The price of sugar produced in state-owned sugar mills has been hiked by Tk14 a kilogram. Currently the maximum retail price of a kg of local sugar, as the Bangladesh Sugar and Food Industries Corporation readjusted the price, is Tk 99 (a jump of 16.4 per cent). However, the prevailing market price of the item at the retail level is Tk 120 a kg.
At a time when consumers are increasingly tightening their belts on account of rising inflation in every area, the latest hike in sugar price will further squeeze people's affordability of essential foods.
Bangladesh imports most of its refined sugar requirements and some 100,000 tonnes of raw sugar is refined at government sugar mills. With devaluation of Taka, obviously cost of import has risen significantly. Looking beyond the prices that have been fixed, residents of different neighbourhoods have been complaining about the sudden disappearance of sugar altogether. Again, beyond the obvious racketeering by unscrupulous business interests, the ongoing gas crisis for the industry has been taking its toll on sugar production.
The supply of gas to sugar mills has been reduced to half, records shown to the Directorate of National Consumer Rights Protection (DNCRP) by millers confirm.
The commerce minister himself has admitted that production of sugar mills has been cut back by a third due to the ongoing gas crisis and the situation may be reversed once energy supply is restored. However, with the state of affairs as they stand now, no one can be fully sure as to when that will happen. Given that many of the variables that have contributed to lower production and higher cost of production inputs, it is time to have another look at the range of duties on the import of raw sugar. Indeed, refiners have already demanded that they require more gas for production and a withdrawal of all duties on the import of the commodity to stave off this upward spiral of sugar. On top of that there is a dearth of forex, which has caused havoc with opening Letters of Credit (LoCs) with banks. With the tightening of belts across the board, many importers complain that they cannot open LoCs.
Sugar is not a luxury product but an essential commodity. One of the complaints importers have is that while opening LCs, the exchange rate for US$ hover between Tk96 to Tk98, but in case of delayed payment, they are being charged up to Tk105 against 1.0 US$. Then there is import duty, which apparently has increased from Tk32,000 per tonne (up from Tk23,000 earlier). As primary energy is almost certainly going to be costlier since the country has to import energy supplies at higher cost from the international market, it makes sense to reduce the various duties and taxes paid on imported sugar. Some duty relief has to be given to producers if price of sugar is to stabilise in the market.
Wholesale withdrawal of regulatory duty, VAT, customs duty, etc. on imported sugar is not realistic since the revenue board will lose out on substantial earnings, but a downward revision should be considered given the crisis period the country is going through.
