Sugar prices show no signs of easing

Sugar prices show no sign of falling in Bangladesh although refining activity is going on in full swing thanks to the improvement of gas supply to refiners to a large extent.

In July, the gas crunch hit factories after the government stopped purchasing liquefied natural gas from the international spot market amid a fast depletion of foreign currency reserves, fuelled by the escalated import bills.

In the subsequent months, the price of sugar skyrocketed because of the lower gas supply and lower pressure of the available

 with one refiner saying in October that the production decreased by 60 per cent due to the gas crisis and warned that there would be a lot of problems in the sugar market if the energy situation does not improve.

At one point, the sugar price shot to Tk 125 a kg from Tk 90 two months ago. Retailers are now selling the item Tk 110-120 per kg.

Now, refiners say they are getting the required amount of gas.

"Our production has returned to normalcy and there has been no gas crisis for the last two weeks in our factories," SM Mujibur Rahman, head of accounts of Meghna Group of Industries, told The Daily Star.

Golam Rahman, secretary general of the Bangladesh Sugar Refiners Association, and managing director of Deshbandhu Group, said the gas crisis has improved by 80 per cent.

In the last week of October, the government instructed Petrobangla to supply adequate gas to refiners.

Since then, Titas Gas Transmission and Distribution Company Limited has been supplying adequate gas to factories, said Md Salim Miah, director for operations of the state-run utility service provider.

Titas supplies gas to most of the refiners in Bangladesh.

But the higher sugar price persists.

Wholesalers and retailers in Dhaka and Chattogram say the sugar supply is still inadequate. The item is available in some markets, but the situation is not the same in other places.

"We are getting about 50 per cent of the sugar we are seeking. That's why the crisis is not over yet," said Abul Hashem, a wholesaler at Moulvibazar in Old Dhaka.

Jakir Hossain, manager of Ramganj General Store in Karwan Bazar, one of the largest kitchen markets in the capital, said: "The loose sugar supply that I have received can meet 30 per cent of the demand for the sweetener."

"Dealers say the supply is low owing to the reduced production because of the gas crisis. So, the price is not falling."

He said his store has not received the supply of branded sugar for about two months.

Several shop owners in Kazir Dewri, Chawkbazar and Hamzarbag area in Chattogram say the dealers did not provide the item as per demand.

At least 13 shops in the areas say there has been no supply of sugar for the last two days.

Retailers and wholesalers alleged that refiners have cut the supply of the sweetener, creating a crisis in the market.

In Khatunganj, a wholesale market in the port city, the prices of sugar shot up by Tk 20-50 per maund (37.32 kgs) to Tk 3,850- 3,880 a maund in the last two days in the face of falling supply, said Abdur Razzak, a wholesaler.

Deshbandhu Group's Golam Rahman said some of the people in the supply chain are not properly supplying the item as per the demand of wholesalers and retailers. "Rather, they are stocking up."

"That's why the fixed price is not working. If the problem facing the supply chain is sorted out, this issue will be resolved," he said.

A commerce ministry official alleged that refineries are using various mechanisms to keep the sugar market unstable.

The price hikes in international markets and higher transport costs are also keeping the price of sugar at a higher level, said a number of businesspeople.

Hashem, a former vice-president of the Bangladesh Sugar Merchants Association, said there are no signs that the prices would go down in the coming days.

Three out of a total of six refiners told The Daily Star that they are supplying all of the sugar they are producing to the market. They said the people in the middle of the supply chain are actually creating the sugar crisis.

"We are supplying products to the market now," said Meghna Group's Rahman. The processor meets 30 per cent of the demand for sugar in Bangladesh.

Tapan Kanti Ghosh, senior commerce secretary, said: "The gas supply situation has improved to a large extent."

He would sit with sugar and edible oil producers today.

"The improvement in gas supply as well as the problem in opening the letters of credit would be discussed in the meeting," Ghosh told The Daily Star.

He, however, could not say immediately whether the prices of sugar would be cut.

An official of the commerce ministry said it is possible to bring down the prices of sugar below Tk 100 per kg considering the import and international prices.

AHM Shafiquzzaman, director-general of the Directorate of National Consumers Right Protection (DNCRP), said keeping a normal supply of sugar is the biggest challenge now.

"The DNCRP is working towards that goal. But how much is that possible for me alone?"

Ghulam Rahman, president of the Consumers Association of Bangladesh, said the government will have to play a big role to improve the supply situation.

"Otherwise, the crisis will continue. As a result, people's suffering will compound."

The country's annual demand for sugar is 25 lakh tonnes but domestic production can supply only 1 lakh tonnes while the rest comes from abroad.

About 95 per cent of imported sugar is unrefined, according to data from the National Board of Revenue.

The unrefined sugar comes from Brazil, India, Australia, the UK, and Malaysia.