Progress. Agric.

17(1) : 283-293, 2006 ISSN 1017-8139

PROBLEMS AND PROSPECT OF SUGAR INDUSTRY IN BANGLADESH

S. M. I. Hossain, M. A. Zaman1, M. A. Rabbani2 and M. S. Hossain3

Associate Professor, Bangabandhu Agricultural University, Shalna, Gazipur, Bangladesh

ABSTRACT
The problems and prospect of the sugar mills as well as the sugarcane
growers are presented in this paper. Three sugar mills and 102 sugarcane
growers within the selected mill zones were interviewed to find out the
problems and prospects of sugar industry in Bangladesh. About 1.0 million
metric tonnes sugar is required annually for domestic consumption, but the
sugar mills can meet only 1/5 of this requirement. The sugar mills are facing
lots of problems for which they cannot reach the target production level. The
major problems are poor management and finance; inadequate supply of
sugarcane; supply of poor quality cane with low sugar content; low recovery
of sugar by the old machines; and lack of commitment and corruption of the
mill stuff. The growers on the other hand have many problems and
limitations for production of quality sugarcane and supply these canes to the
mills. The major problems mentioned by the growers are the corruption of
mill stuff; delay in taking delivery of canes at the mill gate and delay and
irregular payment of the bills; taking bribes by the corrupted stuff to procure
canes from the growers and for payment of bills; offering low price even if
the they supply good quality canes. Sometimes the growers do not get the
timely supply of inputs and loans. For all these problems of both the mills
and the growers, sugar industry is at the point of threat recurring heavy
financial losses. Sugar industry can be made profitable and may have better
prospect in Bangladesh through adoption of stringent policy and programs
like strong management to stop corruption, replacement of old machinery,
effective training of the mill technicians, training and support to the growers,
etc.

Key Words : Sugar industry, Sugarcane, Problems, Prospect

INTRODUCTION
Sugar industry in Bangladesh started its journey from 1933 and since then until 2004, 17
sugar mills were established. Sugar industry is administered by Bangladesh Sugar and
Food Industries Corporation (BSFIC) under the Ministry of Industries.

According to FAO, sugar requirement per capita/day is 29 g and Bangladesh requires

1.0 - 1.2 million tonnes of sugar/year to meet the demand of domestic consumption
(Hassan, 2003). The figure will be larger in near future to keep pace with the country’s
demographic growth of 2.0 million/year and expected change in quality of life. Three

1 Professor, 2 Lecturer, 3 MS student, Department of Farm Power and Machinery, Bangladesh

Agricultural University, Mymensingh-2202, Bangladesh
284 Problems and prospect of sugar industry

sugar mills have been laid off and now there are 14 sugar mills operating in Bangladesh
which have a total production capacity of 0.21 million tonnes/year. The sugar mills could
not reach its present production capacity, as it does not get the required amount of
sugarcane at the mill gates and the sugar recovery rate is also poor. Sugar production
during 2002-03 and 2003-04 were 0.177 and 0.119 million tonnes at the recovery rate of
6.73 and 7.26% respectively (BSFIC, 2003 and 2004). To reach the present production
capacity of 0.20 million tonnes/year, the availability of sugarcane at mill gates should be
2.5-2.6 million tonnes/year with the sugar extraction rate of 8.0 Percent. But sugarcane
available to the mills hardly exceeded 2.3 million tonnes in the last 10 years (1993-94 to
2002-03) and consequently the net sugar production figure did not exceed 0.172 million
tonnes annually with sugar extraction rate of 7.46 Percent (BSFIC, 1994-2004).

The yield and recovery of sugarcane varieties released from Bangladesh Sugarcane
Research Institute (BSRI) are much higher (93 to 102 tons/ha) than the average yield (43
tons/ha) and recovery (7.46%) as reported by BSFIC (Rahman and Pal, 2003; Shahriar,
2004). This indicates the prospect of increased production of sugar by reducing the yield
and recovery gaps through motivation and training of the growers. Besides, there are
problems in sugarcane procurement and collection system at the mill gates for which
sugarcane supply is much less than required. As a result the sugar industry is counting
losses with a threat to its existence. All these aspects justify an in-depth analysis of the
prospects and problems of the sugar industry in Bangladesh. A study was, therefore,
undertaken to identify the problems and prospects of sugar mills, sugarcane growers and
the sugar industry as a whole so as to suggest some measures to be undertaken to
brighten the prospect of sugar industry in Bangladesh.

METHODOLOGY
This study is a post facto survey type research. It was designed to identify the problems
of sugar industry and the sugarcane growers and also policy issues and action programs
of the government. Data were collected through a questionnaire for both sugar industries
and sugarcane growers.

