Bangladesh depends greatly on imports, as domestic production is only 10 % of edible oil demand. In addition, several congloments that control the market cause concerns about competition and impact on consumers.
Expression image. Photo: Collection
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Expression image. Photo: Collection
Bangladesh consumes 200,000 tons of edible oil every year, but the local production is about 20,000 tons. The remaining 180,000 tons are imported from 46 % soybean oil and 53 % palm oil.
Both authorities and consumers are dissatisfied with edible oil retail prices, accusing companies that they are “over -recording” through a common practice that leads to a sudden rise in prices.
Interestingly, the government has set a retail price for edible oil, but has not been able to effectively regulate the market. This scenario reflects the global market, which is an important difference, while other markets are open to competition, while Bangladesh markets are significantly regulated.
According to media reports, global supply of edible oils has been crisis since 2021 due to the confusion, labor shortage, and climate -related issues of pandemic cargo.
In this international supply crunch, China has strengthened food and edible oil to meet the 1.41 billion population needs. China’s aggressive purchases have worsened the situation in early 2022, combined with the War between Russia and Ukrain, and lacks edible oil in the world market.
The world’s most consumed vegetable oil, parum oil, was one of the COVID-19 rock-down victims that restricted immigration workers, which are essential for Palm Oil Plantation in Malaysia. As a result, the yield in Malaysia, the second largest palm oil producer in the world, fell to a low price in 40 years last year.
Drought has also reduced Canadian canola (rapeseed) crops and reduced the harvest of Brazil and Argentina soybeans. Facing of domestic supply and price increase, petroleum production, such as Argentina and Indonesia, took protectionist measures, including suspension of exports.
Argentina paused to export soybean oil after being influenced by drought. The country used to supply 48 % of the soy oil market around the world. Similarly, Indonesia imposed export restrictions in 2022, but has recently been released.
Consumer countries, on the other hand, have struggled to reduce the burden on the population by reducing taxes and increasing subsidies.
In March 2022, Bangladesh deleted 15 % added value tax (VAT) for oil refining, 5 % VAT of retail, and 15 % of imports. The government also provides edible oils to low -income households at a subsidy fee through the open market sales (OMS) program.
Bangladesh imports 80 % of Palm oil from Indonesia and 20 % from Malaysia. According to local media reports, Palm Oil prices have risen at least at the TK300 (equivalent to 40.90 liters) in the mound, at least in the mound, following the export restrictions in Indonesia.
Panic for the ban on palm oil export has raised soybean oil prices, and Khatunganj’s traders reported that the price of TK700 to 1,100 per MAUND within two weeks.
“If you cannot protect raw materials from the global market, you will not be able to produce or improve oil,” said Bangladesh’s Konglomarit CEO.
He pointed out that sunflower oil could be an alternative to soybean oil and palm oil, but the War between Russia and Ukrain had confused the supply of sunflower oil. “Bangladesh may be on a banned arrow because there are as many alternatives available in the global market,” he added. A factory advanced executive warned that “if the raw materials cannot be imported, the supply of edible oils will collapse in the domestic market.”
“Many companies were unable to maintain edible oil operation due to loss caused by the fluctuations in the international market,” said Murubibazar trader, one of the largest wholesale kitchen market in Japan. But this is just a part of the story. “Some businessmen have issued a bank loan to buy land and set up an oil refining facility in anticipation of high profits,” said the former community manager of the Palm Oil Council in Malaysia.
“However, they did not achieve these benefits, but instead loses,” he added, saying that the unhealthy competition between market players was forced to go out of business.
Government’s actions have contributed to the closure of several refined companies. In 2008, the caretaker was forced to sell products below import costs to petroleum craftsmen, which led to 17 of the 32 local edible oil processors. The industry faced another important recession between 2012 and 2015.
Noorjahan Group, Sa Group, Eliash Brothers, and Mustafa Group have stopped their business. As a result, many small entrepreneurs ended the edible oil business between 2008 and 2010 due to sustainable losses. Later, the default of the loan and the aggressive business practices have further closed.
Today, 11 companies dominate the imported edible oil market, and the Bangladesh edible oil, TK Group, City Group, S Aram Group, and Mega Groups have dominated majority share. These Konglomarit integrated their position by using the sudden exit of a giant in other industries.
The TK Group, the national consumer and the main player in the industrial sector, has begun a large investment in transporting its own edible oils using its own ships. Some refiners in the export processing zone (EPZ) benefit from postponed payment conditions for imported raw materials, but EPZ other than EPZ needs to pay taxes when the outsourced goods from the port. there is. This created an uneven stadium among refined companies.
The industry in the industry has some new companies, such as Basndo Hara’s multi -food, smiled food, Sena edible petroleum industry, and the Delta Growms industry, entered the market between 2016 and 2022, but still had a major impact. Note that there is no.
The National Income Committee (NBR) data indicates that about 257,000 tons of soybean oil and palm oil were imported in 2023, accounting for a total of 80 %.
These companies are now about one -quarter of the demand for edible oil, compared to only 10 % before 10 years ago, and has tripled their collective market share. Market players argue that there are no excessive benefits because various government agencies continue to monitor the market. However, some large companies have withdrawn the market due to government policies.
Millers purchases crude oil from an unstable world market where prices fluctuate within a day. However, the government has been forced to fix retail prices for a long time, and forcibly sell the flour prices at a predetermined price.
In 1956, the administration of the Ordinance Law supports the government to regulate, store, transport, supply, and trade with specific products. The Ministry of Commerce has determined the price of edible oil based on this law and is inconsistent with the principle of competition law.
Recently, Shun Shing Edible Oil LTD (Sseol) has merged with Bangladesh EDIBLE OIL LTD (Beol) to strengthen Beol in the market. As of June 3, 2024, BEOL, a joint venture between Wilmar International Limited in Singapore and the Indian Group in India, announced on July 4, 2024 that it will take over all the businesses of Sseol. The High Court approved the merger on February 13, 2024, but was reviewed by the Bangladesh Competition Committee.
BEOL explained that this merger is an important milestone aimed at integrating operations in intense competition and improving efficiency. BEOL, along with TK Group, City Group, S Alam Group, and Megna Group, currently manages about 80 % of the market.
The global supply status, the lack of market analysis by the Competition Committee, the government imposed by the government, and the dominant status of a small number of powdered companies has created ripe conditions for market operation. If this situation continues, more mirrors will come out of the market and further integrate the rule of a small number of players.
Competition Committee and other regulators must reform the market, promote fair competition, and guarantee that all stakeholders (consumers, refiners, and traders) will be fairly dominated. It will not be blurred. Policy support is required to promote investment and promoting competition in the edible petroleum category, which is a proven method to prevent market operations.
Sketch: TBS
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Sketch: TBS
