Dealers not buying sugar from govt agency
Sugar Corporation sets prices higher than the market
A shopkeeper waits for customers at Karwan Bazar in Dhaka. Sugar prices have marked a fall in the last one month. Photo: STAR/FILE
Dealers are not taking delivery of sugar from Bangladesh Sugar and Food Industries Corporation (BSFIC) as the government agency keeps its selling price higher than the present market price.
Sugar has been selling at Tk 52-53 each kilogram at the retail level during the last one month with the BSFIC maintaining the price for its dealers at Tk 55 each kg.
BSFIC officials said they are not considering a cut in the prices to keep a good stock before the month of Ramadan.
Dealers said they will have to sell the sweetener at Tk 57 after buying it at Tk 55 from the BSFIC, which holds 175,000 tonnes of sugar in its stocks now.
"We are consistently urging the authority to reduce the prices. But the government is yet to respond," said Mustafizur Rahman, president of Bangladesh Chini Dealer Baboshayee Samity, a lobby group for 4,100 sugar dealers registered with the BSFIC.
He said dealers would face losses if they buy sugar from the corporation as wholesale prices fell much below the corporation's mill gate prices.
At the city's wholesale point Moulvibazar, the wholesale prices of sugar slipped to Tk 47,000-Tk 48,600 a tonne yesterday from Tk 54,000 in April.
The wholesale price declined due to a fall in prices on the world market in the past several months, and surging imports.
In May, sugar prices fell to $45.88 cents each kg on the world market from $50.16 cents in April, following India's decision to allow exports of raw sugar, according to Commodity Markets Review of the World Bank in June.
India, world's second biggest producer of sugar after Brazil, allowed exports at a time when world sugar production is likely to exceed consumption.
Global sugar production will increase by 4.6 percent to 173 million tonnes in 2011-12 financial year, said Food and Agriculture Organisation (FAO) last month.
Officials of the BSFIC are aware of the market trend but said the corporation is yet to decide on a price cut in line with the current market prices.
But the stocks at the BSFIC play a role in keeping the prices stable domestically, reducing the scope for dishonest businesses to make profit by creating an artificial supply crisis in the market.
AKM Delwer Hussain, director (finance) of the BSFIC, said the corporation is not considering a cut in the prices to sell out its sugar stocks before the month of Ramadan.
"We want to face Ramadan (the fasting month) with the existing stocks so that the prices remain stable during the month. We don't want to allow anyone (business or traders) to take the advantage of an increased demand for sugar during Ramadan," said Hussain.
Of the stocks, the BSFIC imported 106,000 tonnes through tenders with an import cost at Tk 57-58 each kilogram, meaning the government pays Tk 2-3 to sell the corporation's sugar at Tk 55 each kilogram.
A reduction in prices would increase the subsidy burden on the government further, said officials.
Asked about the risk of increased subsidy resulting from a further fall in the prices on the world market in the coming days, Hussain said the BSFIC wants to cut subsidy. But one of its main goals is to play a role in keeping the sugar prices stable on the domestic market, he added.