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7 February, 2021 07:03:15 PM

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Rising edible oil prices: Quick action is needed

To control the situation, the government has fixed the price of open edible oil but the price of edible oil is not falling in the wholesale and retail markets.
Majhar Mannan
Rising edible oil prices: Quick action is needed

The price of edible oil in the world market is constantly rising and in line with the world market the price of edible oil in our local market is rising. It cannot be denied that if the price of edible oil rises in the world market, it will have an effect on our local market.

The price of edible oil is increasing little by little everyday which is now at an unbearable level. The supply of edible oil in our local market does not seem to be low, yet the price increase is undesirable and unwelcome. The price of edible oil is constantly spreading in the market. To control the situation, the government has fixed the price of open edible oil but the price of edible oil is not falling in the wholesale and retail markets. 

According to a newspaper report, the price of edible oil is at highest level in 10 years. The price of open edible oil is rising in the market every week. The traders say, edible oil prices have risen in the international market and in line with that, price has jumped in the domestic market. They also claim that the supply of edible oil in the international market has decreased due to coronavirus epidemic. They think that China has purchased a lot of edible oil this year, which has pushed up the price of edible oil in the international market. But experts say, edible oil prices will not be brought under control unless the government takes drastic action at the moment. Experts think that edible oil price can be kept under control by reducing VAT and Tax

Open edible soybean oil is being sold at 135 to 140 taka per liter in the retail market. According to TCB, soybean oil price was 90 to 95 taka per liter last year. Like soybean, the price of palm oil has also risen. Retailers claim that soybean oil is not available in the market as per the demand and it leads to rise the price. But wholesalers say, the supply of edible oil in the market is normal and there is no crisis. According to traders, our country imports edible oil from Brazil, Argentina and the United States and the production has declined in those countries due to corona which has affected our local market. Experts say, Covid-19 has had an impact on the edible oil market, but mill owners and the government must work together to control prices. The price of edible oil is rising all over the world and in the last one year the price has gone up 19 percent. The Food and Agriculture Organization (FAO) says, edible oil prices have risen sharply in the last two months and it is 4.7 percent. Throughout 2020, edible oil prices rose 19.1 percent. According to the report of FAO, edible oil prices are rising in the world market for three reasons. They are: 1. supply deficit, 2. increase of export tax, 3. China buys lots of oil. Argentina is one of the largest exporters of soybean oil but there is a conflict between the farmers and the government. As a result, logistic services at Argentine ports have almost stopped. Even Argentina has risen soybean export tax by 30 percent.  Drought in many South American countries, including Brazil, has threatened to reduce production.

The country has an annual demand of about 15 lakh tonnes of edible oil, 90 percent of which has to be imported. The maximum retail price of a 5 liter bottle of Soybean oil is 680 to 685 taka. Soybean oil prices have risen about 40 taka per liter in the last five months. Traders claim that the price of 1 ton unrefined soybean in Brazil, Argentina and Paraguay has exceeded 1150 US dollars.

The new soybean season will start in February-March. According to FAO, supplies from major palm oil exporters have fallen. Large exporter Indonesia's massive increase in export tariffs has had an impact on international markets. Malaysia has reduced palm oil production due to unfavourable weather and labour crisis. Even the country is thinking of raising taxes anew.

It is learned that several recommendations have already been made to control the price of edible oil. Due to the conflict with United States, China is moving away from US market and buying oil from Latin American market. Many have speculated that if China moves away from massive import policy, prices can return to normal.

The ministry of commerce has held meetings on edible oil prices and fixed the prices, but the market has not been affected. The reduction in VAT was discussed at the meeting of the ministry of commerce to control of edible oil, but it has not been implemented yet. Traders say that the government gets VAT of around TK 25 per liter of oil. As the price increases at the import stage, the amount of VAT of edible oil increases. According to the newspaper report, the ministry of commerce has formed a new committee to monitor the edible oil market and determine reasonable prices. At the moment the government should take steps to ensure the supply of oil ahead of the month of Ramadan. Since the price of edible oil is the highest in the world market, the government has to take an extra step. Efforts should be continued to increase the production of edible oil in the country. The government has to take up the challenge of controlling the oil market by coordinating with the world market. The government needs to keep a close eye on the local market that no one can manipulate it.  The nature of our country's market is that once the price of s product goes up, it does not go down. Already the price of edible oil has gone beyond the purchasing power of people with limited income. So, effective action is needed now.

The writer is Assistant Professor, B A F Shaheen College Kurmitola, Dhaka Cantonment.

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Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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