Bangladesh: Bottled soybean oil, packet sugar scarce in market
Dhaka faces shortages of bottled soybean oil and packet sugar as retailers cite narrow margins and irregular supplies. Loose sugar sells at Tk120–125/kg against the Tk110 MRP, while seven to eight major companies reportedly control around 90% of Bangladesh’s edible oil and sugar supply chain.
Consumers in Dhaka are facing shortages of bottled soybean oil and packet sugar at grocery shops, while retailers citing low profit margins and irregular supplies.
Meanwhile, loose soybean oil and sugar are selling at prices above government-fixed maximum retail prices (MRPs), raising concerns over supply-chain practices and market concentration.
Retailers said they were reluctant to stock bottled soybean oil as their profit margin had fallen to just Tk1 a litre, equivalent to less than 0.5 per cent of the current retail price.
At the same time, packet sugar has become increasingly difficult to find, with loose sugar selling for Tk120-125 a kg against the maximum retail price (MRP) of Tk110.
The government raised the price of soybean oil by Tk5.0 a litre last month following a proposal from the Bangladesh Trade and Tariff Commission amid rising international prices. The current MRP for bottled soybean oil stands at Tk204 a litre.
However, the price adjustment has failed to ease reported supply shortages at retail outlets.
A visit to Rayer Bazar kitchen market found bottled soybean oil at only two of at least six grocery shops. Neither stocked half-litre or one-litre bottles, while popular brands such as Teer, Fresh and Pusti were unavailable.
“Five litres of soybean oil cost Tk1,020. We make only Tk5.0 by selling a bottle, which means a profit margin of less than 0.5 per cent,” said Ershyad Alam, a grocer at the market.
He said refiners were also failing to supply oil regularly, forcing retailers to repeatedly seek stocks. His shop had stopped selling bottled soybean oil because the returns did not justify the investment.
Another retailer at the market said many small traders were no longer interested in stocking the product because of shrinking margins and irregular supplies.
Obaydul Anwar, a grocer on Sher-e-Bangla Road in Mohammadpur, said suppliers had largely abandoned the traditional credit-based system.
“They now demand full payment in cash before delivering oil, putting additional pressure on small businesses with limited working capital,” he said.
Meanwhile, soybean oil refiners are seeking another price increase of Tk13 a litre. The Bangladesh Vegetable Oil Refiners and Vegetable Fat Manufacturers Association has recently written to the commerce ministry seeking the adjustment.
The scarcity at retail shops, however, contrasts with the situation at supermarkets and wholesale markets.
At Shwapno on Ring Road in Mohammadpur, bottles ranging from one litre to five litres were available in several brands. A representative said the outlet was receiving regular supplies from manufacturers.
Md Shahabuddin, a wholesale trader at Moulvibazar in Old Dhaka, said supermarkets enjoyed a cost advantage because they bought oil at distributor prices, had greater investment capacity and operated their own transport facilities, while also having access to credit.
The president of the Bangladesh Wholesale Edible Oil Traders Association, Mohammad Ali Bhutto, said wholesale markets were receiving regular supplies from manufacturers, with hundreds of trucks carrying oil into the markets daily.
According to him, soybean oil was selling for Tk181 a litre and palm oil for Tk160 in Dhaka’s Moulvibazar wholesale market on October 7.
He said distributors had little control over retail prices, as companies determined the rates and distributors followed them.
The sugar market has also become volatile in recent weeks, with packet sugar largely unavailable at grocery shops. Loose sugar was selling for Tk120-125 a kg, well above the government-fixed MRP of Tk110.
Sohanur Rahman, a commodity trader in West Dhanmondi, said companies had reduced supplies of both packet sugar and bottled soybean oil, preferring to supply the products in loose form.
He also alleged that some companies and traders were stockpiling commodities ahead of Ramadan in anticipation of higher profits.
Value-chain expert Prof Rashidul Hasan said the supply situation pointed to problems beyond distribution, including market concentration, pricing practices and the incentives available to different layers of traders.
He said manufacturers had reduced supplies while seeking higher prices and cutting the margins available to wholesalers and retailers.
As a result, some retailers had stopped selling bottled oil, while others were charging above the MRP, he added.
A commerce ministry official, seeking anonymity, said the ministry was examining the refiners’ latest price proposal, while Commerce Minister Khandaker Abdul Muktadir wanted the issue assessed carefully before a decision was made.
A meeting with the refiners is expected soon, the official said.
Consumers Association of Bangladesh (CAB) Secretary Humayun Kabir Bhuiyan called for strict government action against what he described as companies’ “blackmailing policy”.
He said the government should take firm action against oligopolistic practices in the essential commodity market to protect consumers.
Bangladesh is heavily dependent on imports to meet domestic demand for edible oil and sugar. The country imports around 2.4 million tonnes of edible oil and 2.0 million tonnes of sugar annually.
Seven to eight major companies account for around 90 per cent of the supply chain for the two essential commodities, according to industry estimates.
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Source : Financial Express
