Soybean oil now Tk198 per litre

The commerce ministry has fixed prices of bottled soybean oil at Tk198 per litre with a Tk38 hike in the wake of a supply cut-off by mill owners, fearing losses because of a rise in prices on the international market.

A five-litre bottle of soybean oil will now cost Tk985, up from Tk760, while loose soybean oil's price has been raised to Tk180 per litre from Tk143, the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association said in a media briefing after a meeting with Commerce Secretary Tapan Kanti Ghosh in the chair at Secretariat on Thursday.

Besides, the price of loose palm oil has increased to Tk172 from Tk130. The new rates of edible oil took effect immediately.

City Group Director Biswajit Saha told The Business Standard that mills will resume oil supply at new rates from Friday, but oil is unlikely to reach the retail level before Saturday.

Mill owners have been pressing the commerce ministry for upward adjustments to prices of edible oil for more than a month in the wake of rising import costs.

Following the ministry's refusal to do so, the mills cut off the supply of soybean and palm oil before Eid-ul-Fitr when demand surged across the country, leading to a severe crisis of bottled soybean oil in the market.

Before Eid, many people could not buy bottled soybean oil even after visiting various kitchen markets and super shops in the capital. One or two litre bottles were found in some places but they were sold at much higher than rates fixed by the government.

Bottled soybean oil could not be found in the Dhaka markets on Thursday too. Even though the essential commodity was found in the loose format at some places, it was selling for Tk195-Tk200 a litre.

Officials at the commerce ministry and refineries told TBS that prices of edible oil were earlier fixed by counting the import cost of one tonne of the commodity at $1,407.

The Russia-Ukraine war and export restrictions by Argentina, one of the major suppliers of the cooking staple to the global market, have caused its prices to shoot up on the international market, they said, adding that the import cost of each tonne of soybean oil that the mills will supply to the market now is $1,605.

The commerce ministry has made an upward revision in the prices of soybean oil because of this rise in import cost.

Officials at the ministry and mills say edible oil prices have risen sharply since Indonesia imposed a ban on palm oil exports on 28 April. At present, the free-on-board price of soybean oil on the international market has risen to $2,030 per tonne, which is the highest price ever recorded in the international arena.

People concerned think that if soybean oil imported at the current international price is supplied to the market, the prices may increase further.

Edible oil prices have also risen in neighbouring India following rising international prices, but Pakistan's new coalition government has not raised prices for its citizens as it has enough stocks to meet demand for the next two months.

According to commerce ministry officials, Bangladesh has a demand for 1.30 lakh tonnes of edible oil every month and the government has enough stocks of the commodity in the bonded warehouses, warehouses of mills and dealers in the Chattogram port to meet the demand for one and a half months.

Nonetheless, the mills cut the supply of edible oil in the market due to high import prices. On the other hand, buyers had to cry for soybean oil before the Eid festival as dealers reduced oil supply at the retail level in the hope of making more profits by selling it at higher prices after Eid.

An official at the commerce ministry, who regularly attends meetings on fixing edible oil prices, told TBS on condition of anonymity that if mill owners had normally supplied soybean oil before Eid, they would have lost at least Tk30 a litre, which is why they stopped the supply, causing a crisis in the market.

But if the decision to increase the prices of edible oil had been taken a day or two before Eid, consumers' anger against the ministry and the government would have increased, the official said, adding that the government, therefore, decided to increase the prices on the first working day after Eid to protect the interests of traders as well as to keep the supply of oil on the market normal.

Alamgir Parvez, secretary of Chattogram's Khatunganj businessmen's association and the owner of RN Enterprise, said the Eid holiday in Khatunganj, largest wholesale market of consumer goods in the country, is not over yet. The market will reopen on Saturday, he added.

"Dealers and wholesale market traders will collect oil from mill owners tomorrow [Friday]. They will start selling these oils in the market from Saturday," he said on Thursday.

Rifat Hossain, owner of Rifat store in Karwan Bazar, said, "Every day I sell two drums [each drum contains 204 litres of oil]. The supply has been low since 30 April. There are some well-known hoteliers who buy oil and other products from my shop. I have been selling oil only to them."

However, City Group Executive Director Biswajit Saha claimed that there is no shortage of edible oil supply and the prices have not been hiked.

"We are supplying at least 2 lakh litres of oil to the market every day despite counting losses. We will start supplying oil at new prices from tomorrow [Friday]," he said.

But traders said there is no possibility of getting oil before Saturday.

Before Ramadan, Commerce Minister Tipu Munshi had a meeting to readjust the prices of edible oil.

The minister refused to increase the edible oil prices and assured the traders of adjusting the prices after Eid. He also requested the mill owners to ensure that the supply of oil at fixed prices remains normal during Ramadan and Eid-ul-Fitr, but the millers did not comply.

After that meeting, the National Board of Revenue decided to reduce VAT on edible oil imports to 5% from 15%.

But the NBR collected VAT at the same rate as before from edible oil consignments already arrived at the bonded warehouses at the Chattogram port before the decision to reduce the VAT was taken.

The commerce ministry had sent letters to the NBR in this regard but it was not implemented. In this case too, traders suffered losses.

According to the Bangladesh Trade and Tariff Commission, the mills imported 20 lakh tonnes of crude edible oil and soybean in the last fiscal year. Of the amount, 13 lakh tonnes, about 90% of which was imported from Indonesia, were palm oil. 

In addition, edible oil companies also imported about 1 lakh tonnes of refined sunflower and canola oil from various countries, including Australia and Canada.