26.12.2023 (The Financial Express) - Bangladesh's cooking-oil refiners are moving towards becoming value-added producers by establishing soybean-crushing plants locally, producers and insiders said on Monday. 

This will reduce their import dependency on crude and allow them to supply raw materials to their own refining plants. 

Besides, these new soybean-crushing mills will produce soymeal -- an animal feed ingredient -- helping meet 70-80 per cent of local soymeal demand, they added. 

The two largest consumer-based producers in the country -- Meghna and City Group -- have already expanded their operations to include soybean crushing, according to insiders.

Two other industrial giants, Basundhara and Delta Group, are also investing in soybean-crushing plants. This will further increase the country's capacity to produce edible oil and soymeal. 

Some smaller companies, such as Globe Industries in Narayanganj and Jamuna Edible Oil Industries Limited in Rajshahi, are also getting involved in the local soybean oil production chain.

In the past, Bangladesh's vegetable oil producers were completely dependent on imported crude oil. They would refine this oil and then sell it to the local market. However, with the new crushing plants, they are now able to produce their own edible oil. 

Through crushing oil seeds, Meghna and City Group now supply 30-40 per cent of their soybean oil to the domestic market, executives of the conglomerates said.

Besides, the companies are also able to supply 70-80 per cent of the local demand for soymeal, they added.

Saniat Islam, deputy general manager (Production) of City Group, told The Financial Express that Bangladesh's local industry has been increasing its capacity to crush and produce soybean oil and other by-products over the past few years. 

He added that five years ago, the country's vegetable oil producers were almost entirely reliant on imported crude oil.

"We are the oldest oilseed soybean crushing plant owners, setting up a 1000 tonnes per day [TPD] capacity plant in 2005," said Mr Islam. "We have also set up two other plants having 1800 TPD and 5000 TPD so years ago."

With a combined capacity of 7,800 tonnes per day (TPD) across three units, the City Group stands out as the leader in value-added vegetable oil production through soybean crushing.

Another major player, Meghna Group, is transitioning from import-based refining to local value addition. 

"We began with a 2,000 TPD crushing plant in 2011," said Izabul Nakib, production manager at City Group. "In 2019, we expanded our footprint with a 5,000 TPD plant, enhancing our cooking oil and soymeal production."

"Previously, we solely refined crude oil. Now, 30-40 per cent of our edible oil marketed domestically comes from our own crushing plants," Mr Nakib told the FE.

He anticipated continued local growth in edible oil manufacturing, eventually replacing imported crude with locally crushed oilseeds.

Delta Group's Managing Director Amirul Haque said their 3,000 TPD crushing plant began commercial production last year. "Full capacity utilisation with a focus on cooking oil, soymeal and allied products will start next year," he noted.

Similarly, Syed Farhad Ali Reza of the Basundhara Group expects their 5,000 TPD crushing plant to come online in 2024. 

"Currently we refine imported crude and oil from our new plant to supply finished edible oil," he said.
Further soybean investment is on the horizon, with TK Group setting up a 3,000 TPD plant in Mirsharai, Chattogram, due for production in 2025, according to industry insiders. 

Jamuna Edible Oil Industries Limited also contributes with their 700 TPD plant, established in 2019 and supplying edible oil and soymeal locally. The company has been supplying edible oil and soymeal to the local market over the last few years.

While Bangladesh's edible oil producers are increasingly employing locally crushed soybeans, their reliance on overseas imports still remains high year-on-year. 

Khabibur Rahman Kanchan, chief of the US Soybean Export Council (USSEC) in Bangladesh, told the FE that US soybean export to Bangladesh has been growing at a faster pace over the past few years.

Bangladesh now imports over 2.5 million tonnes of soybeans annually from various global sources, with around 1.0 million tonnes originating from the US, he said. 

He commended the local industry's efforts in adding value through soy crushing, calling it beneficial for consumers.

The country is saving millions of foreign  exchange reserves by reducing crude oil import dependency and adding value locally in their production chain, the USSEC Bangladesh chief said.

In 2022, Bangladesh's soybean oil consumption rose 46 per cent replacing the palm oil intake by the local consumers.

However, the palm oil consumption fell to 54 per cent from more than 71 per cent 10 years back, he added.

kabirhumayan10@gmail.com

https://thefinancialexpress.com.bd/home/local-edible-oil-refiners-turn-to-soy-crushing