Sugar prices soar despite import duty cut

Highlights:

• NBR cut the duties by half on November 1
• Duty on raw sugar cut to Tk1,500 per tonne
• Duty on refined sugar cut to Tk3,000 per tonne
• Retail price increased by Tk10 per kg over 2 weeks
• Wholesale price per maund rose by Tk500
• Wholesalers blames millers for not providing supply as per demand
• 96% of demand for sugar is met through import

Infograph: TBS

The recent decision by the National Board of Revenue (NBR) to reduce import duties on both refined and raw sugar by half has failed to benefit consumers, as sugar prices continue to soar in wholesale and retail markets.

On November 1, the revenue board reduced the import duty on raw sugar to Tk1,500 per tonne and refined sugar to Tk3,000 per tonne. The move was intended to stabilise the price of sugar ahead of the upcoming national elections.

However, two weeks after the duty cuts were announced, sugar prices have actually risen. In the wholesale market in Chattogram, the price of sugar per maund (37.32 kilograms) has increased by Tk500 to Tk5,000.

The increase in the price of sugar in the wholesale market has also affected the retail market. In two weeks, unpackaged sugar has increased to Tk145 per kg, a rise of Tk10.

Wholesale traders of Khatunganj complained that the price of sugar in the market is not decreasing because the millers are not providing the supply as per the demand even though the government has reduced the customs duty. Millers and SO (sales order) sellers are manipulating the sugar market to control prices.

Mohammad Ibrahim, an SO businessman at Khatunganj, told The Business Standard, "The sale of sugar in the market is low. Still, prices are rising. This is because sugar millers and the first-hand traders control the sugar market through syndicate practices."

Alamgir Parvez, the proprietor of MN Enterprise at Khatunganj, expressed, "Even though the government has reduced the import duty, its impact has not been felt in the wholesale market. On the contrary, sugar prices have increased over the past two weeks, leading to decline in sales."

On the other hand, DO buyers allege that the sugar market at Khatunganj is controlled by various syndicates. "Even if they purchase sugar from S Alam, they have to transport and supply it through the designated transport. If they fail to keep the designated transport workers happy, they cannot obtain sugar supply from even S Alam factory," said a buyer.

Absar Uddin, a grocer in the Jamal Khan area of the Chittagong city, said, "We bought sugar at Tk135 per kg today (Tuesday). Here we are selling to retail consumers at Tk145 per kg. The government has reduced the duty, but on the contrary, the price has increased in the market."

Biswajit Saha, director of corporate and regulatory affairs of City Group, one of the largest sugar processing companies in Bangladesh, said, "It will take more time to see the impact of the withdrawal of duty on sugar in the market. Because the sugar which has already been imported and is awaiting release has not got the benefit of withdrawal of import duty."

He said, "The government has withdrawn the duty to contain the price of sugar ahead of the national elections. But it was too late to make this decision. If this decision was taken a month earlier, it would have been beneficial before the elections."

Biswajit Saha said that the sugar supply situation in the market is normal and there is no chance of creating any artificial crisis.

Officials concerned said the country has an annual demand for sugar ranging from 18 lakh to 20 lakh tonnes. Among the quantity, 50 thousand to one lakh tonnes come from state-owned sugar mills. This amount has decreased to 25 thousand tonnes since last year. The remaining demand for sugar (more than 96%) is met through import.

Five industrial groups in the private sector — City, Meghna, S Alam, Abdul Monem Limited and Deshbandhu Sugar Mills — import raw sugar. Later, they refine it in their mills and bring it to the market. City and Meghna are giant importers followed by S Alam Group.