Both sugar and edible oil refiners have come under government scrutiny due to recent price volatility in the local market, according to sources.
In response to this issue, the Ministry of Commerce has already formed a high-powered technical committee on Tuesday.
The committee, comprised of six members, will submit a detailed report with necessary suggestions within the next two months. Representatives from the commerce ministry, Bangladesh Trade and Tariff Commission, Directorate of National Consumer Rights Protection, and trade body FBCCI have been included in the panel.
This decision has been made in light of the fluctuating and unusually high prices of both edible oil and sugar in the domestic market over the past few months, as confirmed by a senior commerce official who spoke with the FE on Tuesday.
The committee will review the existing supply chains for these two items and, if necessary, propose alternative methods instead of the current ones, the official added.
Currently, both cooking oil and sugar are scarce and expensive. Despite taking multiple measures, the government has been unable to control the prices of soybean oil and sugar, according to a high-ranking official.
Several state agencies, including the Ministry of Commerce, frequently meet with traders to take necessary actions in order to stabilise the prices of essential commodities, particularly sugar and edible oil, the official stated.
Despite the government's attempts to cool off the market by fixing the prices for edible oil and sugar, concerned traders are not selling the items at the designated rates. According to market sources, loose sugar, soybean oil, and palm oil have been sold at prices higher than the fixed rates over the past few months.
The government has initiated an assessment of the supply chain for sugar and edible oil in response to market volatility and rising prices, according to a committee member interviewed on Tuesday.
He said the main objective of the move is to curb the unjustified increase in oil and sugar prices by unscrupulous traders.
The committee member also noted that inspections will be conducted at refineries if deemed necessary.
According to a previous report by a government agency, certain oligopolies are intentionally creating an "artificial crisis" by manipulating the supply of these commodities to profit from market instability caused by the Russia-Ukraine war.
Taking advantage of the rising prices of sugar and edible oil in the international market, some refiners have repeatedly increased the prices of these products. These refiners often propose further price hikes for sugar and cooking oil, the committee member added.
"We have received information that a group of traders is engaging in unfair practices regarding the prices of edible oil and sugar. They are raising the prices beyond what is reasonable," said a high-ranking official, who requested anonymity.
The government is determined to take strict action against unscrupulous traders who attempt to profit from creating an artificial crisis in the domestic market for these commodities, the official warned.
Meanwhile, a market source said that a section of those unscrupulous traders is now selling bottled edible oil and packaged sugar in loose formats to maximise their gains, as there is increasing demand for these items in local kitchen markets.
"We have also found such anomalies of making loose or unpacked sugar and edible oil by cutting the bottled oil and packaged sugar as they cannot manipulate the price of bottled oil and packaged sugar," the source added.
The prices of sugar and soybean oil experienced multiple increases last year due to rising global prices resulting from economic disruptions caused by the Russian-Ukraine war and the coronavirus pandemic.
A report prepared by the Bangladesh Trade and Tariff Commission has identified irregularities in the supply chain of sugar refiners, which have contributed to an artificial shortage of white sugar in the local market.
More than 95 per cent of the demand for edible oil in Bangladesh is met through imports. The country imports over 2.0 to 2.2 million tonnes of soybean and palm oil annually to fulfil the approximately 2.2 million-tonne demand.
On average, around 0.14 to 0.15 million tonnes of edible oil is required each month.
The annual sugar demand in Bangladesh is between 2.0 to 2.2 million tonnes. The Trade and Tariff Commission notes that around 2.2 to 2.4 million tonnes of raw sugar is imported annually.
On average, around 0.11 million tonnes (1.1 lakh tonnes) of sugar is required per month, as locally produced sugar from sugarcane only meets 1.5 per cent of the country's demand.
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