Bangladesh Edible oil prices up for supply crunch
Edible oil prices in Bangladesh have surged despite tax exemptions, with refiners halting supplies amid global price hikes and alleged market disruptions. Bottled soybean oil exceeds its fixed price, and loose oils are also costlier. Refiners cite low stocks due to high import costs, despite VAT reductions on imports and production. The government is urged to stabilize imports and curb hoarding ahead of Ramadan. Annual demand for edible oil is largely met through imports, with 2.3 million tonnes imported in FY 2024.
Prices of edible oils have shot up amid a stoppage in supply of the commodity by refiners despite getting notable tax exemptions weeks ago.
Consumers are forced to buy soybean oil and palm oil at much higher than normal rates as many groceries and traders are cashing in on this crunch.
Meanwhile, potato and onion price have remained static at their previous highs, while vegetable prices have declined in the past seven days, according to kitchen market sources.
Potato retailed at Tk 80 a kg (stored) and Tk 100-130 (newly harvested). On the other hand, onion sold at Tk 120-140 a kg.
Most of the groceries have a poor number of soybean oil bottles for the last three to four days as refiners have almost stopped supplying oil.
Both bottled and loose oil prices have posted a further hike in the last one week by Tk 5.0 per litre.
Bottled soybean, tagged with Tk 167 a litre, sold at Tk 172-175 at some groceries.
Helal Uddin, an employee at a medicine corner, said most of the shops lack bottled oil, forcing consumers to go to kitchen markets to source loose oil.
Loose soybean oil retailed at Tk 170-172 a litre, higher than the fixed rate of bottled oil (Tk 167), he told the FE.
However, the loose palm oil price also increased to Tk 164-165 a litre marking a further Tk 5.0 hike.
Rabiul Alam, an edible oil wholesaler in Dhaka’s Moulvibazar point, said refiners have stopped supplying oil. “We’re under great pressure. Price is not an issue, refiners have stopped supply totally.”
“The stock of edible oil drums has almost run out, I couldn’t deliver oil to my known retailers for last two days.”
The FE failed to get any comment from leading refiners City Group, TK Group, Bashundhara and S Alam despite repeated attempts on Friday to know about this supply crunch.
A mid-level official (supply chain) at TK Group said oil stock was very low at factories amid poor imports following sky-rocketing prices globally.
Soybean prices have increased by 15-16 per cent in the world market in the last four months, according to him.
However, the prices of loose edible oil have hiked by Tk 15 a litre in the last one month since value-added tax (VAT) has been cut by the government.
The government reduced VAT on import, processing and trading of soybean and palm oils to lower prices following a demand from refiners and importers.
The finance ministry announced VAT cuts in import and production stages of edible oils in two separate notifications on October 17.
VAT on local production and trading of soybean and palm oils has been exempted, while the same on refined and crude soybean and palm oils in import stage has also been reduced to 10 per cent from 15 per cent.
Earlier, the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association urged the ministry that soybean and palm oil prices were rising in the international market.
They demanded a 14.8-percent increase in the price of crude soybean oil and an 18.68-percent rise in that of palm oil to cope with the spiralling cost.
Later, in a meeting with the finance adviser, refiners said they would not raise edible oil prices in local market if the government would reduce import duties.
They also requested removal of all tariffs on local production and trade of edible oils.
In response, the government decided to grant the tax exemptions.
Asked, an official of a refining company said VAT exemption would not be enough for now.
He said companies like S Alam and Bashundhara, the two biggest players, were in a tight spot amid their alleged involvement in corruption and other charges, thereby contributing to putting an impact.
The government should encourage other refiners to raise imports by ensuring fair share for them, he observed.
Two weeks ago, home ministry also sounded an alarm about a possible crisis of edible oils during the holy month of Ramadan in March, and suggested ensuring adequate stock of the key essential.
The FE on November 14 reported that home ministry recommended commerce ministry and all divisional commissioners to prepare for facing the situation likely to emerge then by taking stern action against hoarders and profit mongers with the aid of mobile courts and the Directorate of National Consumer Rights Protection.
Meanwhile, Consumers Association of Bangladesh vice-president SM Nazer Hossain suggested that home ministry and other government entities concerned take immediate action against wrongdoers.
He said there was no way of shortage for now as the home ministry highlighted a 0.15 million tonnes of possible stock in November.
“The government should look into the matter seriously and manage imports of oil both though government and private channels to make the market stable.”
According to commerce ministry, the annual domestic demand for edible oil is estimated at 2.4-2.9 million tonnes, with over 95 per cent met through imports.
In FY 2024, the country imported around 2.3-million tonnes of non-refined edible oil.
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Source Link : The Financial Express
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