State sugar mills struggle with surging stockpile

Around 221,555 tonnes of sugar valued at Tk 9.0 billion remain unsold in state-run mills, forcing them to delay payment to banks.

Stocks of sugar at the state-run sugar mills have been piling up since 2013 due to price fall in the domestic market, officials of Bangladesh Sugar and Food Industries Corporation (BSFIC) said.

The dealers across the country are reluctant to purchase sugar from the mills as unsold stockpiles of sugar have been bulging day to day, a high official of the industries ministry said.

The government reduced sugar price to Tk 40 from Tk 50 last month at the dealers' level to help boost sale of the essential item.

But he said the price cut hardly brought any positive outcome as price in the local market is still lower.

If the huge sugar remains unsold for long, it will dissolve, causing the mills to count losses in the days to come, he added.

Six private refiners dominate the country's sugar market, edging out state-run companies, a deputy secretary of the industries ministry said, adding product quality of government mills is better than private mills.  

The stockpile has forced the government mills to count losses, leaving them to struggle in paying dues to banks and the farmers, sources said.

"The government has reevaluated the market price of sugar. The authorities hope that the situation will improve sooner," a source said.

Recently, the ministry of industries has requested the ministry of finance to extend the duration of bank guaranty due to short sell.

The mill rate of the sugar is now Tk 40 per kg, while sugar are selling for Tk 43 to 45 per kg in the retail level, said sources of the mill and local traders.

"Different private brands of sugar prices are more than government sugar in the local markets. But we don't understand that why the state-sugar is not selling, the BSFIC sources said.

The demand of sugar is 1.5 million tonne in a year.

The state-run 15 sugar mills under the BSFIC incurred around Tk 2.89 billion losses in the last fiscal year 2012-13. Losses in the state-run sugar mills shot up by about 130 per cent during the last four financial years.

The amount of losses incurred by state run sugar mills was recorded at Tk 1.26 billion in FY 2009-10, Tk 1.70 billion in 2010-11, Tk 2.90 billion in 2011-12, government data showed.