25/07/2008 (The News, International), Karachi - Pakistani manufacturers of edible oil are holding back the benefits of a sharp fall in international price of palm oil as consumers continue to suffer from worst inflation in decades, industry people told The News on Thursday.

Malaysian crude palm oil futures have dropped from record highs but that has not brought any change in retail prices here because of rise in input cost, manufacturers say.

“Yes, prices have fallen but its impact will be seen when new consignments start reaching market in August and September,” said Rasheed Janmohammad, an edible oil trader. “Besides, price has not changed because rupee has depreciated substantially against the dollar.”

However, he was unable to explain why edible oil’s domestic price was climbing everyday in tandem with international palm oil rates a few months back.

Imported palm oil rates have come down to last February’s level of $1,140 per ton when standard 16kg tin cost was Rs1,660. Now it is selling at Rs1,915-Rs1,920.

A senior executive of a popular ghee and cooking oil brand said downtrend in international rates has been neutralised by the rising input cost in the country.

“Please take into account one per cent increase in sales tax, one per cent increase in income tax, 30 per cent increase in gas charges, substantial rise in logistics cost due to high oil prices, increase in minimum wage and the depreciation of rupee.”

He said all these factors have made it impossible for domestic prices to come down. “International prices are fluctuating daily. They might even lead to increase in domestic prices in future.”

But, he said, like other commodities demand for edible oil was dropping the world over due to higher cost.

Last year, Pakistan spent $2.4 billion on import of palm oil and oil seeds to meet its domestic consumption of three million tons. Yield from local seeds is only 0.6-0.8 million tons.

A fixed custom duty of more than Rs9,000 per ton is levied on import of palm oil beside other excise duties and a warehouse surcharge. The duty structure on refined RBD palm olien and crude palm oil is same.

Tariq Subhan, a member of Pakistan Vanaspati Manufacturer Association (PVMA), admitted that consumers were being fleeced in absence of any price regulatory authority.

Kaukab Iqbal, Chairman Consumers Association of Pakistan, said it is high time for government to check if prices of different edible products represented the fair cost.

“Inflation and rising cost of food is the biggest worry for consumers these days,” he said, proposing a consumer affairs ministry for safeguarding interest of the masses. “Existing system to check prices is ineffective and must be changed immediately.”