Sugar prices have skyrocketed amid a supply crunch in Dhaka with traders seeing no way out of the problems they see, including a shortage of dollars for import and a lack of gas to refine the sweetener.
Most stores in Karwan Bazar, Mirpur and Segunbagicha ran out of sugar on Wednesday. Some at Karwanbazar had loose sugar and were selling it at Tk 95 per kg on Thursday. Grocers in Mirpur and Segunbagicha were selling it for Tk 110 per kg, according to bdnews24.com.
Both rates are much higher than the government-fixed prices. The government raised the prices of sugar in the first week of October in an apparent move to catch up with the market as the traders were already selling at higher rates than the previously fixed prices.
The price of refined but loose sugar was fixed at Tk 90 a kg in the retail markets while the price of packaged sugar was set at Tk 95.
Bhai Bhai Store in Segunbagicha was selling loose and packaged sugar at the same rate - Tk 110 per kg. Asked what was the price written on the label of a packet of sugar, a worker of the shop said their stock of packaged sugar was sold out.
Sugar supply fell over the past week and the shortage caused the price hike, said Abul Hashem, a wholesaler in Old Dhaka’s Moulvibazar. The wholesalers were selling unpackaged sugar at Tk 95 per kg.
“Maybe the companies have cut supply because they will raise the prices,” a worker of Ansar Majhi Store at Karwan Bazar said.
Sugar prices have increased by 19.5 per cent in the past year, according to the Trading Corporation of Bangladesh, although the international media reported freight cost for imports has almost halved.
‘INSTABILITY IN IMPORTS’
The annual demand for sugar in Bangladesh is 2.5 million tonnes. The local mills produce only 100,000 tonnes and the rest is imported.
But in the past one year, imports fell by 1 million tonnes as “new hurdles” to sugar imports caused instability in the market, said Golam Rahman, managing director of Deshbandhu Sugar Mill and president of Bangladesh Sugar Refiners Association
Banks are reluctant to open letters of credit for sugar imports and the duty is high, he said.
“We need to open LCs worth $27 million to $30 million for one ship [to import sugar]. But Bangladesh Bank has imposed a limit of $3 million on LCs. And so, we're having to open nine LCs in place of one and at the same time buy dollars at a rate of Tk 105.”
Traders have to pay a duty of Tk 32 for a kilogram of sugar despite calls for the taxes to be slashed, according to Rahman, who said the government ignored their repeated calls for support.
"Business has hit rock bottom for continuous losses,” said Rahman.
A commerce ministry official involved with market monitoring and price readjustment said dollar price was Tk 95 when sugar prices were readjusted. “Prices have in fact increased further. It seems sugar prices need another review.”
‘ENERGY CRISIS’
Biswajit Saha, a director of City Group, one of the suppliers of sugar, said a shortage of gas was causing more problems than the dollar crisis was.
The mills that used to refine sugar round the clock now remain operational for only six hours a day due to the lack of gas, pushing daily sugar supply to 1,200 tonnes from 3,200 tonnes, according to him.
“It won’t be possible to normalise sugar supply if the gas crisis is not solved.”
As the recurring gas outages were damaging the machines and raw materials, Biswajit said, the mills have proposed to keep supply normal for a week and then cut supply completely the next week.
Commerce Secretary Tapan Kanti Ghosh could not be reached for comment on the sugar crisis.
