Tariff Commission wants 25% duty on rice bran oil exports to boost local supply

Highlights

• 25% regulatory duty sought on rice bran oil export
• Ministry's nod for exporters recommended
• There are 20 rice bran oil-producing firms in country
• Annual production capacity is 4.5 lakh tonnes
• But capacity not fully utilised
• Bangladesh exported 64,019 tonnes of rice bran oil to India in FY24
• Annual demand for edible oil is 22-23 lakh tonnes
• 90% of demand is met through import of soybean and palm oil
• Rice bran oil has potential to meet 25-30% of domestic demand

The Trade and Tariff Commission has sought higher regulatory duty on the export of rice bran oil in a bid to ensure a stable supply of edible oil to the local market at reasonable market prices.

The commission has recently sent letters to the Ministry of Commerce and the National Board of Revenue (NBR), seeking 25% regulatory duty on the rice bran oil export.

"A regulatory duty of 25% can be imposed on exports to ensure the supply of refined, unrefined rice bran oil to the local market," reads the commission's letter seen by TBS.

Besides, it recommended adding the "condition of approval of the commerce ministry subject to the recommendation of the commission before exporting all types of rice bran oil."

The commission expects the move will bring down the price of rice bran oil and make it popular as an alternative to other edible oils in the market.

According to commerce ministry data, rice bran oil is exported to India every year.

Twenty rice bran oil-producing companies in the country have an annual refining and packaging capacity of 2.86 lakh tonnes. In the last fiscal year, Bangladesh exported 64,019 tonnes of rice bran oil to India through Bhomra Land Port. In the previous fiscal year, 7,289.2 tonnes of oil was exported through Benapole.

The Tariff Commission has submitted a report titled "Imposing Rapid Control on the Export of Rice Bran Oil to Increase the Supply of Edible Oil in the Local Market" to the ministry.

According to the report, the prices of soybean and palm oil have been adjusted due to an increase in edible oil prices in the international market. The price of bottled soybean oil has been increased by Tk8 per litre.

Before the price adjustment, edible oil producers and importers stopped the supply of soybean oil to the market.

Currently, bottled soybean oil is being sold at Tk175 per litre, loose soybean oil at Tk168 per litre, while rice bran oil is priced at Tk195-205 per litre.

The commission says the country's 20 edible oil producers have a total production capacity of 4.5 lakh tonnes, but this capacity is not fully utilised. 

In order to curb the export of raw rice bran, the primary material for this oil, a regulatory duty of 25% was imposed during FY20. 

However, there is no duty on oil exports, which has resulted in significant quantities of rice bran oil being exported to neighbouring countries. Yet, this oil could play a role in increasing the domestic supply of edible oil.

The annual demand for edible oil in the country is 22 lakh tonnes to 23 lakh tonnes, 90% of which is met through the import and refining of soybean and palm oil.

However, through the processing of unrefined rice bran, it is possible to produce 7-7.5 lakh tonnes of crude rice bran oil.

Refining this oil could increase the supply by 5.6 lakh tonnes to 6 lakh tonnes, which would meet 25-30% of domestic demand.

According to the commission's observations, increasing the supply of rice bran oil to meet the additional demand for edible oil during the upcoming Ramadan could play a positive role in stabilising the overall market.