Importers have virtually halted the supply of edible oil to the market, with consumers alleging that domestic companies are creating artificial scarcity to increase prices, capitalizing on the month of Ramadan for higher profits.
However, traders deny these allegations, claiming that the supply of edible oil in the market is currently more stable than at any previous time.
It is understood that ahead of Ramadan, residents of the capital are once again facing a shortage of soybean oil.
Various brands of bottled soybean oil disappeared from the market as early as November.
After the price of soybean oil was increased by Tk8 per litre on December 9, the situation improved slightly.
In January, the edible oil traders’ association proposed another price hike to the Ministry of Commerce. However, the ministry has yet to decide on the matter.
During a press conference at the Secretariat on February 12, Commerce Adviser Sk Bashir Uddin assured everyone that the edible oil market would stabilize within the next seven to 10 days.
Following this, refining and marketing companies said they were supplying more edible oil than usual ahead of Ramadan, to ensure no risk of shortages during the holy month.
However, recent visits to various marketplaces in the capital revealed that the supply of bottled soybean oil has yet to return to normal.
Artificial scarcity
Sources familiar with the matter say that despite the import of more soybean oil compared to last year, allegations of artificial scarcity of bottled oil have surfaced before Ramadan, and even after searching multiple shops, soybean oil remains difficult to find.
The crisis is evident in neighbourhoods across the capital. Where soybean oil is available, consumers are having to pay extra for it.
The price of loose soybean oil has now gone up to Tk210 per litre.
Market visits revealed an unusual situation: loose soybean oil is generally cheaper than bottled oil, but currently the opposite is true.
Dealers and distributors reported receiving fewer bottles of soybean oil from manufacturers, leading to a supply shortage in stores.
Loose soybean oil now costs around Tk10 more per litre than bottled oil.
And while the government has set the price of bottled soybean oil at Tk175 per litre, it is rarely available at that rate. Depending on the location, bottled oil is now being sold at Tk195 to Tk200 per litre, while loose soybean oil is selling for Tk210.
Due to the higher profit margin, some retailers are opening bottles and selling the oil as "loose," forcing consumers to buy it at a higher price while actual bottled oil remains unavailable.
How oil business works
Importers bring in crude oil, which is then processed and sold both as loose and bottled oil.
There is little difference between the two except for the packaging process.
In Bangladesh, four major companies dominate the soybean oil import market: TK Group, Meghna Group, City Group and S Alam Group.
Recently, Bashundhara Multi Food Products and Abul Khair Group’s Smile Food Products have entered the edible oil market. Bashundhara markets its oil under the Bashundhara brand, while Abul Khair uses the Star Ship brand.
Except for Bashundhara, new companies have yet to make a significant impact on the market. Other new entrants include Sena Edible Oil Industries and Delta Agrofood Industries, though their market influence remains limited.
Reportedly, S Alam Group’s supply chain has faced disruptions due to the company’s founder leaving the country amid recent political developments.
To stabilize the market, the government has decided to purchase edible oil worth Tk196 crore from S Alam Super Edible Oil Ltd for the Trading Corporation of Bangladesh (TCB).
Market manipulation
Consumer allegations suggest that major business groups colluded to propose a price hike for bottled soybean oil to the government, which was rejected. In response, these companies allegedly created an artificial shortage.
Meanwhile, wholesalers and retailers claim that importers are not supplying bottled soybean oil.
Notably, importers had assured the government that the crisis would be resolved by Tuesday, February 25.
According to TCB retail price data, the price of bottled soybean oil has increased by 1% compared to last month and 2.33% compared to last year.
Leading suppliers have had mixed reactions to the allegations. They argue that reducing supply is not an option and that the market naturally sees a higher edible oil supply during Ramadan due to increased demand.
Shamsul Haque, a wholesale trader at Karwan Bazar, told this correspondent that if businessmen like him wanted to buy oil, companies were forcing them to purchase additional products like polao rice, turmeric and chili powder. “Still, soybean oil remains scarce.”
He said disputes arose if a retail buyer wanted to purchase two litres of oil and sellers insisted they buy other items. “As a result, the Directorate of National Consumer Rights Protection is fining us, leaving us in a quandary."
Govt monitoring and market control
City Group Director Biswajit Saha said the conglomerate had increased the supply of edible oil for Ramadan.
“If a crisis persists, wholesalers and retailers are responsible, not us. We have seen similar situations in the past where they hoard products for higher profits," he added.
Md Abdur Rahim Khan, additional secretary of the Ministry of Commerce, said the edible oil crisis was easing, adding that the ministry was monitoring the situation.
“There is no scope for unethical price hikes ahead of Ramadan. Multiple monitoring teams are actively working in the market."
According to ministry sources, Bangladesh has imported more edible oil than its domestic demand for the 2023-24 fiscal year.
The country imported 2.3 million tons of crude edible oil, while local production from mustard, sesame and linseed is around 250,000 tons.
Bangladesh’s annual demand for edible oil is between 2.2 and 2.3 million tons, meaning imports exceed demand.
