production is unusually high due to soaring overheads and outdated machinery and equipment. Most state-owned sugar mills also survive on government subsidies. These mills may now be profiting from the high price of sugar, but the peak may be short-lived. The government should think loud and clear about modernizing these mills under a reorganized management. However, ensuring dynamic management would be a daunting task. Assignment could be an effective alternative. But the process has not worked well in Bangladesh, especially with state-owned companies occupying a large area of ​​land. Private owners, most often, in violation of the agreement signed with the government, either closed mills and factories or used their land for different purposes. Under these circumstances, the government must consider the pros and cons before deciding on better use of state-owned sugar factories to help reduce reliance on imported sugar.

Rachel J. Bradford