Soybean, palm oil import costs rise 82%

Bangladesh’s overall costs for importing soybean and palm oil have gone up by around Tk 11,043 crore within just a year. The country spent Tk 24,508 crore for the purpose in the just concluded FY – an increase of nearly 82 per cent compared to Tk 13,464 crore posted in FY21.

Moreover, the local industry spent 73 per cent more on per tonne of edible oil when compared year-on-year. In FY22, the average import cost of a tonne of edible oil was about Tk 1.30 lakh, which was Tk 75,000 in the FY21, according to the National Board of Revenue (NBR) data.

Industry insiders say the elevated cost of edible oil imports is one of the key reasons behind the gradual decline in Bangladesh’s forex reserves.

In the just concluded FY, the imports of refined and unrefined soybean and palm oil also increased by more than 5 per cent to 18,86,936 tonnes despite a multitude of issues, such as the USD shortage, rising commodity prices, high freight charges, and the Russia-Ukraine war.

Bangladesh imported 17,96,004 tonnes of such items in FY21.

The country spent the most on refined palm oil in FY22, importing 10,89,568 tonnes for Tk 12,230 crore, followed by 7,92,282.67 tonnes of unrefined soybean oil for Tk 10,064 crore, 4,992.87 tonnes of unrefined palm oil for Tk 1,124 crore, and 93.70 tonnes of refined soybean oil for Tk 1,088 crore.

Speaking to The Business Post, TK Group Director Shafiul Athar Taslim said, “The import costs rose as edible oil prices increased three times globally in the last FY due to the Russia-Ukraine war and USD shortage. However, the local market did not feel the impact of the global price hikes.

“Our import costs will decrease in this FY as the global trend of edible oil prices is on the decline.”

He added, “Though we are optimistic that the local prices of edible oil will go down in the coming days, we cannot say by how much. The USD rate against Taka continues to go up, and this issue makes edible oil costlier in local markets.

“Moreover, some shipments of edible oil – which we had brought when the prices were high – are yet to reach Bangladesh’s port because this process takes around three months. So the price drop may take some time.”

When asked why the importers bring in refined palm oil instead of the cheaper unrefined type, Shafiul said, “The difference of price between the refined and unrefined palm oil is just $10 - $15 per tonne. It does make that much of an impact on the overall costs.” Centre for Policy Dialogue Research Director Khandaker Golam Moazzem said, “We must boost local production of cooking oil.

“If we can increase the demand of soybean and palm oil alternatives such as rice bran and mustard oil with a long-term and realistic production scheme, it will cut down our partial dependency on edible oil imports and subsequently lessen pressure on the economy.”

He added, “We must also find more sourcing countries for edible oil. For example, Indonesia has already lifted the ban on palm oil exports. We need to increase the number of importers so that the local consumers can get edible oil at fair prices.”

According to the report, in 2021, crude soybean oil was sold for between $1,050 and $1,280 per tonne and palm oil for between $980 and $1,150 per tonne on the global market.

In 2022, the price continued to increase till May. During this time, soybean and palm oil exceeded $2,000 per tonne. However, prices of all types of edible oil started to fall again in May, a trend which still continues.

Currently, crude soybean oil is being sold for $1,300 per tonne and palm oil for $1,000 per tonne on the global market.