Defying global fall, edible oil refiners push for price hike

The country's edible-oil refiners have proposed a price review, citing the appreciation of the US dollar against the local-currency taka.
However, market experts argue that the proposal is ill-timed due to recent declines in global edible-oil prices, which are around a six-month low.
The refiners' proposal comes just two months after a previous downward price revision, which set the maximum retail price (MRP) of soybean oil at Tk 169 per litre, down from Tk 179.
In a November 9 letter to the Bangladesh Trade and Tariff Commission (BTTC), the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association (BVOVMA) requested a price review in light of the rising trend of the US dollar against taka.
In the letter, the association's Executive Officer Nurul Islam Mollah said refiners are currently sourcing dollars at Tk 122-124, which was at Tk 111 during the last price review.
"Following the hike in dollar price, we urged for a review in prices of edible oil," the letter said.
Consumers Association of Bangladesh Vice President SM Nazer Hossain criticised the refiners' proposal, noting that consumers have just begun purchasing soybean oil at Tk 169 per litre.
He said the rise in dollar prices has been offset by the decline in global soybean oil prices. Hossain urged the Trade and Tariff Commission to carefully consider the global price trend before making a decision.
"Our calculation says the price should be reduced further following such a tectonic decline in prices in the international market," Hossain added, recommending the government temporarily remove all duties on edible oil, sugar and other import-dependent commodities to provide relief to commoners.
According to the global commodity portal Business Insider, soybean oil prices have witnessed a remarkable decline from $1600-1611 per tonne in July to $1150-1160 in October-November, representing a 32 per cent drop. Similarly, palm oil prices have declined to $780 per tonne in November from $980 in May.
A leading refiner said no commercial banks are following the Bangladesh Bank (BB) set dollar price for importers. Instead, importers are paying an additional Tk 11.0-12 per dollar compared to the rate two months ago.
A senior banker of a private commercial bank told the Financial Express that most refiners source dollars from state-owned commercial banks.
"This suggests that their claim of a high difference in dollar purchase rates compared to the official price may be exaggerated to some extent."
Requesting anonymity, a high official of Dhaka Bank acknowledged that the situation was more challenging a month and a half ago when traders had to pay an additional amount for dollars. But the BB has recently implemented stricter measures to ensure that private commercial banks follow the BB-fixed rate.
The Financial Express was unable to obtain immediate comments from relevant officials at the central bank regarding the dollar rate issue.
According to the commerce ministry, Bangladesh's annual demand for edible oil is estimated to be 2.2-2.4 million tonnes, with over 95 per cent of this demand met through imports.
Seven top refiners in the country account for 90 per cent of the oil import.

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