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The Financial Express

OPINION

The cooking-oil market scenario turns grimmer


The cooking-oil market scenario turns grimmer

The international fuel-oil market is always unpredictable. Deep political tensions and wars between countries make the market volatile. The prospect of a major economic recovery or depression also leaves an impact on the fuel-oil prices.

The situation, however, has never been like that with the international cooking-oil market. Crop failures do impact the supply and prices of the soyabean, palm and sunflower oils, but not in a big way. But the ongoing global cooking-oil market scenario is unprecedented. Supply shortage due to soyabean crop failure in South America and war in Ukraine has pushed up the prices of cooking oils by nearly 50 per cent in many countries. Two warring countries, Ukraine and Russia, are major global suppliers of sunflower oil.

The latest decision of Indonesia to impose a ban on the export of palm oil, both in crude and refined forms, has come as a big jolt to the cooking oil markets. Indonesia, the world's largest producer of palm oil, accounts for 60 per cent of the global supply. Its sweeping decision will surely make cooking oils more expensive across the world. Indonesian President Joko Widodo ordered the ban because of the supply shortage and hike in prices of cooking oils in the local market.

Understandably, the Indonesian ban would make the cooking oil market in Bangladesh more volatile. The prices of the items have already gone through the roof. Poor consumers have been making long queues at the tail of TCB trucks to buy a two-litre soyabean oil bottle at subsidised prices.

For the past few days, the supply of cooking oil in the retail market has declined remarkably. Five-litre cans have vanished from the shelves of groceries. What is more surprising is that some big cooking oil companies are allegedly tagging other items with cooking oils and forcing the grocers to accept those.

The prices of cooking oils have already gone beyond the government-fixed rates. If Indonesia sticks to the current ban for long, there could be a serious short supply of edible oils along with an increase in their prices.

The government has already cut duties and taxes on edible oils. But the short supply of the same has emerged as a major problem. So, a tight situation is likely to prevail as far as the cooking oil market is concerned.

In the case of fuel oils, Bangladesh has no option other than remaining dependent on the international market. But with cooking oils, it surely has room for manoeuvre. Being an agricultural country, it can produce its oilseeds, including sunflower, mustard, soyabean and sesame. There was a time when locally produced mustard seeds used to meet most of the demand for cooking oils. The production of many dry season crops, including oilseeds, has declined over the years, with farmers switching over to high yielding varieties of rice, in particular.

Farmers are now growing sunflower and soyabean crops in limited areas of the country and the per-acre yield of these crops is found to be encouraging. The government cannot force farmers to cultivate any crop. Farmers know well what is best for them. Still, the agencies concerned can select areas where the cultivation of oilseeds would be far more profitable than growing rice or other crops. Motivating farmers remains an important task here.

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