A dwindling supply of sugarcane has forced eight state-owned sugar mills to close down as farmers are reportedly selling the output to molasses producers for higher profit.
The state-run sugar mills are unlikely to fulfill their production targets.
"The total production might reach 1,32,000 tonnes this year against the target of 1,40,000 tonnnes," said Abul Fazal Badruddoza, director marketing of the Bangladesh Sugar and Food Industries Corporation (BSFIC), while talking to the FE.
BSFIC officials violation of rules allegedly by the farmers in sugarcane crushing area is the main cause for production target failure, although almost all agri-inputs were supplied to the farmers.
Now, only six sugar mills out of 14 are in operation. They too may stop production anytime, the BSFIC sources said.
Badruddoza said during the last fiscal BSFIC disbursed loan amounting to Tk 730 million among the farmers across the country with a view to cultivating sugarcane on 1,82,000 acres of land under mill zone areas. There are 0.5-0.6 million sugarcane farmers in the country.
But most of the farmers have not supplied all the sugarcane they produced to the sugar mills although they had made commitments to make them all available at the time of receiving loans.
The farmers have sold sugarcane to the molasses producers violating the rules, he said.
The farmers are violating rules under the shelters of local influential persons, he added.
The mills that have stopped their production include Setabganj Sugar Mill, Thakurgaon Sugar Mill, Shyampur Sugar Mill, Joypurhat Sugar Mill, Natore Sugar Mill, Rajshahi Sugar Mill, Kushtia Sugar Mill and Pabna Sugar Mill.
The BSFIC sources said these mills stopped their production much before the end of sugarcane crushing season.
The mills that are operating include Panchagarh Sugar Mill, North Bengal Sugar Mill, Kero and Company, Mubarakganj Sugar Mill at Jhenaidah, Faridpur Sugar Mill and Jheel Bangla Sugar Mill at Jamalpur district.
BSFIC sources said the six sugar mills will produce 77,500 tonnes of sugar until mid April.
When asked the BSFIC sources said they can make profit worth Tk 500 million this year, whereas the net loss was Tk 180 million last year.
"We have been able to make profit this year because of some cost cutting measures. Some 2000 workers were laid off in 2004-05 and expenditure on annual overtime allowance has been minimized to Tk 50 million from Tk 300 million," Badruduzza said.
He said if all 14 sugar mills could crush sugarcane in full swing the production would have reached 1,95, 000 tonnes this year and the BSFIC could make profit worth Tk 800 million per annum.
However, Tk 750 million has been earmarked for disbursement among the farmers across the country to cultivate sugarcane on 200,000 acres of land under 14 mill zone areas, he said.
The sugarcane crushing in the country's 14 sugar mills began last November 8.
State-owned Trading Corporation of Bangladesh (TCB) floated a tender this month to import 25,000 tonnes of sugar aiming at boosting its supply and bringing down prices.
Sources in the BSFIC said the annual demand for sugar in the country ranges between 1.02 million and 1.04 million tonnes.
Sources said in spite of marketing of locally produced sugar by the BSFIC, the price of the commodity has been maintaining upward trend.
The sugar sold to the Basic's designated dealers at a rate of Tk. 35 kg.
But, consumers have to buy the locally produced sugar at a price between Tk. 54 and Tk. 55 a kg.
Market operators said the price of the item has increased in the international markets due mainly to large-scale production of ethanol from sugarcane by the Brazilian farmers.
Recently, Brazil, the world's largest sugar producing country, has been using the ethanol as an alternative to petroleum fuels.