Bangladesh shuts production at 6 state-owned sugar mills amid mounting losses

The government has decided to shut down production at six of the 15 state-owned sugar mills amid the threshing season in a bid to cut its losses.

The development has spread panic among workers and officials of these factories but the Sugar and Food Industries Corporation (BSFIC) has said they will continue to receive their salaries.

A letter setting out the decision, taken earlier this month, reached the managing directors of the respective mills on Thursday.

BSFIC Chairman Sanat Kumar Saha said production at Pabna Sugar Mill, Shyampur Sugar Mill, Panchagarh Sugar Mill, Setabganj Sugar Mill, Rangpur Sugar Mill and Kushtia Sugar Mill will remain shut until further notice.

He pointed out the mills had been accruing losses for a long time for several reasons, including the declining production capacity of sugar mills. Therefore, the factories are being shuttered for now as part of a push to 'reform and modernise' the industry.

On speaking to a few managing directors, it was learned that the letter instructing to stoppage of production at sugar mills did not mention any plans for reform or modernisation. However, they believe losses worth of 'crores of takas' can be prevented by maintaining the current salary structure, even if production is halted.

Fifteen state-owned sugar mills have been counting losses of around Tk 10 billion every year due to various reasons, including excess manpower, the deteriorating condition of machineries, shortage of raw materials, mounting interests on long-term bank loans and the suspension of production for about 10 months of the year.

For these reasons, white sugar produced in private refineries is available in the market at Tk 60 to Tk 80 per kg, whereas sugar produced at government mills is priced between Tk 250 and Tk 300 per kg. As such, the debt-ridden factories are also having difficulties settling their debts to sugarcane farmers on time.

In the last few years, the government has been able to alleviate the crises emerging in the threshing season through the subsidies provided by the ministry. But in the last fiscal year, the amount of government subsidies has also dropped.

According to BSFIC, the sugar mills racked up losses of Tk 9.7 billion in fiscal year 2019-20. The accumulated losses in the last five years stood at Tk 39.76 billion.

The Setabganj Sugar Mill report a loss of around Tk 500 million after the threshing season in FY2019-20. The factory has directed to stop production this year. As a result, the sugarcane belonging to this mill will go to Thakurgaon Sugar Mill.

ASM Zakir Hossain, managing director of Setabganj Sugar Mill, told bdnews24.com that the mill employs 500 permanent workers in total, including 150 contracted workers. Apart from this, there are about 400 more workers who are added to the fold during the threshing season. However, with the threshing process coming to a halt, the mill will not have to worry about the salaries of at least 400 people. It will cost around Tk 11.5 million a month to settle the wages of the permanent employees.

Saif Uddin Ahmed, managing director of Pabna Sugar Mill, said the government has decided to run nine sugar mills this time and keep the remaining six closed. This has never happened before in the history of the sugar industry.

"The corporation has come up with this idea to reduce losses. The costs will go down a bit as the production costs are high.”

Pabna Sugar Mill employs a total of 687 people. Apart from this, hundreds more are added to the workforce during the threshing season. Around Tk 10 million to Tk 10.6 million is needed to cover their salaries.

Asked about the fate of the workers, he said, "The workers will go and work in other places. And Pabna's sugarcane will go to North Bengal Sugar Mill."