Edible oil chaos deepening fast

The crisis has already been there, and news of Indonesia's palm oil export ban has aggravated it.

The export ban of the world's top palm oil producer will be effective on 28 April. But the already high edible oil prices have grown even higher. The country's biggest commodity wholesale market at Khatunganj saw Tk700-Tk800 jump per maund (37.3kg) of palm and soybean oils on Sunday, highest single day gain so far.

The abrupt rise has made the wholesale cost higher than the government-prescribed retail price by at least Tk20 per litre.

The immediate impact was obvious: Supplies to the capital's Karwan Bazar wholesale market crimped, and shelves in retail outlets in Dhaka and other districts were running out of edible oil bottles.

Shopkeepers and buyers have also reported soybean oil crises in Rajshahi, Bogura, Khulna, Jashore, Cumilla, Mymensingh, Sylhet, Faridpur, Rangpur and almost all over the country. Many buyers complained that they could not buy oil even at high prices.

Traders say they cannot meet buyers' demand as there has been no oil supply for the past week or so.

Alamrgir Parvej, owner of RM Enterprise, an edible oil trader in Khatunganj, said the retail price of soybean oil has been fixed at Tk160 per litre, but on Sunday, it was sold at Tk197 per litre at the wholesale market. That is why companies have stopped supplying oil to the retail market.

Similarly, the current wholesale price of palm oil is Tk184 per litre, while the retail price fixed by the government is only Tk127, he added. 

Tariq Ahmed, director (operations) at TK Group, the country's largest importer and supplier of edible oil, told The Business Standard that wholesale prices of edible oil rose abnormally in the last two days. The price is much higher than what is fixed by the government, leading to a supply crisis. "I hope the government will take necessary steps, including price adjustments, soon," he said.

AHM Shafiquzzaman, director general at Office Directorate of National Consumers' Right Protection, said,  "We are trying to figure out how to increase soybean imports. I will recommend reducing VAT on refined oils, such as sunflower oil. We can meet the demand for two months with the stock we currently have."
 
Oil available only with other products

Shopkeepers at Karwan Bazar sell edible oil only if buyers are ready to buy other products too, while many are not selling oil because of a supply shortage.

While talking to TBS, about 15 shopkeepers at the kitchen market said supplies of bottled soybean oil from several companies, TK Group and City Group, have reduced in the market.

They are not getting even half or one-fourth of their demand. And, whatever supplies they get, they are having to buy at price tags put on the labels.

Mohammad Monir Hossain, a salesman at Haji Mizan Enterprise, said, "A 5-litre bottled soybean oil has a Tk760 price tag. We are buying it at a higher price. Again,  the labour cost of Tk2.5 per bottle adds to the price. As a result, I cannot sell oil to all buyers. I am selling oil to those who are purchasing other items too.

Ali Hossain, a salesman at Yasin General Store in the kitchen market, said no company representative had visited his store for a week.

A salesman at Karwan Bazar's Jabbar Store said his daily demand for oil is 600 litres, but he is now getting the supply of only 40 litres at prices higher than what was written on the label.

Crisis of loose, small bottled oil even more

During a visit to retail shops in Dhaka, loose soybean oil was not available there. The supply of 1 litre of bottled oil is low as well. Most shops have two-litre and five-litre bottles.

Retailers say companies have been cutting back on supplies for months. That is why there is a crisis of 1 litre bottled oil. Most shops were found selling bottled soybean oil at the prices fixed by the government.

Ariful Islam, a soybean oil dealer in Dhaka's Hatirpul Bazar, said, "The companies are supplying at least 30% less than what we demand. That is why there is a crisis."

A small bottle of soybean oil was also not found in Eskaton and Magbazar supermarkets in Dhaka. Soybean oil supplies had not come to super shops since Friday.

Md Azad, manager at Eskaton branch of Shwapno, a retail chain shop, said they have almost run out of stocks they got last Friday. 

"We have not been informed about the new supply," he also said.

Another super shop, Meena Bazar, also has a little stock of cooking oil. But it does not have any small bottles of oil.

Durjoy, in-charge of retail chain shop Agora, said, "We have a crisis of 1-litre and 2-litre bottles of oil. We are selling 1 litre bottle at Tk160 and 5-litre at Tk760." 

In the meantime, oil refinery companies declined the allegations of oil supply cuts.

"We have not reduced oil supplies," said Biswajit Saha, executive director of City Group, the country's largest consumer goods producer.

"Oil we have released today is causing us a loss of Tk40 per litre. The government will not increase oil prices before Eid. So, some may have stopped supplying oil. But we did not," he pointed out.

The crisis deeper outside Dhaka

Parimal Prasad Raj, general secretary of Traders-Owners Association, Raja Bazar, the largest market in Bogura town. He supplies oil across the district with dealerships of several companies.

"I supply 20 tonnes of soybean oil every day," said Parimal Prasad, adding,  "But today [Sunday], I got three tonnes for sales.

In Jashore, for the last 10 days, wholesalers and retailers have not been getting oil at price tag.  

Hasan Mia, owner of a shop named Chander Haat, said various oil companies have been forcing them to buy other products with 5 litres of bottled oil. 

Manik Das, a businessman from Kandirpar in Comilla, said, "I have not got oil supply from dealers for the last two weeks. So, I am forced to source oil online at a higher price. I am selling 1-litre bottled oil at Tk175 and the two-litre at Tk340."

In Savar, prices of soybean oil in the retail market have gone up by Tk25 to Tk30 per litre in just 7-10 days. On the other hand, prices of palm oil have also risen.

TBS reporters Jahir Rayhan and Md Jahidul Islam along with district correspondents – Rajshahi, Bogura, Khulna, Jashore, Cumilla, Mymensingh, Sylhet, Faridpur, Rangpur – contributed to the report