Bangladesh : Revitalising the sugar industry
Bangladesh’s sugar industry, once promising, now relies heavily on imports, meeting only 1% of its 2.4 million-tonne annual demand. Outdated mills, mismanagement, and low recovery rates plague the sector. Government plans to reopen closed mills must focus on modernisation, by-product utilisation, and corruption-free management to ensure sustainability, boost local production, and reduce dependency on costly imports.
In the pre-1947 era, when East Bengal had little to no industrial presence, the region still boasted three sugar mills in Darshana, Dinajpur, and Kishorganj. If this historical foundation in sugar production is considered an advantage in terms of expertise and managerial experience, one might have expected the country to achieve significant progress in this sector over the past 77 years, including self-sufficiency in sugar production.
The reality is quite different, however. Bangladesh now imports sugar in large quantities, and its citizens pay significantly higher prices compared to those in neighbouring countries, such as India. The country’s estimated annual sugar demand is around 2.4 million tonnes, but local production accounts for only about 30,000 tonnes. This means Bangladesh is almost 99 per cent dependent on imports to meet the increasing demand for this essential food ingredient.
Moreover, the price of sugar in Bangladesh has skyrocketed from about Tk. 60 to Tk. 140 per kilogram in just three years. Ironically, Bangladesh imports sugar from India at a price of Tk. 70 per kilogram, while smuggled Indian sugar is sold in border areas for around Tk. 90 per kilogram.
This boggles the minds of average Bangladeshis if India can produce and offer sugar at such a low cost, why can’t Bangladesh? Bangladesh and India share almost similar climatic and economic conditions. So, when India’s sugar mills thrived, why have Bangladesh’s mills been struggling to survive? It is not that there is a lack of demand for locally produced sugar in Bangladesh. In fact, locally produced red sugar is considered healthier than imported refined white sugar. Then, why are the country’s sugar mills in such a dismal state?
It is true that the number of the country’s sugar mills rose to 15 from three to four during the pre-independence era. But the sector remained sick because of long neglect, mismanagement, lack of modernisation and corruption of all sorts. All the sugar mills are in the public sector, and all are running at a loss, becoming a significant drain on the national exchequer.
In 2020, six of these 15 mills were shut down due to mounting losses and rising public debt. The mills owe thousands of crore taka to different banks. The closure of these mills not only left thousands of people jobless but also dealt a severe blow to the rural economy, as the livelihoods of hundreds of thousands of sugarcane farmers are closely tied to the fate of these mills located in sugarcane-producing areas such as Pabna, Kushtia, Rangpur, Panchagarh, and Dinanjpur. But still, many supported the government’s decision to close some of the mills, considering that keeping them afloat by providing huge amount of subsidies – especially when a portion of the subsidised funds was being misappropriated – was simply unsustainable.
Of late, the interim government has announced plans to reopen the closed state-run sugar mills to reduce import dependency and create economic opportunities in local areas. During a recent visit to Setabganj Sugar Mill in Dinajpur, Industries Adviser Adilur Rahman Khan stated that the mills would be reopened in phases, with a dedicated task force overseeing the process. He said that Tk. 12 million had already been allocated to incentivise sugarcane farmers, with another Tk. 10 million expected to be disbursed soon.
The revival of these mills is undoubtedly a prudent decision; however, the government must conduct a thorough feasibility study before reopening them to ensure their profitability and sustainability. In their current state, the cost of sugar production is excessively high due to outdated machinery, and most mills rely heavily on government subsidies to survive. While the current high sugar prices may provide temporary relief, such measures are not sustainable in the long term.
Some of the mills are more than half a century old. Production process of the mills is also inefficient. The recovery rate from sugarcane is among the lowest in the world due to inefficient extraction and outdated equipment. For instance, as experts pointed out, sugar mills in Bangladesh can extract only 5 kg of sugar from 100 kg of sugarcane, compared to 10 kg in India.
The lack of timely investment has stalled modernisation efforts in the sugar industry. With upgraded technology and equipment, the extraction rate could be increased, making the sector far more productive and competitive.
Apart from this, the viability of sugar mills can be significantly enhanced through the industrial use of by-products. The sugarcane fibre called bagasse has multiple industrial uses including power generation. Similarly, molasses, another by-product, can be processed into various products such as alcohol, varnish, sanitizer, ethanol, baker’s yeast, and vinegar.
Sugarcane is a versatile crop with its applications going far beyond sugar production. For instance, in Japan, sugarcane derivatives are used to produce specialised medicines. The waste material left after processing can be combined with press mud to create organic fertilizers, further adding value. So, the losses in the sector could be mitigated by adopting practices that maximise the value of by-products.
To increase productivity of state-run sugar mills, modernising mills is crucial, but an urgent overhaul of the management is equally important. However, ensuring dynamic and corruption-free management in state-owned organisations remains a significant challenge. The Bangladesh Sugar and Food Industry Corporation (BSFIC) under the Ministry of Industries is tasked with developing the sugar industry. Its objectives include increasing sugar production, diversifying by-product production, improving sugar quality, expanding market reach, and ultimately achieving profitability. The performance of the BSFIC, however, has not been up to the mark, to say the least. Without a dynamic and corruption-free management, the chances of BSFIC effectively contributing to the growth and development of the sugar industry are slim. Moreover, unless the structural and management issues are addressed, the reopened mills risk reverting to their previous unproductive state.
It is hoped that all these factors will be considered, and a well-thought-out decision will be made to ensure a profitable and sustainable production of reopened sugar mills, benefitting workers, farmers, and the economy at large.
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Source : The Financial Express
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