The country’s state-run sugar industry under the Bangladesh Sugar and Food Industries Corporation (BSFIC) is edging towards collapse, crippled by ageing mills, dwindling sugarcane cultivation, spiralling debts and fierce competition from imported and smuggled sugar.
Once a symbol of industrial self-reliance, BSFIC now produces less than 2% of the country’s total sugar demand. In the fiscal 2023–24, its mills produced just 30,080 tonnes — enough to meet barely 1.5% of annual consumption of around 2 million tonnes, according to the latest annual report. The production target for the fiscal 2024–25, set at 45,000 tonnes, remains negligible.
Mounting losses and closures
Losses across state-owned mills continue to rise. Pabna Sugar Mills recorded a net loss of Tk55.6b, followed by Panchagarh with Tk28.2b, Kushtia with Tk25.5b, Shyampur (Rangpur) with Tk24.4b, Rangpur with Tk21.6b and Setabganj (Dinajpur) with Tk13.6b.
Panchagarh and Shyampur mills have already been closed indefinitely, while Kushtia and Rangpur are on the verge of shutdown.
The sugar division of BSFIC now produces only brown sugar, sold in selected supermarkets at heavily subsidised rates. It is supplied to retailers at Tk132 per kilogram despite a production cost of over Tk400, according to a BSFIC sales official.
A former BSFIC chairman said the government provides a subsidy of Tk150–250 per kilogram of sugar — a level he described as “simply astounding”.
Farmers abandon cane for more profitable crops
Sugarcane cultivation has declined sharply — from over 2.5 billion kilograms annually to around 600 million kilograms, according to BSFIC officials. Farmers are increasingly shifting to rice, maize and vegetables, which offer quicker returns and higher profits.
“When the mill ran, cane was profitable. Now we grow other crops,” said Motahar Ali Sarkar, a farmer in Panchagarh.
“After the mill closed, I switched to tea. Molasses factories make three times more profit,” said another farmer, Biplob Hossain.
Union leader Abdur Rahim, general secretary of the Panchagarh Sugar Mill Workers’ Union, said contract workers have lost their jobs and many permanent staff are struggling to survive while hoping the mills will reopen.
Imports and smuggling dominate
With domestic output collapsing, both legal and illegal imports now dominate the market. Imports from India and Brazil — often facilitated by politically connected traders — have left state mills unable to compete.
Private conglomerates such as City Group and Meghna Group now control most of the legal supply through modern refineries and efficient distribution networks.
Despite multiple import duties — totalling up to Tk43 per kilogram in tariffs and taxes — local sugar remains uncompetitive. State mills burdened with 70–80-year-old machinery, overstaffing and political interference cannot match cheaper imported sugar.
Outdated technology, poor yields blamed
According to Arifur Rahman, former chairman of BSFIC, the industry’s decline is rooted in low sugar recovery rates and obsolete machinery.
“Sugar recovery in Bangladesh is only 5–6%, compared with 12–13% in many other countries,” he told TIMES of Bangladesh. “Our machinery is decades old, mechanisation is almost non-existent, and labour costs are high. Producing the same amount of sugar here costs far more.”
He said the government currently provides subsidies of Tk150–250 per kilogram to keep mills running but warned the system has become unsustainable. “Without subsidies, the mills — which also support local schools, hospitals and communities — would collapse, hurting farmers and rural economies.”
Most state mills still produce brown sugar rather than refined white sugar, further undermining their competitiveness, he added.
To revive the sector, he called for investment in high-yield sugarcane varieties, modern machinery and greater transparency in policy. “Without reform, subsidies will keep rising while production continues to fall,” he warned.
Debts pile up as output falls
By the end of the 2023–24 fiscal year, BSFIC’s debt had reached Tk120.6b, of which Tk105b was overdue. Its largest creditor, Sonali Bank, holds around 60% of the loans.
In addition to producing brown sugar, BSFIC also manufactures spirits and alcohol, chitagur, organic fertiliser, technical products and vinegar.
The debt-to-asset ratio now stands at 180:80 — meaning Tk1.8 in debt for every Tk0.8 in assets. Cumulative losses have climbed to Tk105.6bn, with production costs averaging Tk404 per kilogram — far above the official retail price of Tk132.
Even Carew & Company, the oldest and best-performing unit, posted losses of Tk6.1b in its sugar division, with accumulated losses now nearing Tk80.8b.
Govt measures fall flat
The government recently raised the sugarcane procurement price by Tk1,000 per maund (37kg) in an effort to lure farmers back into cane cultivation.
“To safeguard farmers’ interests, we decided to increase cane prices. The decision is final,” said Abdul Alim Khan, joint secretary and director of Sugarcane Development and Research.
Yet BSFIC officials admit the policy has done little to reverse the decline.
“We cover only 2–3% of national demand,” said Azharul Islam, BSFIC’s commercial director. “Consumers choose cheaper sugar, while our branding and distribution remain weak. A lot of sugar in markets is fake or illegally sourced.”
Economists call for radical reform
Economist Muhammad Shahadat Hossain Siddiquee of Dhaka University described the state mills as “unsustainable”, citing corruption, overstaffing and obsolete technology.
“Subsidies only deepen the strain. Gradual closure or public–private partnerships would be more rational,” he said, adding, “When prices fall below variable cost, production should stop — and by that measure, these mills should already have been closed.”
With debts far outweighing assets, antiquated operations and smuggled sugar flooding the market, the outlook for BSFIC appears bleak. Without decisive reform — through either privatisation or phased closure — Bangladesh’s once-proud sugar industry may soon dissolve altogether.
