Edible oil market volatility justified!

Consumers still face an unprecedented shortage of cooking oil in kitchen markets across the country, despite refiners having around 2.5 lakh tonnes of refined and unrefined oil in stock. Traders are also charging Tk 17-Tk 30 more per litre of bottled, loose soybean oil and palm oil.

Commerce ministry sources say Bangladesh has a monthly demand for 1.59 lakh tonnes of cooking oil, which reaches 2.5 – 3 lakh tonnes during Ramadan. The ministry recently sought information from refiners and wholesalers about the volume of cooking oil in their stock.

Based on data submitted till Monday, members of the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association had 19,737 tonnes of refined and 1,75,899 tonnes of unrefined cooking oil in stock.

Besides, 1,83,800 tonnes were in the process of being imported, indicated by opened letters of credit. Aside from the volume in possession of association members, Bashundhara edible oil also has around 50,000 tonnes of the kitchen ingredient in stock, insiders say.

Ministry sources said the intelligence agencies, district and upazila administrations, and law enforcers will launch a probe into the local edible oil industry – from mills to markets – from Thursday to unearth the reasons behind market instability and take action accordingly.

The commerce ministry has also sent a letter to the National Board of Revenue (NBR) seeking withdrawal of the 15 per cent VAT on cooking oils. The NBR has taken this proposal positively, and will announce their decision soon.

Among the refiners, S Alam Group currently has the largest stock of cooking oil – 2,910 tonnes refined, 49,908 tonnes unrefined. Meanwhile, 1,02,000 tonnes of oil was in the process of being imported.

Another leading refiner, City Group had 6,058 tonnes of refined and 33,920 tonnes of unrefined cooking oil in stock. They were also in the process of importing 36,000 tonnes of the kitchen ingredient.

Refiners such as the Meghna Group, TK Group, Bangladesh Edible Oil, Sena Edible Oil and Globe Edible Oil are in possession of the remaining stock.

A recent research of the Bangladesh Trade and Tariff Commission mentions that the country has 11 edible oil refineries, with an annual production capacity of 50 lakh tonnes.

So the country has a monthly production capacity of around 4.17 lakh tonnes of cooking oil. As the production capacity is higher than domestic demand, refiners had sought permission from the authorities concerned to export the kitchen ingredient.

Some received this permission on a case by case basis and exported some volume of cooking oil.

A commerce ministry official, on condition of anonymity, said, “The information provided by refiners clearly indicates that Bangladesh has an adequate volume of cooking oil in stock, and around 1 lakh tonne is in the process of being imported.

“No shortage of edible oil exists in the country. But the ministry had recently rejected a price hike proposal of the refiners. The wholesalers and retailers also complained to us that the refiners have decreased supply in the market despite having the capacity to produce more oil.”

The official added that the ministry will take steps in this regard so that the production of edible can be boosted to normalise supply in the market.

According to tariff commission data, Bangladesh currently has an annual demand for 20 lakh tonnes of cooking oil. The country imports 19 lakh tonnes of unrefined oil to fulfill demand for 18 lakh tonnes of the essential commodity.

Bangladesh produces 2.03 lakh tonnes of edible oil from various seeds and rice bran to cover the remaining demand.

DNCRP meets with stakeholders

The Directorate of National Consumer Rights Protection (DNCRP) on Tuesday and Wednesday held meetings with millers, wholesalers and retailers in a bid to rein in edible oil prices and ease the ongoing supply shortage.

At the meeting, DNCRP Director General AHM Shafiquzzaman pointed out that keeping receipts will be mandatory for buying and selling edible oil from next Friday.

He added that Bangladesh has enough stock of cooking oil to cover demand till the end of Ramadan, and a certain quarter is trying to jack up prices by citing shortage as an excuse.

Shafiquzzaman further said, “We will not tolerate any irregularities in the marketing process. We will take action against those trying to hike cooking oil prices by creating an artificial shortage, despite the country having adequate stock of the kitchen essential.

“A number of government agencies are working on curbing the instability in the country’s edible oil market. We will extend our full cooperation to wholesalers and retailers so that they can run their businesses fairly.”

Consumers have complained that the traders are playing a blame game over the ongoing shortage of edible oil in the local market, and using this opportunity to rake in a hefty profit.

However, wholesalers say the crisis originated from the soybean and palm oil refineries, adding that the millers are not supplying cooking oil as per the supply orders (SO).

The issue has been exacerbated as millers have taken SOs in advance, and cut down production to raise prices ahead of Ramadan. These issues have triggered a supply shortage of edible oil in the market, and forcing consumers to pay more for the product, they added.

A wholesaler, present at Tuesday’s meeting, said he could not take delivery of edible oil despite placing a work order over a month ago. He pointed out that he has already sold his existing stock.

Responding to a query, City Group Director Biswajit Saha told The Business Post, “We have maintained a regular and stable supply of Teer refined edible oil in the market. We have maintained a stable supply.”