Setting the stage right for sugar traders to fleece consumers
Wednesday, 16 September 2009
Shamsul Huq Zahid
White sugar has been troubling both consumers and government since the beginning of the holy month of Ramadan. The price of sugar has increased by nearly 40 per cent during a period when its consumption usually goes up.
The people are seen waiting in long queues to procure one or two kilograms of sugar from the mobile sales centers of the private sugar refiners and the late entrant, the Trading Corporation of Bangladesh (TCB).
The commerce ministry, which was very much upbeat before the start of Ramadan about keeping the prices of essentials, including sugar, under control through so-called market monitoring and intervention by the skeletal TCB, has disappeared from the scene. The consumers have developed a strong feeling that the ministry has utterly failed to contain soaring prices of many essential items.
To be honest, the apex Chamber body, the Federation of the Bangladesh Chambers of Commerce and Industry (FBCCI) has dented its own image being associated with the commerce ministry's futile move to contain prices. A few days back, an FBBCI market monitoring team faced wrath of the angry consumers at a Dhaka city market.
The hike in sugar prices in the international market following the entry of a big buyer, India, has to some extent influenced the rise in sugar prices in the domestic market. But it does not anyway justify the level of increase in prices that the sugar has gone through during last four to five weeks.
Then, what has gone wrong with sugar prices? Though belated, the government has decided to look into the reasons for the unreasonable rise.
But, in the meanwhile, the parliamentary standing committee on Ministry of Industries headed by former commerce and industries minister Tofail Ahmed, has found, at least, one culprit, which has contributed to the present sugar crisis.
The parliamentary committee blamed a decision of the previous caretaker government to allow a private sector sugar refiner, the Deshbandhu Sugar Mill, to export 12000 metric tonnes of white sugar to European countries for the hike in sugar prices.
But how can export of 12 to 13 thousand tonnes of sugar destabilize the market when the total domestic consumption of white sugar is estimated at 1.2 million metric tonnes? Moreover, the permission of export was given at a time when there was no volatility in sugar prices in both domestic and international markets. The accusation on the part of the parliamentary committee, according to many, is a ploy to shift the onus of sugar price rise on to others.
Actually, the committee, deliberately or otherwise, has bypassed some other reasons that have contributed to the more than justified hike in sugar prices.
The production of sugar by the public sector sugar mills through the crushing of sugarcanes has declined substantially in recent years. The annual production of sugar by these mills has come down to less than 100,000 tonnes from the previous level of 0.25 million tonnes. The role of the Bangladesh Sugar and Food Corporation, which used to import a sizeable quantity of sugar and market the same through its designated dealers, as a market intermediary has largely vanished because of the entry of a good number of private sector sugar refiners in recent years. These refiners are actually dominating the sugar market. The refiners import crude sugar and market the same after refining.
In the name of protecting 'domestic' sugar industries, the government this year has levied duty at a rate of Tk.3000 per tonne of refined sugar while the duty on the crude or unrefined sugar was withdrawn fully on August 15 last. Coinciding with the changes in duty rates on refined and crude sugar, the production of sugar in the state-owned sugar mills was, reportedly, brought down to 86,000 tonnes this year from the previous year's 1,86,000 tonnes.
So, all the actions helped the local sugar refiners to gain full control over the domestic sugar market. Refiners have thus availed themselves of the best time, the holy month of Ramadan, for making extra profit. Most traders, starting from top fashion houses down to vegetable vendors, target this particular time to fleece the consumers. Why should then sugar refiners fall behind?
Market trend indicates that the sugar prices would come down gradually during the current week as the traders in the large wholesale markets, including Khatunganj in Chittagong and Maulavi Bazaar in Dhaka, have started releasing their stocks of sugar at a reduced price. The traders have minted enough money out of sugar this year and it is high time for them to provide some relief to the hard-pressed consumers!
And if the sugar price declines to a reasonable level, the consumers as well as the parliamentary watchdog won't mind forgiving those who have made billions within a very short period.
