BANGLADESH: Government to consider sugar exports
Published: 07/13/2012, 12:45:21 PM
The government is exploring ways to allow refiners to export surplus sugar after meeting domestic demand, according to Bangladesh's Daily Star newspaper.
The cabinet committee on economic affairs will need to approve a proposal that seeks to allow refiners to ship sweetener after the festival of Eid in August.
Refiners will first need to be certified by the Bangladesh Sugar Refiners Association (BSRA) of excess stock to be considered for export permit by the commerce ministry.
Taking into consideration the availability and price of sugar in the local market and its import position, the ministry would then give the approval.
The export price of sugar should be 10% higher than the price paid for the raw sugar imported from Brazil, the commerce ministry said.
Bangladesh Sugar and Food Industries Corporation has a stock of 163,000 tonnes of sugar, with 80,000 tonnes imported, which is more than enough to meet demand during Ramadan, said Ferdous Begum, secretary of the state-owned company.
"We have already been selling below our production cost. The local production will begin in November. Unless we can clear out the surplus before then, our losses will increase exponentially," she said.
Earlier, private refiners had urged the government to waive curbs on sugar exports, which were imposed in March 2010 to increase supply of sugar to the domestic market and curb price spirals.
Local mills' production capacities have increased in the last few years to 3.5 million tonnes, which is more than double the local demand of 1.5 million tonnes, according to the five private refiners in operation.
"There is a legitimate reason behind allowing exports of sugar as our production capacity is much higher than demand," said ASM Mohiuddin Monem, secretary general of BSRA.
"If the government allows us to exports, we could utilise our factories to their limit," he said.
Moreover, the green light to export will improve the balance of payments, Monem said.
"As raw sugar is imported, exports will enable us to recoup some of the foreign currencies expended," he said. "It will have a positive impact on balance of payments." In his note on why sugar export is being considered, Commerce Secretary Ghulam Hussain said these factories were set up with bank loans and they risk running up unsustainable losses by not operating to their full capacities.
The refiners' woes have been compounded by higher import costs due to the depreciation of the taka and increased interest rates on loans.
Moreover, refiners feel hard done by the government's decision to keep the import duty on raw and refined sugar the same.
"Refiners are claiming huge losses due to the price fall caused by the surge in imports," Monem said.
Sugar imports increased to 1.567 million tonnes in 2011/12, a jump of 75% from the previous fiscal year.