Sugarcane is a round the year crop. It is generally planted within October to December
and harvested after 12-15 months of plantation. Data were collected from December 2003
to February 2004; the data collection was conducted just after harvesting of sugarcane.
On the other hand the data of sugar mills were collected just after production season of
sugar.

Sample survey technique was followed for this study and for drawing sample multi-
stage systematic proportionate random sampling method was followed. Out of the
fourteen sugar mills three sugar mills were selected (Table 1). Under each sugar mill zone
one village was taken in which 34 sugarcane growers were selected randomly. Thus from
three mills zone a total of 102 sample growers were selected and interviewed.
Hossain et al. 285

Table 1. Selected sugar mills and villages scheduled for interview

Name of the selected sugar mill
Panchagarh Sugar Mills Ltd.
Thakurgaon Sugar Mills Ltd.
Zeal Bangla Sugar Mills Ltd.
Location Name of the selected village
Panchagarh Dhonipara under sadar upazila of Panchagarh
district
Thakurgaon Balia under sadar upazila of Thakurgaon district
Dewanganj Moraduburi under Dewanganj upazila of
Jamalpur district

Data were collected from the sugarcane growers and from five departments of each mill
such as Factory, Cane Development, Repair and Maintenance, Accounts and
Administration departments by using personal interview schedules. Data collected were
analyzed using personal computer (PC). Numeric data were analyzed for range, mean,
standard deviation, etc., using Microsoft Excel. The non-numeric data were summarized
and tabulated using Microsoft Word.

RESULTS AND DISCUSSION

The general features of three selected sugar mills are represented in Table 2. Panchagarh
Sugar Mills Ltd., Thakurgaon Sugar Mills Ltd. and Zeal Bangla Sugar Mills Ltd. were
established with yearly production capacities of 10160, 15240 and 10160 million metric
tonnes per year, respectively. Although Thakurgaon Sugar Mill has larger production
capacity than the other two, sugarcane crushed by each mill during 2003-04 was nearly
the same. Total number of persons employed in these mills is not proportionate to their
capacities. The number of working stuff should be optimum so as to avoid unnecessary
overhead cost, which is incurred upon the sugar production cost.

Table 2. General features of the three selected sugar mills under investigation
Name and location Panchagarh Sugar Thakurgaon Sugar Zeal Bangla Sugar
Mills Ltd., Panchagarh Mills Ltd., Thakurgaon Mills Ltd., Jamalpur
Year established 1969 1958 1958
Daily crushing capacity 1,016 1524 1016
(million metric tonnes)
Cane crushed in 2003-04 98,296 109373 99669
(million metric tonnes)
No. of gur processing units 0 IC*- 190; PC**- 93 IC- 2; PC- 117
No. of officer & staff 994 1135 816
No. of contract growers 8777 13272 11414
* IC – indigenous crusher; **PC – power crusher

Problems associated with the sugar mills

The major problems regarding poor performance of sugar mills are discussed in the
following paragraphs.
286 Problems and prospect of sugar industry

Poor performance of sugar processing units

For production of white sugar, cane has to go under several processes such as cane
cutting (chopping), milling, juice heating, juice clarification (through sulphitation &
carbonation process), evaporation, crystalization, centrifugation and sugar bagging. In
each step of sugar processing some amount of sugar is lost in the by-products such as
bagasse, press mart and molasses. This is particularly true if the machines are old. First
two sugar mills were established in 1933 and last one in 1996. Eventually the mills are
being operated with the age old processing equipment. Replacement and maintenance
work could not be done due to shortage of fund. As a result frequent break down of the
components, low recovery and losses of sugar are observed in the mills. This is a critical
problem of the sugar mills which needs to be improved.

Poor management system

The management systems of all the selected sugar mills were very poor. According to the
respondents, the main reasons for poor management were unskilled manpower, political
influences, trade union influence and lack of training. A very strong management system
supported by stringent rules and regulations is a crucial need for all the sugar mills and
industry as a whole.

Inadequate supply of sugarcane

Most of the sugar mills including the selected ones do not have their own land to
produce sugarcane. They collect sugarcane from the growers’ field in the mill zones. All
three-mill authorities reported that there are inadequate supplies of sugarcane to the
mills and they pointed out different reasons for inadequate supply of sugarcane such as
(1) farmers produce less sugarcane than required by the sugar mills, (2) low yield of
sugarcane and (3) farmers sell their cane to ‘gur’ (brown sugar) producers at higher price
(55–60 Taka per 40 kg). Better price of sugarcane based on quality should be ensured to
attract the growers.

