Refiners have now sought further upward review of the rates of already-pricy sugar by city global volatility that shot price indices to 40-year highs.
They also urged government interventions amid criticalities in import owing to export embargo on the sweetener by India and ship congestion in the ports of the key exporter, Brazil.
Local sugar prices, however, have already increased by Tk 15-20 a kilogram in last one and a half weeks despite the government having reduced some specific duties. Sugar was found retailing at Tk 150-160 a kg.
Bangladesh Sugar Refiners Association sent a letter to the commerce ministry on November 6 regarding the imports of raw sugar by the association members during this massive hike on the international market and the adjustment of sugar price due to the appreciation of the US dollar.
The letter, issued by its executive secretary, says currently the price of sugar on the international market is 40-year high due mainly to India's ban on sugar export as well as excessive ship congestion in Brazil ports (80-90 ships waiting for about 4.0 million tonnes of sugar).
With the global price of raw sugar currently at US$ 680-690 a tonne, association members are hesitant on LC opening for raw sugar as the import price of sugar would be Tk 145 inclusive of duty, VAT and other taxes amounting to about Tk 42-45 a kg, the letter reads.
Refiners in the letter claims compared to the global hike, prices have not risen in the domestic market.
"So the members of our association do not have the courage to pay the booking (import) of raw sugar at present," the refiners' group says in the letter.
Meanwhile, the refiners also said due to rise in dollar price, the opening of LCs became cumbersome.
"Currently our members are paying Tk 121-123 for US dollar, which is much higher than that of a few months back."
And due to delay in opening LC and payment of US dollar against it, the ships are idling away time at the port for 30-45 days, resulting in large sums as demurrage and thus raising production cost further.
Therefore, taking into consideration the above-mentioned reasons, the association sought instructions from the ministry as to whether or not to continue the import of raw sugar.
It also requests adjusting the price of sugar in view of the increased price of imports.
A leading refiner told the FE that, part from this gamut of issues, due to unavailability of gas as per their demand, production by the refineries has severely been disrupted while the mills are not able to operate to their capacity.
"This is causing a notable hike in production cost," he says.
The refiner mentions that import has declined at least by 30 per cent this financial year so far compared to that of last FY.
Vice President of Bangladesh Sugar Wholesale Traders Association Mohammad Ali told the FE that they were not getting required sugar properly from the mills.
He said companies almost stopped issuing new delivery orders (DOs) which cut supply to the wholesale markets, thus leading to higher retail prices.
He said the daily demand for sugar across the country is 6,500-7,000 tonnes but availability is much below. And refiners are not giving DOs as per the government-fixed rate.
Consumers Association of Bangladesh (CAB) secretary Humayun Kabir Bhuiyan says the government had fixed maximum retail price of sugar at Tk 130-135 a kg in August which was never actualized.
"Consumers are paying Tk 140-150 a kg despite the government fixation while it has increased to Tk 150-165 a kg now though the government reduced import duty recently by Tk 1500 a tonne," he told the FE writer.
He suggests that the Trade and Tariff Commission (BTTC) should calculate the import and processing costs accordingly and should propose logical price to contain unbridled price spiral.
"The government should remove all kinds of duty on raw sugar and other totally import-dependent products to save millions from starvation during this volatile condition," the consumer-rights campaigner says.
According to the commerce and industry ministries, the country produces only 22,000 tonnes of sugar--following capacity squeeze of state-run mills--against its 2.4-2.5-million-tonne gigantic demand.
Seven leading refiners import all the sugar the country needs-though there have been suggestions for expanding the scope.
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