Now refiners demand hike in sugar price

• Annual sugar demand in the country: 18 lakh tonnes
• Govt sugar mills produce 45,000 tonnes
• Remaining demand is met thru' imports
• Private refiners import raw sugar
• Earlier, import duty was Tk22,000-23,000 per tonne of raw sugar
• Now refiners have to pay Tk28,000-29,000 per tonne of imports
• After refining, mill gate price of sugar stands at Tk3,703-3,888 a maund
• Refiners are selling sugar at Tk2,900-2920 per maund

Private sugar refineries have demanded that the government waive import duty and supply dollars at the current bank rate for import payment, besides raising the price of sugar urgently in the wake of the soaring dollar prices.

If these steps are not taken, the volume of losses will mount, pushing sugar refiners to bankruptcy, said the Bangladesh Sugar Refiners Association in a letter sent to the Ministry of Commerce.

Meanwhile, Commerce Minister Tipu Munshi said even though the price of soybean oil has dropped markedly in the international market, consumers in the country are not enjoying its benefit due to the rise in the price of the dollar.

At the end of the Cabinet meeting on Thursday, the minister added that a decision might be taken next week regarding a proposal by millers on raising edible oil prices by Tk20 a litre amid the volatility in the foreign exchange market.

Officials at the commerce ministry told The Business Standard that Sugar Refiners Association Secretary General Golam Rahman sent a letter to the commerce secretary on Wednesday, proposing an increase in the price of sugar.

In the letter, the organisation says sugar refineries opened LCs (letters of credit) with deferred payment facility but they are having to pay extra taka against the dollar in settling the LCs, as a result of which they have been incurring huge losses.

"When the LCs were opened for the import of raw sugar, the dollar rate was Tk83-85 per dollar. But now while settling those LCs, commercial banks are charging us Tk115 per dollar. Hence, additional money is being spent on sugar imports," reads the letter.

The letter also notes that earlier import duty was 22,000-23,000 taka per tonne of sugar, but due to the increase in the dollar rate, the refiners have to pay Tk28,000-29,000 in import duty per tonne, causing import costs to go up. "

After refining, the mill gate price of each maund (around 40kg) of sugar stands at Tk3,703-3,888, but refiners are selling it for Tk2,900-2,920, it adds.

Commerce ministry officials have also endorsed the sugar-related claim by saying that besides the increase in commodity prices in the international market, the import costs of various daily necessities, including sugar, are going up because of the rising dollar price in the country.

As a fixed rate of import duty on sugar is imposed on the import price, sugar importers now have to pay more in duty than before, causing sugar prices to increase further, they added.

In order to rein in the price of sugar in the domestic market, the government in March this year reduced the regulatory duty on sugar imports to 20% from 30% because of increased demand for the item during the month of Ramadan and an upsurge in shipping costs.

An official of the Bangladesh Trade and Tariff Commission told TBS that in addition to the regulatory duty, sugar importers have to pay duties, taxes and VAT at various stages, taking the tax incidence on sugar imports to as high as 51%.

According to data obtained from the commerce ministry, annual demand for sugar in the country is about 18 lakh tonnes.

Government sugar mills produce about 45,000 tonnes, while the rest of the demand is met through imports of raw sugar