State-run sugar mills face crisis as BSFIC fails to secure funds for farmers

The financial stability of eight state-run sugar mills is under threat as the Bangladesh Sugar and Food Industries Corporation (BSFIC) struggles to secure adequate funds to pay sugarcane farmers in the ongoing 2025-26 crushing season.

Despite having a staggering outstanding claim of Tk 80.80 billion against the government for trade gaps and subsidies, the corporation is short of a Tk 3.30 billion required to settle farmers' dues. This massive debt reflects the persistent financial distress plaguing the state-owned sugar mills.

The BSFIC, under the Ministry of Industries, has requested the Ministry of Finance to take steps for approval and release of funds needed for payments, exposing a severe shortfall in meeting its obligations to farmers.

During the current season, the corporation expects to crush a total of 0.76 million tonnes of sugarcane across eight of its nine operational mills (excluding Keru & Co. (BD) Ltd). The total value of this cane, which must be paid to farmers, is Tk 4.80 billion.

While the finance ministry has released Tk 1.5 billion in two tranches (Tk 1.0 billion on September 25 and Tk 500 million on November 25), the amount covers only 31.27 per cent of the total cane price requirement. An additional Tk 3.30 billion is urgently required to fully pay the farmers.

An official said the situation puts immense pressure on the BSFIC. He warned that failure to secure the full amount on time could lead to significant unrest among farmers, who rely on timely payments, and may jeopardise future sugarcane supply, further crippling the struggling state-run sugar mills.

Currently, there are 15 mills under BSFIC, with an annual production capacity of 0.21 million tonnes. This output is way too less than the country's annual demand for more than 2.2 million tonnes of sugar. To meet this demand, 2.2-2.4 million tonnes of raw sugar is imported annually.

The industries ministry has undertaken multiple projects to diversify sugar products by tapping into existing potential to make the mills profitable. Some projects are currently being implemented, the official said.

The BSFIC has prepared a five-year roadmap for fiscal years 2022-23 to 2026-27 with a view to making the sugar industry profitable. A source said the loans taken by the sugar mills were intended to support sugarcane farmers. While farmers repaid their debts by supplying sugarcane, the mills failed to pay off their loans.

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