Soybean oil price: Slipping out of reach

A crisis of edible oil, particularly soybean oil, has hit the domestic markets amid retailers and wholesalers stocking up and refiners slowing down delivery, as prices of essential commodities keep climbing in the international market.

Over the last several days, many consumers have returned from stores without being able to buy the essential ingredient as retailers have had their shelves empty.

Even with oil canisters available, consumers are told that those are not for sale. Wholesale stores are seeing similar scenes as traders are out to make a quick buck.

Customers are being compelled to pay higher than the government-fixed prices.

Low-income customers are suffering the most.

Residents of Bhasantek and Damalkote slums in the capital claim that loose edible oil has been scarce for low-income groups.

Shafiqul Islam, a scavenger who earns an average of Tk 200 daily to feed his five-member family, said he had to buy loose palm oil for his family as soybean oil was unavailable.

"If I want to buy half a litre of soybean oil, I will have to spend half of my daily income and compromise on other essentials."

Yesterday, loose soybean oil was barely available in Dhaka's kitchen markets, while whatever was available sold for Tk 170 per litre, according to data of the Trading Corporation of Bangladesh. A week before, the price hovered around Tk 160.

The price of a 5-litre bottle was as high as Tk 830, while the government-fixed rate is Tk 795.

Md Milon, a 72-year-old fruit trader in the capital, said, "I used to buy a litre of soybean oil every week. Now I can only by buy one-third of that … I don't know whom to complain to … Nobody seems to care about us."

Traders and insiders said the crisis is the result of the stocking tendency within the supply chain after the refiners demanded the commerce ministry increase the price of edible oil to Tk 180 per litre from March 1, up by Tk 12 from the government-fixed price.

Refiners have demanded a hike in the price in a bid to shift the burden of increasing import costs on the shoulders of the consumers, as the international markets also saw a rise in prices due to dry weather in Argentina and Brazil -- two major producing and exporting countries.

Supply concerns in the international market also stem from the ongoing Russia-Ukraine war.

The prices of palm oil and sunflower oil have also surged.

The average price of soybean oil was $1,596 per tonne in February – up from $1,470 the previous month, according to The World Bank Commodities Price Data.

The quarterly average price of soybean oil was $1,169 per tonne in January-March last year, it said.

In a letter to the commerce ministry on February 27, edible oil refiners, however, said prices of soybean oil ranged between $1,700 and $1,725 per tonne in the international market.

Bangladesh has to depend on the international market to meet 90 percent of its edible oil demand as the country produces only a small quantity of oilseeds.

"The demand for loose edible oil has increased so much that we are having difficulty catering to our regular customers," said Md Monir Hossain, owner of Monir Enterprise at the Karwan Bazar kitchen market.

He hung a notice at his store reading, "No soybean oil here".

Mohammad Raju and Mamun Hossain, also traders in Karwan Bazar, said their purchase orders placed with refiners were not being met.

Mofizul Islam, owner of Arif General Store in Mirpur's Shewrapara, said, "This is the first time in 15 years that I am having to wait for sales representatives to come and take my purchase order … It has been a week and no one has come."

However, Biswajit Saha, director of corporate and regulatory affairs of City Group, a leading importer and processor, claimed his group did not reduce supply volumes. "We are delivering 2,000 tonnes of edible oil daily," he said.

Didar-Mohd Dabirul Islam, head of finance and accounts of Bangladesh Edible Oil Ltd, said, "We are supplying to the markets but are failing to have any control there as traders are aware about prices being hiked in the international market."

The prices would somewhat come down if the revenue authorities exempt the 15 percent VAT on edible oil. At present, customers have to count Tk 30 VAT for each litre of bottled soybean oil, he added.

In the face of rising demand, supershop Shwapno has said it would not sell more than one 5-litre soybean oil canister to each customer. 

"With a shortage in soybean oil supply compared to the recent increased demand in the market, we have set a quota of one bottle per customer to stop panic-buying and to serve a higher number of customers," said Sabbir Hasan Nasir, executive director of ACI logistics and operator of Shwapno.

With soaring demands and losses created due to the current market prices, manufacturers have also reduced their number of deliveries.

"We could not provide soybean oil in 30 of our outlets on Thursday [March 3]," he said.