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Sugar prices soar on permit sale frenzy

Purchase paper of a dealer gets sold several times, at increasing rates, till delivery of sugar

PORIMOL PALMA
Permits given to big dealers to buy sugar changed hands several times at higher rates during Ramadan, leading to the abnormal rise in the commodity's price at that time, traders and intelligence agency sources said.
Dealers obtain delivery orders (DOs) for sugar from mills by paying in advance. There are around 300 dealers at the Moulavibazar wholesale market in Dhaka and Khatunganj in Chittagong, but only a
few big’dealers buy sugar from millers in bulk amounts.
The rest make business by selling the DOs. Each time a DO changes hands, new costs are most likely taxed on sugar, sources observed.
A DO was sold even 50-100 times during Ramadan, each time adding to the sugar price by Tk .20 a kg on an average, said a trader at a city market.
The issue came to the forefront as sugar price went up to Tk 65-70 a kg in Ramadan although the government had
fixed the price at mill gates at Tk 39 a kg andTk42 at retail level.
Even after Eid-ul-Fitr, sugar was selling atTk 56-60 at city markets.
Following the government declaration on arresting a few big dealers on charge of hoarding sugar, many dealers are now not opening their businesses.
Although Trading Corporation of Bangladesh is blamed for its failure to make adequate market intervention, businesses said it is the "DO business" by
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unscrupulous dealers that led to the present crisis.
Moulavibazar Traders Association President M Enayet Ullah said mills sell sugar through DOs in advance, even by one or two months.
A mill with a production capacity of 20,000 tonnes of sugar a month, for example, sells DOs for 50,000 tonnes in advance, he said.
"The DOs are then resold many times. A DO can be sold to even 50-100 dealers, and each time a DO is sold, the price goes up," he told The Daily Star, adding that it will not be right to blame only the traders for this.
Millers prefer this system because they get extra money in advance, Enayet said.
Millers also change the price rate many times a day, which influences the DO traders to increase the price. "Such fluctuation in the price of any commodity may be at the wholesale or retail level, but why at the mill gates?" he said.
Enayet said a few banks are giving dealers loans against DOs. "How can banks give loans when the produce is not ready?" he said.
Besides, mills often do not deliver sugar in time, rather keep the trucks waiting for days, said a wholesale trader in Karwan Bazar. He said his truck had to wait at the mill gate even for a week for which he had to count Tk 1,500 extra cost a day. This extra cost also contributed to the increase in sugar price.
A team of National Security Intelligence, which investigated sugar price hike, also identified similar reasons. "Having DOs in hand but not getting the delivery means the produce is being hoarded," said an NSI official.
Fazlur Rahman, chairman of City Group that owns a sugar refinery, however refuted the allegation of delaying deliveries. Mills always maintain serials and there is no question of storing sugar, he said.
Moulavibazar Traders Association leader Enayet Ullah said the existing system under which sugar business has been running can never solve the price problem.
"The government must make specific laws on distribution and bar sugar mills from changing price rates every now and then," he told The Daily Star.