Govt, traders at odds over edible oil price hike; decision on action against companies tomorrow

The government and major edible oil importers and distributors have found themselves at odds after consumer-level prices of soybean oil were raised without any announcement this week – a move the government says was not approved and is illegal.

Bottled soybean oil in various shops across Dhaka has been selling for Tk9 more per litre than before. 

After visits to Karwan Bazar, Mohammadpur and other markets, it was seen that five-litre bottles of leading brands like Rupchanda, Teer, Pushti and Fresh are now selling for around Tk965, while one-litre bottles – previously sold at Tk189 – are being priced at Tk198 in some markets. However, one-litre and two-litre bottles with the new pricing have yet to reach the market in sufficient quantities.

The government says the increase was made in violation of rules and has called a meeting tomorrow at the Secretariat to discuss action against the companies. Producers and distributors have also been summoned for the meeting.

Traders who hiked edible oil price by Tk9 without govt approval will face action: Commerce adviser

Speaking to reporters at the commerce ministry, Commerce Adviser Sk Bashir Uddin said, "The government knew nothing about raising oil prices. We only found out today. The companies have collectively increased edible oil prices. Such coordinated action is not acceptable in any way."

Asked what the government plans to do, he said, "We will decide the procedure after discussions. There is no legal basis for this."

When questioned about how traders could bypass the ministry and raise prices, he replied, "Ask the traders. We will take action; discussions are underway. Earlier, they tried to increase prices, but when we disagreed, they could not do it. If they have violated the law, visible action will be taken."

Govt can shut down refineries

AHM Shafiquzzaman, president of the Consumers Association of Bangladesh (CAB), warned that the government holds the authority to shut down refineries if companies raise prices without permission.

Edible oil prices jump by up to Tk13 per litre

Speaking to The Business Standard after attending a meeting at the commerce ministry yesterday, he said companies released the costlier oil into the market without government consultation. 

The National Consumer Rights Protection Directorate will now investigate the matter and ask companies why the price was raised without approval, he added.

"On average, 5,000 tonnes of soybean oil are sold daily. When the price goes up by Tk9 per litre, consumers lose a huge amount in just one day," he said.

He added that the higher-priced oil has not yet reached all markets. "The new-price stock must be withdrawn from the market immediately," he said.

Refiners defend the move

However, the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association claims the increase follows the rules, saying international market trends leave them with no option but to adjust prices.

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The association's Executive Officer, Md Nurul Islam Molla, said, "When international prices rise, we must raise ours. When they fall, we reduce them. These products do not belong to any individual; global market data is known to everyone."

"We notified the Tariff Commission, Competition Commission, FBCCI, Bangladesh Bank – everyone – before increasing the price. No one can raise edible oil prices just because they want to," he added.

The refiners argue that failing to adjust prices in line with rising import costs would lead to losses and disrupt future imports.

"If prices were adjusted every 15 days or every month, the rise would be smaller – two or three taka at a time. There has been no adjustment for the past two to three months, which is why the increase is steep this time," Nurul added.

The association further noted that they reduced prices by Tk19 per litre in August when global palm oil prices fell.

Speaking to TBS, Meghna Group's General Manager, Taslim Hossain, said, "According to the rules, prices should be adjusted every three months. In August, prices were reduced. Since then, global prices have risen, but the government did not allow us to increase prices."

"We will have to sell at the new, higher price. Otherwise, we will incur losses," he said.

He also confirmed that the government has called a meeting with producers and distributors.

Sources at the Bangladesh Trade and Tariff Commission confirmed that companies applied on 10 November to raise prices starting 24 November.

The association set the price for bottled soybean oil at Tk199 per litre and Tk985 for five litres. It also set loose soybean oil at Tk179 per litre and palm oil at Tk169 per litre.

What the rules require

Under the Control of Essential Commodities Act 1956, the commerce ministry issued the Essential Goods Marketing and Distributor Appointment Order-2011.

It states that producers, refiners and importers of essential commodities may adjust prices through their trade associations – but must notify the ministry's monitoring cell, district administrators and upazila executive officers at least 15 days beforehand.

Traders claim they followed these procedures for the current increase.

In June 2021, the ministry also formed a high-level committee, including business representatives, to align edible oil prices with international market trends.

In August, the committee approved a slight price reduction following a global fall in prices. But in October, companies again tried to increase prices without approval, citing rising international rates. 

The commerce adviser then warned that such action was unacceptable, and refiners backed down.