White sugar has been troubling both consumers and government since the beginning of the holy month of Ramadan. The price of sugar has increased by nearly 40 per cent during a period when its consumption usually goes up.
The people are seen waiting in long queues to procure one or two kilograms of sugar from the mobile sales centers of the private sugar refiners and the late entrant, the Trading Corporation of Bangladesh (TCB).
The commerce ministry, which was very much upbeat before the start of Ramadan about keeping the prices of essentials, including sugar, under control through so-called market monitoring and intervention by the skeletal TCB, has disappeared from the scene. The consumers have developed a strong feeling that the ministry has utterly failed to contain soaring prices of many essential items.
To be honest, the apex Chamber body, the Federation of the Bangladesh Chambers of Commerce and Industry (FBCCI) has dented its own image being associated with the commerce ministry's futile move to contain prices. A few days back, an FBBCI market monitoring team faced wrath of the angry consumers at a Dhaka city market.
The hike in sugar prices in the international market following the entry of a big buyer, India, has to some extent influenced the rise in sugar prices in the domestic market. But it does not anyway justify the level of increase in prices that the sugar has gone through during last four to five weeks.
Then, what has gone wrong with sugar prices? Though belated, the government has decided to look into the reasons for the unreasonable rise.
But, in the meanwhile, the parliamentary standing committee on Ministry of Industries headed by former commerce and industries minister Tofail Ahmed, has found, at least, one culprit, which has contributed to the present sugar crisis.
The parliamentary committee blamed a decision of the previous caretaker government to allow a private sector sugar refiner, the Deshbandhu Sugar Mill, to export 12000 metric tonnes of white sugar to European countries for the hike in sugar prices.
But how can export of 12 to 13 thousand tonnes of sugar destabilize the market when the total domestic consumption of white sugar is estimated at 1.2 million metric tonnes? Moreover, the permission of export was given at a time when there was no volatility in sugar prices in both domestic and international markets. The accusation on the part of the parliamentary committee, according to many, is a ploy to shift the onus of sugar price rise on to others.
Actually, the committee, deliberately or otherwise, has bypassed some other reasons that have contributed to the more than justified hike in sugar prices.
The production of sugar by the public sector sugar mills through the crushing of sugarcanes has declined substantially in recent years. The annual production of sugar by these mills has come down to less than 100,000 tonnes from the previous level of 0.25 million tonnes. The role of the Bangladesh Sugar and Food Corporation, which used to import a sizeable quantity of sugar and market the same through its designated dealers, as a market intermediary has largely vanished because of the entry of a good number of private sector sugar refiners in recent years. These refiners are actually dominating the sugar market. The refiners import crude sugar and market the same after refining.
In the name of protecting 'domestic' sugar industries, the government this year has levied duty at a rate of Tk.3000 per tonne of refined sugar while the duty on the crude or unrefined sugar was withdrawn fully on August 15 last. Coinciding with the changes in duty rates on refined and crude sugar, the production of sugar in the state-owned sugar mills was, reportedly, brought down to 86,000 tonnes this year from the previous year's 1,86,000 tonnes.
So, all the actions helped the local sugar refiners to gain full control over the domestic sugar market. Refiners have thus availed themselves of the best time, the holy month of Ramadan, for making extra profit. Most traders, starting from top fashion houses down to vegetable vendors, target this particular time to fleece the consumers. Why should then sugar refiners fall behind?
Market trend indicates that the sugar prices would come down gradually during the current week as the traders in the large wholesale markets, including Khatunganj in Chittagong and Maulavi Bazaar in Dhaka, have started releasing their stocks of sugar at a reduced price. The traders have minted enough money out of sugar this year and it is high time for them to provide some relief to the hard-pressed consumers!
And if the sugar price declines to a reasonable level, the consumers as well as the parliamentary watchdog won't mind forgiving those who have made billions within a very short period.