Variations in quality of sugarcane

The quality sugarcane primarily means clear and healthy cane containing good amount
of sugar in it. Sugarcane grown in the growers’ fields is not of the same quality due to
varietal differences as well as the variation in soil characteristics, agronomic practices
and climatic conditions. Sugar content is maximum when the cane is fully matured;
sugarcane will have lower sugar content if harvested before maturity or harvesting is
delayed. If the growers get the ‘purjee’ (permission) at the right (maturing) time, they can
supply good quality canes; if not, harvesting is delayed and cane quality is deteriorated.

Transportation of sugarcane
During crushing period sugarcanes are harvested and transported to sugar mills from the
grower’s fields. The transport systems of the sugar mills with limited number of old
vehicle can not provide transport services to all the growers and some growers had to
carry their canes to the mill gate through their own or hired transports like bullock cart
Hossain et al. 287

and buffalo cart or power tiller drawn trolley. Moreover, the road systems in the rural
areas, from where canes are hauled, are not at all suitable for mechanized vehicles.

Imbalance of sugar price and production cost

Sugar is the principal product that brings revenue for the sugar mills. The average
production cost of sugar was higher than Tk. 30,000/metric tones in 2003-2004, but the
market price of sugar was Tk. 26,500/metric tones. On the other hand the market price of
sugar is dictated by the price of imported sugar and illegal trafficking of low-priced
sugar from India. The imbalance of sugar price and production cost cannot be waved off
until these two problems are solved. Consequently the sugar mills will continue to count
financial loss. The only way to get rid of this situation is to reduce the sugar production
cost by every possible means.

Profit and loss

As the sugar price in the local market is less than the production cost of the locally
produced sugar, the sugar industry incurs loss. All three selected sugar mills counted
loss during 2003-04. The mill authority cited a number of reasons for financial losses such
as :
i. inadequate supply of sugarcane;
ii. higher production cost due to higher price of all inputs;
iii. low market price of sugar; and
iv. low recovery of sugar because of old machinery as well as low sugar content of
cane varieties.

Financial problem
Financial problem of the sugar industry is an acute problem that attribute to many other
problems that let not sugar industry stand on its own foot. Due to financial losses
through the years, the sugar mills can not pay salaries and wages to employees; can not
pay the bills of the farmers for their supplied canes in time and has to count interest on
borrowed money from the bank. The scenario is common for all three sugar mills. To
resolve the financial problem there should be an effective measure to improve the
management system of the mills that may increase resource utilization efficiency and
reduction in production cost of sugar.

However, there are many other factors that attribute to the losses of the industry, of
which management is the key factor along with human and technical factors.
Government should take strong pragmatic initiative to improve the situation.

General characteristics of sugarcane growers

Level of cane growing experience
Distribution of cane growers on the basis of their cane growing experience is given in
Table 3. The cane growing experience of the selected growers ranged from 4 to 50 years.
Table 3 shows that 97.06% of the growers had more than 10 years of cane growing
288 Problems and prospect of sugar industry

experience. The average cane growing experience of the farmers was 25 years. If these
farmers can be provided with training on the use of modern technologies, the yield of
sugarcane can be raised and cane supply to sugar mill would be increased substantially.

Land area of the growers for sugarcane cultivation

The amount of land areas owned by the selected sugarcane growers are presented in
Table 4. The land areas of the growers vary widely from 0.6 to 14.77 ha. About 48% of the
cane growers own less than 3 ha of land where 30% of the cane growers possessed 4 to
less than 6 ha of land and very few (less than 5%) own land greater than 10 ha. The
majority of the cane growers (66%) own land ranged from 2 to less than 6 ha and the
average land area is 4.4 ha.

Even though the average land area owned by the cane growers is 4.4 ha, the cane
growing area is less than 1 ha. Table 5 revealed the fact that cane growing area is
gradually decreasing at the rate of 0.15 ha/year/grower. This may be due to the fact that
growers are getting tired of the mismanagement of sugar mills or diverting their land to
other high valued crops.

