08/12/2009 (Dawn.com) - KARACHI: The rising palm oil prices in the world markets have further pushed up the rate of 16kg ghee and cooking oil tins to Rs1,780 from Rs1,720 on Dec 1, compared to Rs1,680 on Nov 1, in Karachi.

In Lahore, the rates of good quality 16-kg ghee and cooking oil tins have surged to Rs1,850, while the price of medium quality packs has risen to Rs 1,750, showing a rise of Rs7 per kg in the last one month.

Chairman Pakistan Vanaspati Manufacturers Association (PVMA) Khawaja Arif Qasim said palm oil rate surged to $810 from $685 per ton a month back, while in the same period a dollar was equal to Rs83.60 as compared to current rate of Rs84.25, thus making imports costlier.

He added that the consumption of ghee and cooking oil from Nov to March every year jumps to 200,000 tons a month as compared to 150,000 tons in the summer.

He said that the markets had still stocks of 150,000 tons of palm oil, palm olien and crude palm oil.

Khawaja Arif said that due to the price factor, a number of buyers have started buying ghee and cooking oil plastic pouch as ghee and cooking oil available in tins are costly.

He urged the government to allow ghee and cooking oil makers duty free import of tin plates as the industry is forced to buy tin plates from a local producer, who enjoys monopoly.

Meanwhile, a leading packer said that palm oil rates in the local market had surged to Rs3,490 from Rs3,200 three weeks back, while canola rate in the market has hit Rs3,610 as compared to Rs3,200.

He said the losing strength of the rupee against the dollar, increasing transportation cost after price hike in diesel and upcoming increase in gas and power rates by 15-20 per cent is making a combined impact of Rs7 to 8 per kg on ghee and cooking oil.

Producers utilise only 400,000-500,000 tons of local cotton seed and sunflower production in the manufacturing of ghee and cooking oil, while they are dependent on the huge imports of palm oil. The country also imports canola and sunflower seeds for crushing and blending for local production of cooking oil.

In July-Oct 2009, Pakistan imported 517,853 tons of palm oil at a price of $375 million as compared to 486,669 tons at $543 million in the same period of 2008.

Import of soyabean oil fell sharply to $2.9 million (2,849 tons) from $9.8 million (6,857 tons) in the corresponding period of 2008. The cost of import depends on the rate of palm oil prevailing in the world markets. The government is pocketing at least Rs28-30 per kg in terms of taxes and duties.

The packer said that palm oil rates had been surging owing to some increase in its demand world wide, while stocks are short in the producing countries. He was of the view that palm oil prices may remain under pressure in the first quarter of next year as dry weather would affect the palm oil crop and production may decline by four to five per cent.

Makers of branded ghee and cooking oil have yet to pass on the impact of surging palm oil rates but according to retailers, some companies had suspended the ongoing discount schemes, which mean that they are flexing muscles to push up the rates.