'The government will not accept any price hike, especially during Ramadan'
The commerce ministry on Monday said the proposal to increase the price of edible oil during the ongoing month of Ramadan would not get any nod.
The government will not accept any price hike, especially during Ramadan. Any company found to sell edible oil at higher than the rates fixed will have to face stern actions, said AHM Shafiquzzaman, additional commerce secretary.
Edible oil traders came up with a proposal to increase the local prices citing a global price hike, he said. The government has no plan to increase edible oil prices before Eid, he said.
However, there was no confirmation if prices would subsequently increase after Eid.
Edible oil importers and its marketing companies on April 19 proposed to increase the price of bottled edible oil in the domestic market due to the price hike in the international market, from existing Tk139 per litre to Tk144.
The Bangladesh Vegetable Oil Refiners and Vegetable Manufacturers Association, an association of edible oil producers, wrote to Bangladesh Trade and Tariff Commission that day, proposing to increase the rates.
According to the law, the tariff commission has to be informed before raising the price of edible oil.
The Commerce Ministry also said that the price of oil would be fixed every 15 days due to the recent rise in prices in the international market.
SM Nazer Hussain, vice-president of Consumer Association Bangladesh (CAB) told Dhaka Tribune that earlier, the government has increased edible oil price twice as per traders' demand. They proposed to raise the price during Ramadan, although the government has denied it may surge further in future.
Citing the market trend of edible oil, he added that even before waiving 4% advance tax, oil was sold at a higher price in retail.
He furthermore said that these traders, countable compared to other traders, take advantage of the lack of regulatory body inaction and weak mechanism to hike the prices.
But even if they hike the fares, there would be minimal impact as consumers have already bought their edible oil considering Ramadan, Nazer hoped.
Prof Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD) told Dhaka Tribune that previously edible oil prices were adjusted with its international rates.
As the commerce ministry turned down the proposal. To keep the oil price in control they have to enforce the market to follow the rule, he also said.
And through the Trading Corporation of Bangladesh (TCB), edible oil supply should also be controlled. Traders are claiming current global price hike, but the stock they are currently selling were bought at pre-hike rates, he added.
Traders have raised the price of edible oil in the Bangladeshi market in two phases in the first four months of this year, citing rising prices in the world market.
According to the Trading Corporation of Bangladesh, soya bean and palm oil prices are 18-21% higher than that of a year ago and it is a ten-year high.
On February 17 earlier this year, the Commerce Ministry set the prices of each litre of loose soybean oil at Tk107 at mill gates, wholesale price at Tk110 and retail price at Tk115.
Bottled soybean oil was priced at Tk123 at mill gates, Tk 127 and Tk135 at the wholesale and retail level respectively.
The mill gate price of five-litre containers of soybean oil was set at Tk585, wholesale price at Tk600 and the retail one at T630.
At the same time, every litre of loose palm super oil was priced at Tk90 at mill gates, Tk98 at the wholesale level and Tk104 at retail shops.
The NBR on April 10 withdrew 4% advance tax on soybean and palm oil imports to control prices and keep edible oil prices tolerable during Ramadan.
According to Index Mundi, soya bean oil crude prices surpassed $1,000 a ton and palm oil crude $930 a ton last December.
The hike was 29% and 51% respectively in six months, showed the global commodity web portal.
In March last year, just before the countrywide shutdown due to the Covid-19 outbreak, a kg of soybean oil was found retailing at Tk92-95 in markets, which was Tk85-87 just a week ago. Besides, bottled soybean oil sold at Tk100-105 per litre and palm oil at Tk86.
Local market overview
About 70% of the edible oil used in Bangladesh is super palm. Earlier, the price per litre was Tk95 at Millgate (loose), Tk98 at the distributor level, and Tk104 at the retail market.
According to the ministry, the prices of crude soybean oil and crude palm oil have been rising in the world market since last July. Soybean oil, now priced at 800 to $900 per ton, is now being sold at more than $1,100.
Traders said that edible oil prices rose to their peak in mid-2012 when each ton of crude soybean oil was sold at as much as $1,400 in the international market, due to an acute supply crunch.
A recent report of the Bangladesh Trade and Tariff Commission says that each ton of unrefined soybean oil was priced at $743 in July last year, which jumped to $1,150 last month.
The essential product would cost Tk150-155 if sold considering the latest global prices.
Bangladesh has an annual demand for 1.1 million tons of soybean oil; 300,000 tons of palm oil and 100,000 ton of mustard oil-- 90% of which is imported. Local companies refine the imported crude edible oil to meet domestic demand.
Citygroup, TK Group, Meghna Group, S A Group, S Alam Group, Bangladesh Edible Oil, Brothers’ Group, Severn Circle Edible Oil, Dada Group and Nurjahan Group are the key market leaders in Bangladesh.
Citigroup tops the list, followed by TK Group, Meghna Group and S Alam Group.
The Trading Corporation of Bangladesh or TCB markets a little share of the total demand for oil.
Global edible oil prices are nearing their peak but may be slow to decline to previous levels due to low stocks, a slow recovery in output and higher global use in biofuel production, leading analysts said in March earlier this year.
Major vegetable oil prices such as palm oil and soybean oil have likely already peaked at multi-year highs in 2021, lifted by a cocktail of production hiccups, recovering food consumption and an upbeat outlook for biofuel demand, leading industry analysts said at the Virtual Palm and Lauric Oils Price Outlook Conference.
But a constrained recovery in palm oil production due to an enduring labour shortage in Malaysia, and a slowdown in soybean oil output in China due to stalled soymeal demand growth, will prevent prices from falling too steeply.
World palm oil supply is expected to expand by 3 million tons in 2021 after suffering a decline of 2.5 million tons last year, Dorab Mistry, director of Indian consumer goods company Godrej International, said.
The modest recovery in global palm oil supply will limit the price decline, said Thomas Mielke, head of Hamburg-based analyst firm Oil World.
The higher palm oil prices have rationed food demand in price sensitive markets like India, but US President Joe Biden’s biodiesel agenda will spur demand from the fuel sector, the analysts said.
Biden has pledged to invest in developing next-generation fuels and in research to develop cellulosic biofuels.
Palm oil, the world’s cheapest and most widely used edible oil, is found in everything from biscuits to biofuel.