VAT cut fails to stop price hike of edible oils

Highlights:

• Price of per maund edible oil has gone up Tk200-Tk300 in the last three days
• At present, bottled soybean oil is selling for Tk168 a litre, although the government set it at Tk157 per litre
• Wholesalers say that importers have reduced the supply and increased the price despite having sufficient stock

The government has reduced VAT on imports by 15% to keep edible oil prices stable and set the maximum wholesale price.

But, there is no effect of the reduction of VAT on edible oil prices in the market. The product is not selling at the price set by the government.

As a result, the price of the product has increased one more time in the last three days in Chattogram's Khatunganj, the country's largest wholesale market for commodities or consumer goods.

Wholesalers allege that importers reduced market supply and increased the price of the product, even though there are sufficient imports and stocks.

On Thursday, per maund (40.90 liters) of palm oil sold for Tk5,500 in Khatunganj, which was Tk5,200 three days ago. However, the wholesale price of palm oil set by the government is TK5,180 (Tk127 per liter).

On Sunday, the wholesale price per maund of soybean oil was Tk6,000, which increased to Tk 6,300 on Thursday. The government has set the price per maund of retail soybean oil at Tk5,550 (Tk136 per liter).

Per maund of palm super oil is currently Tk5,600 in the market, which three days ago sold for Tk5,400.

As such, the price per maund of edible oil has gone up by Tk200-Tk300 in the last three days.

At present, bottled soybean oil is going for Tk168 per litre, although the government set the retail price at Tk157 per litre.

Abdur Razzak, a wholesale edible oil trader in Khatunganj, said that even though the government determined and set the price of edible oil by adding import cost and other expenses, importers are not abiding by it. In the Khatunganj wholesale market, per maund of palm oil and soybean oil are selling for Tk320 and Tk650 respectively, more than the price fixed by the government.

Wholesale edible oil traders in Khatunganj said the price of both palm oil and soybean has gone down in the international market. At present, per ton of palm oil in the international market (Malaysia) is Tk115,781. Two weeks ago, it was Tk133,199 per ton. In other words, the price per ton of palm oil has come down by Tk17,418 in a week. According to the above price, the current booking price per maund of palm oil is Tk5,083.

Similarly, soybean oil is currently selling for Tk138,052 per ton in the international market, which two weeks ago was Tk146,680 per ton. As such, the price of soybean in the international market has decreased by Tk8,628 per ton. According to the above calculation, at present, the booking price per maund of soybean oil is Tk5,889.

Zaheer Ahmed Ratan, managing director of edible oil importer Nurjahan Group, said it was true that the price of edible oils has declined in the international market, but those lower prices have yet to reach the market. The edible oils that are in the market now were bought at a higher price. Prices are likely to fall slightly once the more recently priced products hit the market.

Claiming that they are selling edible oil at prices fixed by the government, he said, "We are selling edible oil at the price set by the government at the mill level. The price of the product has gone up in Khatunganj more than before as the product was bought and resold, thus driving up the price."

According to Chattogram Customs, 5,36,817 metric tons of crude soybean oil was imported in the first nine months of the current financial year, from July to March. During this time, 6,63,828 tons of palm oil was imported.