Sugar price keeps rising though import duty goes
Sugar prices have maintained an upward trend at both wholesale and retail levels in Bangladesh despite a record cut in import duties to keep the market stable ahead of Ramadan.
On February 26, the National Board of Revenue (NBR) lifted Tk 3,000 specific duty on the import of raw sugar and Tk 6,000 on refined sugar per tonne with immediate effect. It also cut the regulatory duty on the import of sugar to 25 per cent from 30 per cent.
After the reduction, the overall import cost of raw and refined sugar is expected to decline by Tk 6,500 and Tk 9,000 per tonne at the import stage, respectively.
Still, the price of sugar shows no sign of cooling down. Rather, it increased by Tk 130, or 3 per cent, per maund in the wholesale market.
Commodity traders in the Khatunganj-Chaktai wholesale market in Chattogram said sugar was sold at Tk 4,080 per maund (37.32 kilogrammes) on Monday, up from Tk 3,950 a week ago.
The price increase came amid continued supply shortage and a spike in demand for the kitchen item on the occasion of the fasting month when sugar is used in verities of items.
The hike in the wholesale rate has translated into a spike in the retail market. Loose sugar price has gone up by Tk 2 to 3 per kg and is now retailing at Tk 115 to Tk 120.
The retail price was up 2.17 per cent from a month earlier and 48.73 per cent from a year prior, data from the Trading Corporation of Bangladesh showed yesterday.
Packaged sugar is not available in the market, according to traders.
On February 1, the government fixed the prices of loose and packaged sugar at Tk 107 and Tk 112 per kg.
Ziaul Haque, a wholesaler in the Khatunganj-Chaktai wholesale market, said dealers were meeting only 10 to 20 per cent of the demand of wholesalers for sugar.
"The price of sugar has been on the rise for a week because of the supply shortage."
A hike in transport costs is also being added to the product cost as trucks have to wait two to four days at the mail gates due to the delay in the delivery of the product, according to Haque.
He claimed sugar price is being increased by creating an artificial crisis in the market.
Biswajit Saha, director for corporate and regulatory affairs at City Group, one of the largest processors in Bangladesh, said: "It will take more time to reap the benefits of the duty cut since the sugar that has already been imported and is awaiting release will not be covered by the duty reduction facility."
He said that the government had cut the duty to control the price of the product during Ramadan, but it was too late.
"Had the decision been taken a month earlier, the benefits would have been visible before Ramadan."
Ramadan might begin on March 24.
Saha described the supply situation as normal and said there was no scope for creating an artificial crisis.
Globally, sugar prices rose to $0.45 per kg in February from $0.42 in January, according to data from the World Bank.
Businesses in Bangladesh imported 3.28 lakh tonnes of raw sugar and 139,25 tonnes of refined sugar in January and February. In the same months last year, about 4.88 lakh tonnes of raw sugar and 8,770 tonnes of refined sugar were imported, data from the NBR showed.