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Why is sugar so expensive these days?

Staff Reporter:

The local sugar market has been extremely volatile for the past few months despite the government fixing the maximum retail price (MRP) on April 6.

This essential commodity is currently being sold at Tk140-Tk150 per kg, with an acute shortage of the product in the retail market.

Loose sugar is somewhat available, but packaged sugar has disappeared from the market and some retailers have stopped selling it.

Earlier, the government slashed the price of loose sugar from Tk107 to Tk104 per kg and packaged sugar from Tk112 per kg to Tk109.

The price adjustment came after the government slashed duties on sugar imports by 5% to 25% to rein in the price of sugar ahead of Ramadan in February.

Despite the reduction in import duty, the sugar market has not normalized.

A visit to Karwan Bazar threw up a picture of an inadequate supply of sugar. Loose sugar, however, was seen at very few shops while the packaged ones had totally disappeared.

When asked why there was no sugar, Bablu, a salesperson of Mayer Doa Traders of Karwan Bazar, said that the dealers don’t provide any sugar. They say things like no sugar being there at the mill gate.

“However, some of them offer loose sugar without any money receipts. Keeping sugar without a money receipt is more dangerous as I can’t show any valid paper against the price if the media or consumer rights authority ask to see proof of purchase. So, I am not keeping sugar,” he added.

Authorities at Al Amin Traders, Jabbar Traders, Chandpur Traders and Salman Traders of Karwan Bazar had similar issues, they said.

A salesman from Jabbar Traders said that it has to pay Tk6,400-Tk6,600 for a sack (50 kg bag) of sugar, meaning the buying price stands at Tk128-Tk132, while the government set price is Tk107.

“This situation has been causing trouble frequently, so we don’t sell sugar at all,” he said.

What is behind this volatility?

Retailers said that the private sector is exerting influence in determining the price in the country’s sugar market and they have created a new crisis.

Wholesale traders alleged that refiners are increasing prices by hoarding sugar.

Bashir Uddin, president of Moulvibazar Traders Association, said that the sugar market has been volatile as the supply of sugar to wholesalers is very limited.

Talking to Dhaka Tribune, Mofizul Haque, president of the Sugar Traders Association, said that traders have to purchase sugar from the refiners at Tk128-Tk132. “So how can we sell sugar at a lower price?” he questioned.

He also blamed the price hike on the international market and the current global economic situation.

However, the refiners denied the allegations made by retailers and said that the supply of sugar fell in the international market and the price also hiked to a 40-year high due to fears of lower production in several exporting countries like India, Brazil and Argentina.

The global market price of sugar has affected the country’s market as well.

Golam Rahman, managing director of Deshbandhu Group and secretary general of Bangladesh Sugar Refiners Association, sent a letter to the Commerce Ministry on Tuesday.

He said that the international price of sugar has risen to $675 from $520 per tonne in the last month, but the price of loose sugar has not seen a proportionate increase in the domestic market.

“As the international price of sugar has reached record highs, the association members are in a dilemma as to whether or not to import sugar,” he added, saying that the association has also urged the government to take appropriate steps on importing raw sugar.

As per the international market, the price of 1-tonne sugar (1000kg) is roughly Tk71,614, meaning a kg of sugar is Tk71.61.

The refiners have an additional cost of Tk25-Tk30 due to the imposed VAT, Tax and other duties, meaning that it costs roughly Tk101-Tk102 per kg.

“The government-fixed price of sugar should be raised appropriately,” said Mozammel Haque, a private jobholder and a consumer from Karwan Bazar.

He also said that the price of essentials is becoming unbearable day by day.

According to the International Sugar Organization (ISO), the price of sugar in the global market was $0.53-$0.59 (Tk56-Tk73) per kg in November.

On April 27, the price shot up to $0.68-$0.71 (Tk72-Tk75) per kg, meaning the price was hiked by 22% in the last five months.

According to Trading Corporation of Bangladesh (TCB) data, the price of sugar in Bangladesh was Tk105 per kg in November. On May 3, the price stood at Tk140-Tk150 per kg, meaning a hike of 25%-42%.

However, the price was Tk78 per kg on May 3, 2022, meaning the price rose by more than 70% in a year, TCB data stated.

The annual demand for sugar is about 25 lakh tonnes and the annual production (private and government) is about one lakh tonnes.

Once, the annual domestic production of sugar was about 1.5-2 lakh tonnes at 15 government sugar mills.

However, six sugar mills, in Panchagarh, Setabganj, Shyampur, Rangpur, Pabna and Kushtia have been closed for two years. Annual production has dropped to 25,000-30,000 tonnes.

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