Soyabean oil supply slips as traders target price-gouging keeping Ramadan in sight

After the change of power, value-added tax, or VAT, was waived to stabilise cooking oil prices, while a price hike was introduced to ease supply constraints.

Despite these interventions, producers and marketers have adopted strategic pricing tactics, proposing another increase in soyabean oil prices ahead of Ramadan, reports bdnews24.com. 

At the retail level, reduced commissions and stricter credit policies by dealers have led to a noticeable decline in bottled oil availability in local shops.

However, key markets under regular government oversight—such as Karwan Bazar, Shantinagar, Kamalapur T&T Colony, and Mohakhali’s kitchen markets—maintain steady oil supplies.

Many grocery stores in less-monitored areas like Jatrabari, Shonir Akhra, and Dholai Par have run out of cooking oil. However, superstores in these areas still have bottled soyabean oil in stock.

Rumours are circulating among retailers that traders aim to raise prices before Ramadan, which is why dealers have stopped selling oil on credit.

Price hikes of soyabean oil before or at the beginning of Ramadan are not new to consumers.

In 2024, just before Ramadan in April, traders demanded a price increase for edible oil, prompting the government to adjust prices.

Muhammad Yunus-led interim government that took office following the fall of the Awami League administration reduced the VAT on cooking oil imports by 5 percent and fully removed VAT at the production and business levels in October of that year.

The move was taken in response to the rise in global cooking oil prices.

The price of cooking oil was last increased on Dec 9, with bottled soyabean oil of different brands disappearing from the market just before the hike.

At that time, the price of bottled soyabean oil was increased by Tk 8 per litre, reaching Tk 175.

The 2-litre bottles were priced at Tk 380, and 5-litre bottles at Tk 852.

The retail price for loose soyabean oil was set at Tk 157.

Earlier, bottled oil had been priced at Tk 167, while loose oil had been Tk 149.

PROPOSAL TO INCREASE PRICE BY TK 15 PER LITRE

Around a month later, the Bangladesh Edible Oil Traders' Association proposed another price hike for soyabean oil in the second week of January.

Conversations with ministry officials and traders revealed that the traders proposed a price hike of Tk 15 per litre.

However, arguments are still ongoing in favour of a more moderate hike of Tk 11.

A meeting between traders and Commerce Adviser Sheikh Bashir Uddin took place on Jan 23, but no final decision was made.

In response to the proposal, the commerce ministry has sought feedback from the Bangladesh Trade and Tariff Commission, though the report has yet to be submitted.

Mohammad Mustafa Haider, president of the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association, told bdnews24.com that the government had introduced a policy in 2011 to adjust soyabean oil prices according to global market trends and domestic costs.

He added that, under this policy, prices should be revised every 15 days.

The price of soybean oil is set based on global oil prices, import costs, transportation expenses, and the government's VAT applied at different stages.

Citing the rise in costs, including the dollar, he said: "We have simply asked for price adjustments to be made in line with the government's policy."

However, the government has made it clear that it does not want to raise the price during Ramadan.

As a result, VAT exemptions will remain in place until the end of the holy month.

Additional Secretary Abdur Rahim Khan, currently serving as the acting secretary of the commerce ministry, told bdnews24.com: "There has been no decision to increase prices. The current rates must be maintained for sales."

When asked if the Bangladesh Trade and Tariff Commission has submitted any report regarding the traders' proposal to raise prices, he said: "They have not yet submitted any report to the commerce ministry.”

SUPPLY DWINDLES IN MARKET

The supply of bottled soyabean oil from brands like Pusti, Fresh, Teer, and Rupchanda is generally higher, alongside supplies from companies owned by the army and navy.

In addition, some lesser-known brands also sell soyabean oil in different areas.

bdnews24.com spoke with dealers and traders from the Mohakhali, Karwan Bazar, and Jatrabari areas on Jan 28 to gain insight into the soyabean oil supply situation in the market.

Rumours are circulating that the price of cooking oil might increase once again before Ramadan.

As a result, traders have begun stockpiling.

Millers, on their part, have cut off credit sales to dealers, further tightening supply.

The government has set fixed prices at every stage, from importers to producers, dealers, and retailers.

Currently, the maximum retail price for a litre of bottled soyabean oil stands at Tk 175, while dealers get it at Tk 172.

