Edible oil refiners seek price hike despite global mkt dip
Bangladeshi edible oil refiners have urged the government to increase prices amid a decline in the international market, leading authorities to consider reducing prices in the local market.
On July 6, the Bangladesh Vegetable Oil Refiners’ and Vanaspati Manufacturers’ Association wrote to the commerce ministry, citing a stronger US dollar and rising bank interest rates as reasons for the price hike.
They claimed that refiners were experiencing losses due to purchasing dollars at Tk 114-Tk 115 for oil imports, compared to the previous Tk 111 set by the authorities.
In addition, they highlighted the increase in bank interest rates by 2.13 percentage points over the past year, following the new monetary policy for the first half of FY24.
They argued that raising soybean oil prices was necessary under these circumstances, as conducting business at a loss was not feasible.
Typically, soybean oil prices in Bangladesh are determined by the Bangladesh Trade and Tariff Commission (BTTC) and refiners, based on an analysis of international price trends and other relevant factors.
The commerce ministry is expected to hold a meeting with stakeholders, including edible oil refiners, to set new prices based on the tariff commission’s recommendations.
In mid-June, the government reduced cooking oil prices. These prices have been adjusted multiple times in response to fluctuations in the international market, with a downward trend in cuisine oil prices beginning in May 2022.
According to the World Bank estimates, soybean oil was priced at US$838 per tonne in 2020 but increased to US$1,963 per tonne in May 2022. However, global soybean oil prices subsequently dropped to a one-year low of US$1,130-1,150 per tonne in April.
Contacted, a senior official said last week that the prices in the local market were adjusted based on the global market prices of crude soybean, which ranged between US$912 and US$1025 per tonne (fob) since June 11.
On June 11, 2023, local edible oil refiners, following the commerce ministry’s instructions, reduced the maximum retail price (MRP) of bottled oil from Tk 199 to Tk 189 per litre.
They also lowered the MRP of a five-litre soybean oil jar to Tk 920 and set the MRP of one litre of loose soybean oil at Tk 167. Besides, the price of palm oil was adjusted from Tk 135 to Tk 133.
Senior Commerce Secretary Tapan Kanti Ghosh announced these prices after the 7th task force meeting at the Secretariat office on June 11, 2023.
He expressed optimism that if international prices remain stable, there could be a further reduction in the local edible oil prices, which are currently under review.
According to the Trading Corporation of Bangladesh (TCB), as of July 9, the retail market in the capital city had bottled and loose soybean oil priced at Tk 190 and Tk 170 per litre, respectively.
These prices exceed the government’s fixed rates declared on June 11.
During the task force meeting, it was reported that the global price of crude soybean oil on June 8, 2023, had decreased by 43.77 per cent compared to June 8, 2022.
However, the local market only experienced a 2.0 per cent decrease. Similarly, global palm oil prices declined by 48.69 per cent, while the reduction in the local market was only 20 per cent.
Currently, importers are required to pay a 15 per cent ad valorem duty on the import of crude soybean and palm oil. To tame the rising prices, the government had previously granted duty waivers on the import of edible oil.
According to the commerce ministry, the annual demand for edible oil in the country exceeds 2.0-2.2 million tonnes, with over 95 per cent being met through imports.
Recommended for you
