Edible oil market volatile again amid supply cut

The country’s edible oil market has become volatile again as most refiners have halted the supply of soybean oil to groceries, according to insiders.

Many stores in the capital have run out of their edible oil stocks.

In the absence of mainstream products, unscrupulous traders are reportedly selling counterfeit products at Tk 185-190 a litre, while loose soybean oil is being traded at Tk 180-185 per litre.

Palm oil is being sold at Tk 175-180 per litre in Dhaka’s kitchen markets by loose oil vendors.

Refiners previously fixed the price of bottled soybean oil at Tk 175 per litre following a consensus with the government on December 16 last year.

This represented a Tk 8.0 per litre increase. Both loose soybean oil and the best-quality palm oil were priced at Tk 170 per litre.

However, consumers were able to purchase bottled soybean oil at Tk 175 per litre for only two to three weeks before the supply dried up, leaving them frustrated, said Abu Rayhan Sufi, a grocer at Chanmia Housing in Mohammadpur.

He said he had been trying to buy edible oil from a Mohammadpur Town Hall distributor for the past five days but failed.

"Distributors claim they are out of supply. I have a few bottles of Pusti (a product of TK Group), which may sell out by tonight," Sufi said in a frustrated tone.

Habibur Rahman, another grocer in Malibagh’s Chowdhurypara, said many traders had stocked up on five-litre bottles earlier and are now selling those as loose oil to earn significant profits.

He said the supply of major brands, such as Rupchanda (an Adani Wilmar product), Bashundhara, Fresh (Meghna), and Teer (City Group), has almost stopped over the past few days.

On January 6, the Bangladesh Vegetable Oil and Vanaspati Manufacturers Association sent a letter to the commerce ministry, requesting a price review in light of the global market trends and rising import costs.

The request was reiterated in another letter on January 15, confirmed a commerce ministry official.

To reduce the financial burden on consumers, the government had earlier withdrawn import duties and VAT on soybean oil, bringing the cost down by Tk 8.0-10 per litre.

However, with the rising dollar exchange rate, the government revised the price to Tk 175 per litre, which refiners accepted.

Before this adjustment, the National Board of Revenue (NBR) had announced major tax exemptions on December 16 last year, including the removal of import duties, regulatory duties, and advance income tax (AIT) on both refined and non-refined edible oils, such as sunflower, canola, soybean, and palm oil.

These exemptions are effective until March 2025.

Additionally, the VAT on edible oils for final consumers has been waived, and that on imported edible oils has been reduced to 5.0 per cent from 15 per cent.

These steps, based on recommendations from the Bangladesh Trade and Tariff Commission (BTTC), aim to stabilise the market and ease consumer burden, according to NBR officials.

Shafiul Ather Taslim, director of TK Group, said his company has continued supplying products despite challenges.

"Prices have increased in the global market, and the US dollar is on an upward trend," he explained.

Taslim noted that global soybean oil prices are currently $1,090-1,100 per tonne, while import costs, including freight charges and some duties, stand at $1,200 per tonne.

He said traders are incurring losses by selling edible oil at Tk 170-172 per litre to distributors.

City Group Director Biswajit Saha also claimed his company has been supplying oil to distributors on time.

“We are regularly sending our supply information to the BTTC, the National Security Intelligence (NSI), and the Directorate of National Consumers' Right Protection (DNCRP),” he said.

Another official at a refining company said the supply from S Alam and Bashundhara has totally stopped, which might have an impact on the supply side.

Despite several efforts, immediate comments from other key refiners were unavailable.

Iqbal Bahar Sabery, secretary of the Consumers Association of Bangladesh’s Chattogram division, criticised refiners for employing what he called “ransom tactics” to raise prices.

He accused refiners of exploiting their market dominance, made possible by a value chain controlled by merely six to seven companies.

“These seven companies are dominating the market of not only edible oil but also other key essentials, including flour, pulse, sugar, and even salt,” he said.

"In the early 2000s, there were 250-300 edible oil importers in Chattogram and Dhaka. Over the last 16 years, that number has dwindled to just a few," he added.

Sabery urged the interim government to take strong action against oligopoly and implement an import policy that creates a competitive environment.

“The government has done its part by scrapping duties and VAT, but refiners are presenting another face,” he said.

He also urged the authorities to strictly monitor the market to give consumers some relief.

Bangladesh’s annual edible oil demand stands at 2.2-2.5 million tonnes. 95 per cent of the demand is met through imports.

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