Jahangir Hossain, a dealer for Teer Company in the old Mohakhali market, told bdnews24.com: “The company follows government pricing. There’s no issue with supply—my wholesalers are getting their stock.”

He added that 13 grocery stores in the Mohakhali kitchen market buy oil from him.

"No shop can say that they haven't received oil."

Although the Mohakhali dealer made such a claim, traders in Karwan Bazar said the supply is being cut back.

Ekramul Haque Naeem, manager of Abdur Rob Enterprise, said: “We usually stock up gradually throughout the month. Sales peak in the first week. Now, if we order two cartons, we only get one. Dealers say supply is tight.”

Mohammad Biplob, a Fresh brand distributor in Karwan Bazar, echoed the concern.

“We get just one truckload of oil, and it sells out the same day. We’re asking for more, but the company isn’t providing extra.”

When asked whether everyone is getting oil according to demand, he said: "Demand is going to increase now. I have to ensure everyone gets some, so if someone wants four or five cartons, I give them two. That way, everyone gets a share.

“What's the problem? They'll sell this and buy more later."

A carton typically contains 20 one-litre bottles, nine two-litre bottles, or four five-litre bottles.

Mohammad Selim, a dealer for Teer Company in Karwan Bazar, told bdnews24.com: "The oil shortage isn’t just a recent issue. For the past month or so, I haven't been getting oil like before. I send trucks frequently to bring in more, but even now, I only get one truck at a time, and sometimes it's less. I distribute whatever I receive in the market."

On the other hand, retailers say that buying in bulk reduces transportation and labour costs. When they bring in stock multiple times, the profit margin shrinks.

Sohorab Mia, a shopkeeper at Shariatpur Traders in Jatrabari, told bdnews24.com: "No dealer has come for a week. I had one bottle left, and it’s finished [on Friday]. If I go and buy oil now, the costs will increase. How can I manage when the profit on one bottle is only Tk 3?"

In areas like Shonir Akhra and Dholai Par, many grocery stores have run out of bottled soyabean oil. Shopkeepers say dealers, who used to visit regularly, have stopped taking orders.

While bottled oil is scarce, loose soyabean oil remains readily available, selling between Tk 180 and Tk 190 per kg, depending on quality.

WHAT MARKETERS ARE SAYING

City Group’s Director (Regulatory and Corporate Affairs) Biswajit Saha dismissed claims of a supply crunch.

“There’s no shortage. Every day, we report exactly how much oil we distribute to dealers to government offices,” he told bdnews24.com

He further claimed that the Tariff Commission, Directorate of National Consumers’ Right Protection, and other intelligence agencies are updated regularly on the supply status.

“The government can track where dealers are storing oil. Dealers are buying oil at the current price,” he added.

Following the fall of the Awami League government on Aug 5, 2024, many businessman tied to the former regime are no longer visible.

In the cooking oil market, S Alam Group and Bashundhara Group have scaled back their soyabean oil supply.

Their dealers are now sourcing from other companies to keep their operations afloat.

Despite a drop in supply from these companies, Mustafa Haider assured there is no oil shortage overall.

“Others have increased their supply, so there is no shortage. We constantly review import data. Government figures indicate that oil imports have not decreased in the last year and, in some cases, have increased,” he said.

“Overall, there is no shortage of soyabean oil supply. Every day, all companies are required to report to the government [different departments and intelligence agencies] on the quantity of oil imported, produced, stored, and distributed to dealers.”

With real-time online data access, millers are not facing any supply-related issues, Mustafa added.

Dealers must deposit payments into the company’s bank account before purchasing oil. Now, they confirm orders by presenting the deposit slip.

Earlier, they would verify oil availability before making a deposit. Now, they deposit the money first and then check for the expected delivery date.

Mustafa, also the Group Director of TK Group of Industries, said: “I can vouch that our company’s records are accurate. Dealers are still purchasing oil as they did before.

“With increased market monitoring, companies are also keeping a closer watch on dealers. Company representatives visit markets daily to oversee operations.”

When asked whether dealers were receiving oil as per their demand, he said: “There is a set allocation for each dealer. Increased demand does not necessarily mean higher supply. However, they are receiving regular deliveries.”