BTTC identifies supply chain anomalies

The Bangladesh Trade and Tariff Commission (BTTC) has identified anomalies in the supply chain by sugar refiners, which led to an artificial crisis of crystal sugar on the local market.
It has already sent a report on the findings to the Prime Minister's Office (PMO) for necessary action.
According to the report, a copy of which was obtained by the FE, the sugar refiners issue more supply orders (SOs) than their actual capacities, causing disruptions in the supply chain.
"They issue SOs to deliver to the wholesalers within two weeks, but it actually takes 3-4 months," it observed, suggesting short-and long-term measures to overcome the problems.
The state agency prepared the report by reviewing the existing supply chain of the item against the backdrop of volatility and unusual prices in the market during the last couple of months.
It found that under the existing SO system there is a chance of changing hands, which is another key reason for the price surge of the essential commodity in the local market. Once the SO changes hands, the sugar prices rise each time.
At present, sugar has become both scarce and expensive, and traders are not selling it at the government-fixed rate, according to market sources.
According to the report, there are some vested quarters cashing in on the weaknesses of the SO system and trying to make abnormal profit by creating artificial crises in the market.
When the sugar prices increase in the international market, the refiners slow down the delivery - one of the reasons that was observed during the recent sugar crisis.
To avert such anomalies in the market, the commission put forward recommendations including enforcement of the 'Control of Essential Commodities Act 1956' in production and marketing of sugar.
It also proposed reducing the existing import duty of the essential item and suggested ensuring that the set sugar prices at mill gates remain stable for at least 10 days.
Moreover, it suggested that a commodities exchange be established to control the secondary market.
The recommendations included ensuring cent per cent use of consumer packs, taking action against issuing more SOs than refiners' production capacity, and ensuring that the SOs issued for specific areas are not delivered to other areas.
It also suggested that the Bangladesh Competition Commission may take necessary measures to create competition in the market by increasing the number of refining mills.
The BTTC observed that it would not be possible to do cent per cent consumer packs as 95 per cent of sugar is sold in bulk form in the wholesale or secondary market. This type of secondary market is difficult to control by mill owners or the government agencies, it said.
Under the circumstances, it suggested establishing a commodities exchange to control the secondary market where the secondary buyers/traders are registered as well as buy and sell essential commodities.
Despite several attempts, immediate past president of Bangladesh Sugar Refiners Association (BSRA) Golam Mostafa and Secretary of the association Golam Rahman could not be contacted over phone for comments on the BTTC report.

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