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Although soybean oil prices have dropped in the international market, consumers in Bangladesh are yet to reap the benefit of this reduction as domestic prices remain the same.
Globally, soybean oil was sold at $1,236 per tonne in the January-March period of the current calendar year, down 26 per cent year-on-year from $1,674 per tonne, according to World Bank data on commodity prices.
However, prices of the edible oil did not see a similar decline during the period, as per retail price data compiled by the state-run Trading Corporation of Bangladesh (TCB).
TCB data shows that bottled soybean oil was sold at Tk 187 to Tk 190 per litre in January, up from Tk 150 to Tk 160 during the same month in 2022.
In February too, retail prices of soybean oil remained higher than what they were during the same month in 2022.
And in March, packaged soybean oil was sold at Tk 180 to Tk 185 per litre, which was nearly 9 per cent higher than Tk 165 to Tk 170 a year ago even though prices continued to fall in the international market, shows World Bank data.
Globally, soybean oil was sold at $1,236 per tonne in January-March of the current calendar year, down 26 per cent year-on-year, according to World Bank data
As such, the Consumers Association of Bangladesh has criticised local businesses for delaying price adjustments in line with global trends. However, officials of commodity processors blamed higher import costs and taka’s depreciation against the US dollar for keeping prices the same.
Energy and transportation costs have also risen and so, even if prices fall in the international market, it may not have an effect on the domestic market, said Taslim Shahriar, senior assistant general manager at Meghna Group of Industries, one of the biggest commodity importers and processors.
In June last year, the price of soybean oil was Tk 205 per litre while it is now Tk 180. So, it can be assumed that the price will fall further as the Tariff Commission sets the price in coordination with the international market, he added.
As the foreign exchange reserves have depleted fast, the local currency lost its value by about 25 per cent against the US dollar in the last one year with the highest depreciation taking place between August and September.
The international market has been stable for the last two months and prices are also declining. So, its impact would have been fully achieved if the price per dollar was Tk 85.
“We currently have to buy the greenback at Tk 117 to Tk 118 per dollar,” said Md Shafiul Ather Taslim, director for finance and operations of TK Group, another major commodity importer and processor.
He then informed they had recently bought soybean for $1,300 per tonne on average. The product will arrive in Bangladesh after Eid.
“So far, the local market is stable and there is no crisis of the product [edible oil]. This is a huge thing as just a few days ago, if letters of credit were opened, banks would make payments within 180 days. Now, it has reached 270 to 360 days,” Taslim added.
He went on to say that their gas bill which cost Tk 1 crore in February increased to Tk 3.5 crore in March.
“So, how can consumers fully benefit from the price reduction?” Taslim asked.
When the price of a product increases in Bangladesh, it increases very quickly. But when the price falls, traders take a lot of time to adjust it.
Besides, it is often seen that they do not even make the whole adjustment in order to secure more profit.
“Here, the trend of making huge profits has developed,” said Ghulam Rahman, president of the Consumers Association of Bangladesh.
Therefore, the government has to acquire the ability to be directly involved in the market. Otherwise, consumers will never be able to reap the benefits of price reductions in the international market, he added.
Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said imports of soybean oil are dependent on three to four big businesspeople.
So, there is an opportunity for them to influence prices in the market.
“Here, the government should check whether they are making more profit in the current situation,” he added.
Moazzem then said due to the higher US dollar price along with its shortage, traders are not being able to open letters of credit on demand. So, there may be a tendency among importers to give slow supply to the market considering future prospects.
“Therefore, the impact of the price reduction in the international market did not fall as much as it was supposed to in the country’s market,” he added.
(TDS)
