No overnight relief from losses

The Bangladesh Sugar and Food Industries Corporation (BSFIC) will not get relief from the losses anytime soon despite closing six mills.

The sugar mills of the BSFIC have been facing losses for years as management of the mills showed excess expenditure than actual and the collective bargaining agent (CBA) leaders pocketed public money by charging extra for the sugarcane they indirectly supplied, although they are not supposed to do so.

Both, management of mills and the CBA leaders were responsible for the losses of the mills, the BSFIC said in its assessment.

For this reason, the government had to run the mills giving a considerable subsidy.

"The mills will not get relief from the losses this year, although sugarcane crushing has stopped at six mills as it is not possible to reduce the losses instantly," said Md Arifur Rahman Apu, chairman of the BSFIC.

However, the expenditure will reduce slightly due to the closure of six mills.    

The BSFIC has a target to produce around 50,000 tonnes of sugar this year from nine existing mills. The government shut six mills in a bid to reduce losses.

According to the BSFIC, the sugar mills faced a loss of Tk 787.10 crore per year on average from 2015-16 to 2019-20 against sugarcane crushing.

However, Carew & Co (Bangladesh) Ltd made Tk 8.85 crore profit per year in the last five years. In the previous fiscal year, the company made a profit of Tk 11.37 crore.

Average production cost reached Tk 131.40 to Tk 319.34 per kg sugar from 2015-16 to 2019-20. The BSFIC sold it at Tk 52.78 to Tk 57.54 per kg. The loss was between Tk 78.86 and Tk 216.18 per kg.

In December, Sanat Kumar Saha, then chairman of the BSFIC, said mill authorities collect sugarcane at Tk 4 per kg, but it was shown as Tk 7 per kg. The BSFIC detected the anomalies, he said.

Saha said the BSFIC has the scope to reduce expenditure and increase revenue by setting up the outlets of Carew & Co (Bangladesh) Ltd at the district level to sell liquor and bio-fertilizer.

The BSFIC earned Tk 120 crore from selling molasses last fiscal year, up from Tk 50 crore each year in the preceding five years.

He said the home ministry was not giving licence for the sales centres and warehouse of Carew & Co.

The mills will have to diversify products and modernise operations to recover from the losses, he said. Mills should manufacture export-oriented liquor and beer, and other products.

Researchers blame mismanagement, corruption and an absence of proper planning for the losses incurred by the state-owned jute and sugar mills.

The rate of sugar extraction from crushing sugarcane is comparatively much lower in Bangladesh. It is six to eight per cent per tonne, down from 12 to 14 per cent in India and Brazil, according to a study by Dhaka University Professor Mohammad Tanjimuddin Khan and Moshahida Sultana and Researcher Maha Mirza.