Table 3. Distribution of cane growers on the basis of their cane growing experience
Range (Year) Mid value (Years) Number of cane growers Mean Standard deviation
Number Percent
0-9 4.5 3 2.94
10-19 14.5 38 37.25
20-29 24.5 26 25.49 25 yrs 10.88
30-39 34.5 23 22.45
40-49 44.5 10 9.80
50-59 54.5 2 1.96

Table 4. Distribution of sugarcane growers on the basis of total land area owned by them
Range (ha) Mid value (ha) Number of cane growers Mean Standard deviation
Number Percent
0-1.9 0.95 12 11.76
2-3.9 2.95 37 36.27
4-5.9 4.95 31 30.39
6-7.9 6.95 10 9.80 4.40 2.89
8-9.9 8.95 7 6.86
10-11.9 10.95 1 0.98
12-13.9 12.95 2 1.96
14-15.9 14.95 2 1.96
Hossain et al. 289

Table 5. Average area under sugarcane by the cane growers during 2001-2004
Location Sugarcane growing area (ha) Average reduction of cane
growing area (ha/year/grower)
2001-2002 2002-2003 2003-2004 2001-2004
Panchagarh 1.1 0.7 0.6 0.167
Thakurgaon 1.0 0.8 0.6 0.133
Zeal Bangla 1.1 0.8 0.7 0.133
Mean 1.067 0.767 0.633 0.145

Problems associated with sugarcane production by the growers

Availability of sugarcane production inputs
Fertilizers : Sugar mills’ authorities usually provide the growers with inorganic
fertilizers. Among the selected cane growers 90.7% growers received fertilizers from the
mills and the rest 9.3% bought fertilizers from the local market. However, about 54.2%
growers received fertilizers from the mill without any trouble and 36.4% with various
troubles- 24.6% did not get fertilizer on time, 6.8% got poor quality fertilizers and 7.1%
got inadequate amount of fertilizers (Table 6).

Table 6. Problems associated with the supply of fertilizers to the growers

Description Frequency Percentage
Purchased from local markets 11 9.3
Received fertilizers from the mills 107 90.7
(a) without any troubles 64 54.2
(b) with various troubles 43 36.4
(i) Not supplied at right time 29 24.6
(ii) Not supplied good quality fertilizer 8 6.8
(iii) Not supplied adequate fertilizer 6 7.1

Seeds : Usually every sugar mill has a clean seed program under which they produce
clean seed in mill’s farm or farmers’ fields. These clean seeds are distributed to the
growers on credit if they want. Among the growers 61% used their own seed where 39%
used seed supplied by the mills’ authorities.

Pesticides : Pesticides are also supplied from the sugar mills on credit to the growers.

Tillage : For land preparations 100% of the interviewed growers have their own country
plow and 15% have their own power tiller. But 36% growers used power tiller on hire.
The hiring rate of power tiller was Tk. 1000 to Tk. 1500 per hectare. Planting, weeding
and harvesting were done manually using spade, hand hoes and hasua, respectively at
wage rates of Tk. 50.00 to Tk. 60.00 per day. All the growers reported that hired laborers
290 Problems and prospect of sugar industry

were available for different operations except in some peak period, especially during
harvesting.

Irrigation : Although irrigation is an important input for better yield of sugarcane,

almost 89% of the growers did not apply irrigation to their field. Only 11% applied
irrigation water from shallow and deep tube well at the cost of Tk. 50 to Tk. 60 per hour.

Cost of sugarcane production

Production costs of sugarcane were different in different mill zones (Table 7). The
average production costs were from Tk. 45,218.00 to Tk. 56,254.00 per ha.). Similar
production cost of sugarcane was reported by Alam et al. (2002). Average profits received
from sugarcane cultivation were from Tk. 44,897.00 to Tk. 60,352.00 per hectare. The
findings prove that sugarcane is still a profitable crop for the farmers. If the growers are
not harassed by the corrupt stuff of the sugar mills, they will encouraged to continue
growing of sugarcane despite some other difficulties.

Table 7. Production cost and return from sugarcane in three sugar mill area
Mill Mean Production Mean Return Mean Profit Benefit Cost
cost (Tk./ha) (Tk./ha) (Tk./ha) Ratio (BCR)
Panchagarh Sugar Mills Ltd. 45,218.00 105,570.00 60,352.00 2.33
Thakurgaon Sugar Mills Ltd. 48,896.00 102,713.00 53,817.00 2.10
Zeal Bangla Sugar Mills Ltd. 56,254.00 76,775.00 20,521.00 1.36
Average 50,123.00 95,019.00 44,897.00 1.89

Selling of sugarcane
All the sugar mills get sugarcanes from either credit or non-credit contract farmers. Some
growers (29.4%) got the favour of the mill authority and could supply their cane without
facing any problem. But 70.6% cane growers reported that they had to encounter various
problems for cane selling to the mills; 36% complained about irregular payment of the
bills in installment (not at the time of cane supply); 22% complained about bribing to get
the payments. 20% farmers could not sell their canes to the mills at the time of cane
maturity; 11% got ‘purjee’ (permission) lately and 12% farmers complained about the
misbehavior of the mill personnel (Table 8). These problems discourage the growers to
supply their cane to the sugar mills and the sugar mills did not get adequate amount of
sugarcane for crushing. Mill authority should extend their attention towards solving
these problems.

