Export ban on rice bran oil puts local traders in trouble

Local traders and factory owners have been hit hard by the government's abrupt decision to halt the export of rice bran oil.

In the one month since the ban was imposed on 24 May, they have lost at least Tk154 crore in foreign exchange earnings. In addition, at least 1 lakh workers and employees directly involved in this industry have become unemployed.

According to the Export Promotion Bureau (EPB), around 20,000 tonnes of rice bran oil (crude) were exported to India, China, Australia, the United States, the United Kingdom, Japan, France and other countries in the 2017-18 financial year.

Rice bran oil is extracted from the hard outer brown layer of rice called chaff (rice husk). This variety of edible oil is more popular in developed countries than soybean or palm oil. However, the demand for rice bran oil is low in Bangladesh even though it is produced here.

Rice bran oil began to draw consumers' attention recently with the sharp rise in soybean and palm oil prices.

The Ministry of Commerce on 24 May issued a letter banning the export of rice bran oil, which came as a shock to the industry. Production of the oil in local mills came to a standstill.

There are 17 mills in the country that produce rice bran oil. Of these, nine are in Rajshahi division, two in Rangpur, two in Mymensingh, three in Dhaka and one in Cumilla.

Chitta Majumdar, managing director of Majumdar Products Limited, a rice bran oil factory established in Bogura in 2012, said, "Since 2015, we have been exporting crude rice bran oil mainly to India. My mill produces 150-160 tonnes of oil daily, all of which are exported to India. But now production has been halted due to the government ban."

"At the beginning, I spent Tk7 crore in advertisements aimed at capturing the market for rice bran oil. At the same time, I supplied Tk8 crore worth of products to the market on credit. But people do not buy this oil and the price is also relatively higher than that of soybean oil," he added.

Majumdar Products Ltd exports around 3,000 tonnes of crude rice bran oil per month, with a market value of around Tk42 lakh.

Chitta Majumdar said, "Besides producing oil, at least 560 tonnes of de-oiled rice bran is made every month, which is used as food for fish, animals and birds."

"The decision to ban the export of rice bran oil by the government will lead to an increase in the price of our de-oiled rice bran. Some 2,500 workers have lost their jobs in my factory. The party which concluded an agreement with us on crude rice bran oil supply is also putting pressure on us," he added.

Bogura's Tamim Agro Limited produces more than 60 tonnes of crude rice bran oil a day. Following the export ban, all the 10 reserve tanks of the company are now full of refined oil, leaving the company without any more space to store oil.

According to the Bangladesh Rice Bran Oil Mills Association, the country's annual demand for edible oil is 25 to 30 lakh tonnes. Rice bran oil production is about 2.5 lakh tonnes. At least Tk1,859 crore or $200 million worth of this oil variety is exported per year. At the same time, 13 lakh tonnes of de-oiled rice bran are produced per year.

Prakash Dutta, general secretary of the Bangladesh Rice Bran Oil Mills Association and managing director of Agrotech International Limited, said, "The government ordered a halt to the export of rice bran crude oil without consulting us. As a result of the unilateral decision, the traders are facing disaster."

"They are being forced to close down their factories. The country is being deprived of foreign exchange. Besides, about one lakh people involved in this industry have become unemployed," he added.

According to the government's decision, rice bran oil will be sold through trucks of the Trading Corporation Bangladesh.

Abdul Aziz Mia, president of the Bangladesh Rice Bran Well Mills Association, said, "How can we refine this oil all of a sudden? It is also difficult to bottle. Some factories have 600 to 2,000 tonnes of crude rice bran oil in stock. The sudden decision puts us all at risk."

Mentioning that a letter has been sent to the government to withdraw the decision on the export ban, Abdul Aziz Mia said, "There is no market for this oil in the country. What is the benefit of stopping exports?"