Soybean oil shortage, prices up by Tk 10 to Tk 29

Buyers cannot find popular brand soybean oil in the market ahead of Eid-ul-Fitr. Customers are being forced to buy mustard oil, tea or other commodities along with bottles of soybean oil.

Not only supply shortage, the price of oil has also gone up in the market. Despite the government-fixed price of one litre bottle of soybean oil at Tk 160, it is being sold at Tk 170. And, the five-litre bottles can be bought at Tk 780, though the fixed price is Tk 760. The price is even higher at smaller retail shops.

The price of loose oil has increased the most. The price list of the government's Trading Corporation of Bangladesh (TCB) on Thursday says, the lowest price of per litre of loose soybean oil in Dhaka markets is Tk 184, which is Tk 29 more compared to last week. Similarly, palm super oil is selling at Tk 165 after an increase of Tk 20.

Two major reasons have been found behind the scarcity of edible oil. One of the reasons is that the demand of edible oil goes up during the month of Ramadan and Eid. But, this time, the import was less. The other reason is that traders are stockpiling oil under the impression that the price of soybean oil will upsurge after Eid.

Large importers and refiners are saying if the price in the local market is not allowed to increase in line with the price in the global market, the import rates will drop. So, the government should pay attention to increase the supply.

Mohammad Mustafa Haider, director of top edible oil importer TK Group, said to Prothom Alo on Friday, the government should give highest importance to keeping the supply chain running. The world market is going through a crisis of edible oil. This should be considered as a crisis. For this the importers should be encouraged, so that supply can run smoothly.

Visiting 15 grocery shops in Rayer Bazar of Dhanmondi area on Friday, bottled soybean oil was found in only four of them. The rest of the shops didn’t have it. The picture is almost the same in Dhaka’s Karwan Bazar and Mohammadpur Krishi Market as well.

Md Mokhlesur Rahman, a retail seller at Mohammadpur Krishi Market said to Prothom Alo, “Distributors force different commodities on us when we go to buy edible oil. Today (Friday) they forced one and a half kg of tea with four cartons (each containing four five-litre bottles) of edible oil. The distributor said, the oil won’t be sold unless the tea is also bought.”

When asked about this, Md Enamul Haque, owner of Messer’s Bhai Bhai Enterprise, a distributor of edible oil in the same bazaar informed Prothom Alo that distributor companies have kept the oil supply closed for last one week. When asked whether it is compulsory to buy other goods along with edible oil, he declined to comment.

However, officials of top level importers like TK Group, City Group and Meghna Group said they are supplying sufficient amount of oil. Biswajit Saha, director of City Group informed Prothom Alo, “We are supplying 1,700 to 1,800 tonnes of soybean and palm oil every day. We have supplied a total of 47,788 tonnes of soybean and palm oil in 26 days of April. Where does this oil go?”

More than 80 per cent of the demand for edible oil in the country is met through import. Seven to eight companies import unrefined oil and market that after refining. Some import seeds and produce oil by crushing them.

According to National Board of Revenue (NBR)’s statistics, 92,000 tonnes of edible has been imported in almost two months since 1 March till Friday, which is the lowest among last seven years. In that same period (1 March-28 April), companies have released 137 thousand tonnes of soybean oil from the custom bonded tank terminal of the port.

Concerned people are accusing the price difference between the local and global markets as the reason behind the decrease of interest in import. They say the price in the international market is way higher. But, the government is not allowing adjustment of the price.

Commerce ministry fixed the price of bottled soybean oil at Tk 160 per liter on 20 March last.

The price of per tonne of soybean oil at the Commodity Exchange Chicago Board of Trade of the United States was USD 1,625 on 21 March. On last Thursday, that same oil was traded at USD 1,997. That means, the price increased by USD 372 in the meantime, this in turn resulted in an increase of Tk 29 per litre.

Traders say the price of edible oil in the world market is rising due to the shortage in production. Argentina has already limited its oil export. And, Indonesia has announced to close down export of palm oil.

When asked what should be done to meet this deficit, Dr Khondaker Golam Moazzem, research director at Centre for Policy Dialogue (CPD) told Prothom Alo, monitoring should be enhanced now. The government has to take initiative to increase import. If necessary, the issue can be discussed with traders as well. There may be need to change the price in the local market as the price in the world market is moving upward.

[Drinja Chambugong, Dhaka, provided information to assist in this report]

* This report has been rewritten in English by Nourin Ahmed Monisha