Buckling under massive debts and tonnes of unsold sugar, state-owned mills are on the brink

With billions of takas owed to workers and farmers, and tens of thousands of tonnes of unsold sugar, the state-owned mills send an ominous sign much as the jute mills had done before their closure.

Selling the stockpiled sugar will obviously enable the mills to clear some of the payments, officials said, before warning that doing so at a time may make the market unstable.

Moreover, the production cost, which is more than twice the market price of sugar in the mills, has put all the plans for their revival in jeopardy.

The bleak prospects have forced the Bangladesh Sugar and Food Industries Corporation, or BSFIC, to seek a funding of Tk 8.5 billion to pay off their debts.

State-owned sugar industry is suffering the same fate as the jute sector due to corruption and irregularities, said the sugarcane farmers who are awaiting payment.

The Prime Minister’s Office has formed a committee to identify the flaws in managing the 15 state-owned sugar mills.

Bangladesh has to import a large quantity of sugar every year as the state-owned mills cannot supply even 100,000 tonnes against an annual demand of around 1.5 million tonnes.

The mills owe the sugarcane farmers more than Tk 300 million, said Shahjahan Badsha, the general secretary of Bangladesh Sugar Mill Sugarcane Farmers Federation.

“A lack of fertiliser and pesticide due to the fund crunch has hampered cultivation as the mills are yet to pay the farmers even into the new season,” he told bdnews24.com.

The sugar mills are facing debts totalling around Tk 10 billion due to irregularities over the years, but unfortunately, the farmers are bearing the brunt of incompetence of the mills, he said.

Ruhul Amin Kaiser, the managing director of Panchagar Sugar Mill, told bdnews24.com that they could not pay the workers their wages and allowances after July.

The mill needs Tk 8-10 million per month to pay the workers. It has 3,200 tonnes of sugar stocked in its warehouse now after producing 2,400 tonnes this year.

“We could pay the wages by selling it,” said Ruhul Amin.

“But authorised dealers are not taking the sugar for a long time, resulting in huge stockpiles at the mills,” he explained.

One kilogram sugar in this mill costs Tk 150 to produce, while the market price is Tk 70 only.

Worker wages and allowances are unpaid for five months in Shyampur Sugar Mill, said its Managing Director Dilip Kumar Sarkar.

Tk 50 million is required to pay the dues and the authorities were supposed to sell the sugar and pay them, but the sales were not enough.

Shyampur mill has 1,700 tonnes of sugar in its stock. The market price of the stock is Tk 100 million.

The production cost of 1 kg sugar in the mill is Tk 174 this year. With the annual bank loan interest of Tk 260 million to pay, the production cost per kg goes up to Tk 245.

“In recent times, the dealers have lost interest in buying sugar from us. We have got the approval to sell 500 tonnes in the open market. Once we sell the sugar, we can pay our workers and staff,” said the managing director of Shyampur Sugar Mill.

Anwar Hossain, a director of BSFIC, dismissed the claim that sugar has remained unsold due to a lack of buyer.

“The government must store some sugar in order to maintain the balance in the market. Also, the sugar stored with us will be exhausted before the next season of sugarcane harvest or before the next Ramadan,” he said.

The mills produced a total of 79,000 tonnes of sugar this year.

“Right now we’re left with 40,000 tonnes of sugar which will be sold before the new stock arrives. There’s nothing to worry about. But if we sell all of the sugar, it will make the market unstable just like the onion market is now,” Anwar said.

Agora and other super shops buy sugar from the state-owned mills at Tk 65 per kg, he said.

“There’s a demand for natural sugar. Therefore, it won’t be a good idea to sell the white sugar at a lower price, we believe,” said Anwar.

The corporation had sought Tk 8.5 billion from the government to pay the dues, allowances, gratuity and pension to the staff, contractors and farmers, said Sanat Kumar Saha, the chairman of SFIC.

The industries ministry forwarded the appeal for the funds to the finance ministry two months ago, but they are yet to make a decision, he said.

“We can pay the arrears once we receive the amount from the government,” he added.

“The government paid us Tk 4 billion in the last two years and asked us to run the mills with our own earnings. Can they pay us anymore?” Sanat Saha asked.

Corruption and other sorts of irregularities have pushed the sugar industry to the brink, claimed Shahjahan, the leader of the sugarcane farmers.

“This industry will come crushing down if the trend goes on. We heard that an inter-ministry committee has started to investigate the issue.”

“Most of the mills run for 40-45 days a year and they (officials and workers) draw wages while doing nothing for the rest of the time. We’ll think about it,” said Anwar, the director of SFIC.

“The Prime Minister’s Office has formed a committee to look into the issue, but it will take two to three years to resolve it, he added.

Representatives from the PMO, commerce ministry, industries ministry, agriculture ministry, and finance ministry sit on the inter-ministry committee, said SFIC boss Sanat Saha.

He advised bdnews24.com to contact the industries ministry for more details on the committee, but when reached, Industries Secretary KM Ali Azam said he had no idea about it.