State-owned sugar mills need planned renovation to survive
State-owned sugar mills can meet nearly 5 per cent of the market demand, only a small portion of the bulk domestic need for sugar in the country. But for years, most of the sugar mills have been facing losses, causing the production cost sky-high. Considering the overall demand, our sugar industry is undergoing a critical situation.
By now, the country is to import almost 2.2 million tons of crude sugar a year. Again, the demand is growing at a rate of about 15 per cent every year. Albeit, currently the total production capacity of the country's sugar mills is only 2 lakh tons, the actual production is less than 1 lakh tons. On the other hand, thousands of tons of sugar produced by the state-owned mills remain unsold in the warehouse.
Reportedly, there has been an estimated gross loss of Tk 3976 crore of the existing state-owned sugar mills in the last five years. The loss in the financial year of 2019-2020 was almost 970 crore. A total of 15 state-owned sugar mills produce sugar in the country. Meanwhile, the authorities concerned have decided to stop threshing sugarcane in 6 sugar mills out of 15--aiming at structuring the loss-making sugar mills to be renovated and running afresh.
In any capitalist economy, even if the private sector dominates, the state-owned sectors do not defunct completely. In our country, there has always been an attempt to expand the scope of the private sectors by abolishing the state-owned sectors. If losses are shown as an excuse in the case of closure of state-owned sugar mills, then why this loss occurs, how much the loss is, and what initiatives have to adopt to be rescued- these issues must substantially be taken into consideration.
Merely issuing an order to stop directly without finding a way to get out of this loss might not be the right option. On the whole, we have to get out of the culture of halting state-owned industries without taking the problems into account that can be solved.
The country's economists opine on the renovation and modernization of the sugar mills on an urgent basis. The lifespan of a sugar mill is around 20 years. The utility of sugar mills, established in the early 1930-60s, has ended nearly 20-40 years ago from now. So, government incentive has to be allocated in this industry and the mills have to be in operational mode being renovated and modernized as they have been running in dilapidated condition for long. If it is possible to turn the industry remunerative, then there will be a favour for this domestic industrial sector to thrive further where at least 5 lakh farmers and 16,000 workers are directly involved.
Lower selling price and higher production cost, a huge amount of accumulated debt and accrued interest, decreased cultivatable land and reluctance of farmers, lack of control in the sugarcane market, sugar import liberalization, supply deficit and transport crisis, extremely low rate of sugar extraction, the sorry state of the mills, factory process loss, problems with technical performance, the crisis in internal management, and inadequacy of proper initiative of selling sugar etc have been severely threatening to the growth prospects of the industry.
If corruption inside, lack of fair policy, purchase of spare parts, commission trade, weight fraud, and irregularity in the management of vehicles could be prevented, then the sugar mills would have gotten a path to subsist anew. Moreover, most often the farmers do not feel encouraged to produce improved varieties of sugarcane as the prices of all grades of sugarcane are the same and they are not paid regularly as well. Therefore, the farmers are more inclined to supply sugarcane to the molasses manufacturers than to supply to the sugar mills. If the mills' authorities could cultivate sugarcane on their land, the production costs would significantly have trimmed down.
In addition, there is less opportunity for product diversification in the country's sugar mills. Alongside keeping sugar production continued, the genesis of by-products like alcohol, bio-gas, sanitizer, vinegar, electricity, organic fertilizer, and molasses cookies must have been processed. Instead of shutting down, turning state-run sugar mills moneymaking by modernizing them through planned investment, and diversifying sugar products would be a better decision to revive this industry.
We await, the authorities concerned will come up with necessary measures to ensure diversification through joint investment from home and abroad, and take effective measures to eliminate graft and corruption inside the industry. Implementing strategic planning, enhancing required skills, and assuring quality management to check the continuous downfall of the state-owned sugar mills are imperative indeed. The authorities also have the liability to turn this national enterprise operational and profitable instead of making the industry vulnerable and branding it as only the loss-making sector.
The writer is an academic