Keeping sugar industries operational round the year

Product diversification is a process of expanding business opportunities through additional market potential of an existing product. Diversification may be achieved by entering additional markets or pricing strategies. Often the product may be improved, altered or changed, or new marketing activities are developed. The planning process includes market research, product adaptation analysis and legal review.
The product diversification strategy is different from product development in that it involves creating a new customer base, which by definition expands the market potential of the original product. This is almost always done through brand extensions or new brands, but in some cases the product modification may "create" a new market by creating new uses for the product.
Indeed, products tend to create or stimulate new markets; new markets promote product innovation. Product diversification, however, involves addition of new products to existing products either being manufactured or being marketed. Expansion of the existing product line with related products is one such method adopted by many businesses. Adding tooth brushes to tooth paste or tooth powders or mouthwash under the same brand or under different brands aimed at different segments is one way of diversification. These are either brand extensions or product extensions to increase the volume of sales and the number of customers.
Meanwhile, the product life cycle is an important concept in marketing. It describes the stages a product goes through from when it was first thought of until it finally is removed from the market. Not all products reach this final stage. Some continue to grow and others rise and fall. Product diversification some times enhances product life cycle thus create market opportunity and customer delight.
The Bangladesh Sugar and Food Industries Corporation (BSFIC) has 15 sugar mills, 55 food units and one engineering project. In 1977-1983 period, almost all food units were disinvested under a government policy. Hence, the BSFIC is running only with sugar products and the engineering project as support service of sugar mills. In global market, only one product can't survive the competition.
The BSFIC produces sugar and molasses from sugarcane. Moreover, climatic condition is not favourable for quality sugarcane production. To sustain the BSFIC, it needs product diversity on its own lands and technology. In Bangladesh, sugar mills remain operational only for 2-3 months of a year. These sit idle for the rest of the year, creating huge pressure on budgetary allocation resulting in a huge loss in this sector. So the mills need product diversification in order to minimise losses.   
Some initiatives have been taken by the government to rescue the BSFIC from huge losses. Three major projects are running i.e; 1)  balancing, modernisation, rehabilitation and expansion (BMRE) of Carew & Co. (BD) Ltd, 2)  replacement of old machineries with new ones for sugar production from sugar bit in Thakurgaon Sugar Mills Ltd and 3) power production through the process of co-generation and establishment of a sugar refinery in North Bengal Sugar Mills Ltd.
Most economists would agree that there is a need for diversification of high-value agricultural crops, grown with some economies of scale, exported in raw or preferably processed form to lucrative metropolitan markets, and resulting in higher net profits from sugarcane. Some of these are already occurring to some extent with a handful of farmers.
However, the 'reformers' do not explain how exactly diversification will occur throughout the sugar belt, nor why it has not occurred already if the potential returns are so high.
On the contrary, there are a number of quite plausible reasons why diversification is not likely to occur, because of very rational economic behaviour by the farmers. If we can diversify sugar product, we can ensure sugar industries operational round the year thus resulting in new job opportunities, minimising the losses and creating new products in the market.
Some examples of diversified products of sugar are mentioned in Chart-1.
If we can produce a few of the diversified products, we can attain food security in sugar product supply chain, minimise the losses and create competitiveness in the market.
The writer is Deputy Secretary, the Ministry of Industries.
masudlaxmi@gmail.com