‘Mismanagement, benefits to traders destroying our sugar mills’

Moshahida Sultana, associate professor at the Department of Accounting and Information Systems in Dhaka University, has been doing research on the sugar mills in Bangladesh since 2015. In a conversation with Sumon Ali of The Daily Star, she talks about the state of the sugar mills and the country's sugar production.

We have a lot of demand for sugar. We have sugar mills, too. Why is the industry in shambles, then?

Since independence, Bangladesh Sugar and Food Industries Corporation (BSFIC) and the sugar mills have taken loans worth Tk 6,044 crore. The interest these loans incurred amounts to Tk 3,085 crore. At present, about Tk 7,946 crore of debt, including interest, needs to be paid. If the government had given subsidies to the sugar mills, the loan interest would not be such a big amount, and the industry would not be in such a sorry state. The government lacks planning and willingness as far as our sugar mills are concerned. It is keen on providing special benefits to traders, which is destroying our sugar mills. 

Why are businessmen given special benefits?

These days, the government's interests cannot be separated from the businessmen's interests. Businessmen have become politicians. Public interest has taken a back seat. Income tax no longer benefits public interest. People's money gets siphoned off to individual accounts, thanks to our corruption-riddled economy. Our sugar mills are bearing the brunt of that. There has always been a lack of foresight regarding sustainable management, anti-corruption measures and efficient planning in this sector.

How much sugar does 100kg of sugarcane produce in Brazil, India and Bangladesh?

Brazil and India both produce 12-14kg of sugar from 100kg of sugarcane. Meanwhile, Bangladesh produces 6-7kg only.

Why does Bangladesh have such a low yield compared to Brazil and India?

That is because our high-yield sugarcane cultivation is limited. Bangladesh Sugarcrop Research Institute (BSRI) claims that the seeds they supply are capable of 12-14 percent sugar yield. But system loss, ancient machinery and delays in sugarcane delivery to the mills cause the decline in the yield. If sugarcane cannot be delivered to the mills within a day of cutting, their sucrose level drops. This affects the sugar production.

What is the production cost of sugar?

It varies from mill to mill. Mills that are burdened with debt have higher production costs. Certain mills can lower the costs by utilising the by-products. Some mills are affected by the loan interest. Previously, the amount of debt (including interest) in production cost was 6-7 percent, but after six sugar mills were shut down in 2020, it shot up to 37 percent on average.

How can the cost be reduced?

I suggest equipping all the sugar mills to utilise the by-products to diversify production. For example, Carew and Co has a distillery where they produce alcohol and sanitisers. They also produce organic fertiliser and electricity using the by-products. Some sugar mills have their own land; they can cultivate other crops in the unutilised land. Surviving solely on sugar production is difficult everywhere in the world. We need specific policies that keep the uniqueness of sugar production in focus.

What kind of support do farmers get to enhance sugarcane supply?

Usually, farmers cultivate sugarcane more and the overall production and supply increase if they get fair prices. Sugarcane farmers must be given incentives every year. They must be given a steady supply of seeds, fertilisers and loans. They should be given assurance that the government will procure their produce. They get demotivated if they do not get the right price at the right time. In the 2010s, farmers did not get paid properly for a few years, which demotivated them. High quality sugarcane must get better prices. That will encourage farmers to cultivate high quality sugarcane.

What is the impact of the current situation?

The vulnerable condition of the sugar mills has proven to be a boon for private refiners. Due to this, the market is going into the hands of privateers. If the private sector has control over supply and demand, they can increase the prices as they wish, which we saw happen with edible oil. The government is unable to control these businesses. The sugar produced at our sugar mills is of high quality and a lot healthier than refined sugar. But even if general people want to, they cannot have healthy sugar. If all our sugar mills were opened and equipped to increase sugar production, traders would not be able to manipulate the market prices for their own benefits. As the government is busy providing benefits to traders, people are deprived of a healthy option.

Can we make our sugar mills profitable?

Of course. It only needs the government's willingness. Till date, people who have been at the helm had little or no knowledge about our sugar industry. People who are involved with the process, e.g. farmers, workers, retired officers—people who are well aware of the pros and cons of the overall management—should be brought in to make new plans, and their implementation should be a priority.

Is there any government initiative to make sugar mills profitable?

No, the government has not yet taken steps to remedy the current situation. Our economy will benefit from investment into this sector. A lot of people will be employed, and our farmers will be benefitted. This has been recommended time and again, but to no avail.

Sugar International, a consortium of three companies from the UAE, Japan and Thailand, has proposed to invest Tk 5,500 crore into our state-owned sugar mills to make them profitable. Will this work?

There is a rumour that the Japan Bank for International Cooperation and Thailand's Exim Bank will provide 70 percent of the consortium's funds as a loan. If this initiative is implemented, and then fails, the consortium and the BSFIC will have to shoulder the burden. If they fail, the guarantors will have to repay the loan. It is still not certain which banks will be guarantors and which properties of the sugar mills will go under mortgage in this initiative. If it fails, the sugar mills may have to sell their land to pay off the debt. Businessmen may procure said land at discounted rates. On the other hand, if the foreign investors want to make a quick profit, they will increase the price of sugar. We should do something on our own instead of seeking outside help. The government must subsidise this sector to improve its condition, which will decrease our import dependency. It will also prevent sacrificing public property for debt service.

Translated by Mohammed Ishtiaque Khan.