Expectations of the growers

Sugarcane is a cash crop and farmers grow it for cash. After one year of proper
nourishment when the canes get matured, growers obviously expect their cane to be
supplied to the mill at proper time and expect cash payment in time. The expectations the
sugarcane growers are summarized in Table 9. Majority of the growers expected that the
price of the cane should be paid in time (27%); purjee should be given at the right time
Hossain et al. 291

(23%); protection of cane in the field from theft (20%); good behavior of the officer and
bribe to be stopped (10%). Some growers also demanded higher price of their cane.

Table 8. Problems of the growers with cane selling

Nature of problem No. of respondents Percent
(a) No problems with cane selling 30 29.41
(b) Face problems with cane selling 72 70.59
(i) Pay money irregularly 50 35.97
(ii) Want bribe 30 21.58
(iii) Can not be sold at right time 27 19.42
(iv) Misbehavior of mill personnel/officers 17 12.23
(v) Delay in getting purjee 15 10.79

Table 9. Expectation of cane growers from mill authority or the government

Expectation Frequency Percentage
Price to be paid in time 42 27.10
Bribe to be stopped 17 10.97
Good behavior of manager/ officer 16 10.32
Purjee to be given in right time 37 23.87
Cane price to be increased 10 6.45
Good quality fertilizer to be supplied 1 0.65
Protection of cane from theft in the field 32 20.64
Total 155 100

CONCLUSION AND RECOMMENDATIONS

Based on the findings of this study the following conclusions are drawn and some
recommendations are given in order to increase sugar production and to revive the
bright prospect of sugar industry in the country.

a. Sugar is an essential food commodity with universal demand. If local production

is inadequate, sugar has to be imported with the expense of foreign currency.
Local production of sugar can meet only 14.0% of annual requirement for
domestic consumption. This indicates the acute necessity of increasing sugar
production in the country. A long term policy is needed to increase sugar
production in phases up to the level of self sufficiency.
b. The sugar mills are failing to achieve their production targets for inadequate
supply of sugarcane from the growers. The farmers are not interested to grow
more sugarcane as because the mills do not pay fair price for their canes and they
do not get their money in due time rather they are paid in installments after
292 Problems and prospect of sugar industry

several months and sometimes they have to pay bribe for selling sugarcane and
getting money.
c. Another cause for inadequate supply of sugarcane to sugar mills is the use of
indigenous and power sugarcane crushers by gur producers within the sugar
mill areas; a substantial part of sugarcane is consumed for gur production. Even
the contract farmers supply their canes to gur producers, if higher price is
offered.
d. Land area under sugarcane is decreasing at a rate of 0.15 ha per year, which
indicates that the growers are losing interest in growing sugarcane because of the
mismanagement and corruption of the sugar mills regarding procurement of
sugarcanes from the growers. The sugar mills should have a clear schedule for
sugar production by the contract growers and a schedule for sugarcane
procurement from each farmer during the operational period of the mills. The
sugar mills should also improve their management system and stop corruption
by the stuff.
e. Sugarcane is still a profitable cash crop for the growers. All kinds of inputs and
services should be made available to them in due time and all of their harvests
should be procured by the sugar mills with fair price as per schedule which has
been circulated to them well ahead of time. If the growers can sell all of their
harvested crop with a good profit margin, they will be encouraged to grow more
sugarcane for the sugar mills.
f. Sugar recovery is low in sugar mills as because they are using old machines and
the farmers are supplying canes with low sugar content. The sugar mills should
replace the old machines or renovate the sugar production units. The growers
should also be motivated to grow recommended varieties of sugarcane with high
sugar content.
g. Advisory or extension services for good agricultural practices (GAP) in
sugarcane production must be made available to the sugarcane growers so as to
enable them to get higher yield and maximum return.
h. The number of persons employed in a mill should be optimized on the basis of
sugar production capacity of the mill; this will cut down the overhead cost and
thus minimize the production cost of sugar. Training should be provided to the
employees to improve their skill.
i. Previously the sugar mills could earn money by selling the by-products such as
bagasse and molasses. Some initiatives are required for utilization of these
products. Bagasses can be utilized by the paper mills and molasses by some
private companies. The possibility of using bagasse for small electricity
generating plant can be explored.
Hossain et al. 293

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