Supply crisis of edible oil created to fleece people

The crisis in the supply of edible oil has yet to ease in the local market, particularly for bottled soybean oil in 500-ml and one-litre packs. While two- and five-litre bottles are available at some shops, smaller packs are largely unavailable, forcing consumers to buy larger quantities than they need.

Amid the continuing supply shortage, edible oil refiners have again moved to raise prices. The latest move comes only weeks after the previous price adjustment.

On September 2, edible oil refiners increased the retail price of bottled soybean oil by Tk 5 per litre to Tk 204. Earlier, on December 9 last year, the Commerce Ministry had raised the price of bottled soybean oil by Tk 8 to Tk 175 per litre. The price of loose soybean oil and palm oil was also increased from Tk 149 to Tk 157 per litre at that time.

Consumers had expected the supply situation to improve following the price hike. However, the shortage has continued.

Nurul Islam Molla, Executive Officer of the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association, recently wrote to the Commerce Secretary seeking another price adjustment by January 10.

A visit to several retail markets in the capital found that many grocery shops had no bottled soybean oil. A few shops had two- and five-litre bottles, but 500-ml and one-litre packs were hardly available.

Retailers said they had repeatedly contacted distributors for supplies but were unable to obtain oil according to demand. Only two or three companies are currently releasing bottled soybean oil in the market, and their supplies are far below demand.

Farid, a consumer in the Malibagh Chowdhurypara area, said, "I needed a one-litre bottle of soybean oil, but I could not find one even after visiting several shops. I was forced to buy a two-litre bottle. As a result, I returned home without buying some of the other groceries I needed."

Retailers also complained that their profit margins had been reduced despite the supply shortage.

Afzal Hossain, a retail grocer at Bhai Bhai Store in Rampura, said, "The companies are holding everyone hostage by not supplying oil. On top of that, our commission has been reduced to only Tk 1 per litre. We are making just Tk 5 by investing Tk 1,000."

He said customers often bargain for Tk 5-10 less when buying a five-litre bottle, further reducing retailers' already thin margins.

The shortage of bottled soybean oil has pushed up the price of loose oil. In the capital's retail markets, loose soybean oil is selling for Tk 205-208 per litre, while loose palm oil is being sold for Tk 180-185.

Consumers have also alleged that some unscrupulous traders are opening bottled soybean oil and transferring it into drums before selling it as loose oil at higher prices. As a result, consumers are paying more than the government-fixed price.

Retailers and wholesale suppliers have alleged that importers and millers in Chaktai-Khatunganj, one of the country's major commodity trading hubs, have reduced supplies. According to them, supplies are not even half of market demand, creating an artificial shortage at the retail level.

Importers, however, have offered a different explanation. They said that despite the government reducing duties and taxes in two phases, import costs have not fallen. The country's ongoing dollar shortage has also made it difficult for importers to bring in edible oil at previous levels.

They also said global edible oil prices have increased, putting further pressure on the domestic market.

SM Nazer Hossain, vice-president of the Consumers Association of Bangladesh (CAB), alleged that supplies were being restricted in an attempt to raise prices.

"An attempt is being made to raise prices by stopping supplies. An artificial shortage is being created in the market," he said.

He said consumers were not receiving the benefits of the various measures taken by the government, including duty reductions. According to him, the authorities are more willing to adjust prices upward than downward.

Nazer also alleged that domestic prices rise quickly when international prices increase, but prices are not adjusted downward at the same pace when global prices fall.

The edible oil crisis is unfolding at a time when subsidised sales of essential commodities by the Trading Corporation of Bangladesh (TCB) have remained suspended for a prolonged period.

TCB's subsidised products, including rice, lentils and soybean oil, have traditionally provided some relief to low- and fixed-income households by allowing them to buy essential goods at prices below those in the open market.

With the programme remaining suspended, many low-income consumers are now forced to depend entirely on the open market, where prices are significantly higher.

"Everything is expensive in the market. TCB products helped us manage household expenses at a lower cost. Now that the programme is suspended, we have no choice but to buy from the open market at higher prices," said a low-income consumer.