MARKET DEVELOPMENT
No Relief in Ghee, Cooking Oil Rates
No Relief in Ghee, Cooking Oil Rates
24/10/2013 (PakTribune.com) - Prices of ghee and cooking oil have not declined despite duty concessions on import of palm oil under Pakistan-Indonesia Preferential Trade Agreement (PTA), effective from September 2013.
Manufacturers have calculated less than Rs2 per kg/litre cut in the prices. In some cases, the manufacturers have kept the prices static and some have increased the rates by Rs5 to Rs10 for one kg/litre pouch of ghee and cooking oil, citing different reasons.
Pakistan had extended a 15 per cent Margin of Preference (MoP) over the standard tariff to Indonesian palm oil products, similar to what was extended to Malaysian palm oil products under the Pakistan-Malaysia Free Trade Agreement (FTA).
The commerce ministry said last month that the PTA would help in decreasing prices of vegetable ghee and cooking oil.
Chairman Pakistan Vanaspati Manufacturers Association (PVMA), Sheikh Abdul Razzak said, "In line with the PTA, the customs duty has been reduced by 15 per cent on import of palm oil products from Indonesia. The cumulative effect of this reduction — including customs duty, federal excise duty and income tax — comes to Rs1,700 a tonne or Rs1.70 per kg."
The import duty was Rs9,050 a tonne before Sept 1.
Pakistan used to import 70pc of palm oil-related products from Malaysia and 30pc from Indonesia before Sept 1. After the PTA, the share of import from Indonesia was expected to rise to 60pc, he said.
Since major inputs like raw material (edible oil), Tin Plate for packing, chemicals consumed in refining and bleaching, additives like vitamins 'A' and 'D', etc — consumed in manufacturing of vegetable ghee/cooking oil — are importable items, the increase in the dollar from Rs98.50 in July to over Rs106 in inter-bank market has raised the import bill of the industry.
He said palm oil rate in world market had declined from $1,170 a tonne in the first quarter of fiscal year 2011-2012 to $1,025 a tonne in the first quarter of FY13.
In the last 15 days, palm oil prices have surged by around $30 a tonne to reach $850 a tonne.
However, consumers could not benefit from the fall as devaluation wiped out the impact of falling price.
The edible oil stocks available at Port Qasim and Karachi Port are around 150,000 tonnes. These stocks have sufficiently absorbed the hike in dollar exchange rate, resultantly the prices of vegetable ghee/cooking oil are still stable in the market, he said.
Mr Razzak said the price of 1kg ghee of top brands is Rs178-182 (excluding wholesaler, distributor and retailers margin) and that of cooking oil is Rs184-190. The market share of these leading brands is only around 15pc due to high prices.
Whereas, other brands with a market share of around of 30pc are available at a price of Rs164-169. Others sell in the range of Rs150-155. Similar prices were witnessed in August and September this year, PVMA chief said.
The edible oil — extracted from locally produced oil seeds like cotton, sunflower, rapeseed and canola — is stagnant for the past five years and hovers around 600,000 to 700,000 tonnes against the national consumption of 3.2m tonnes a year. As a result, around 2m tonnes of palm oil products and 1m tonnes of oil seeds are imported each year to fill the gap.
The PVMA chairman added that the rise in energy and POL price had increased pressure on manufacturers of this staple food item.
The cushion provided by the PTA was being utilised and any further increase in international market or devaluation of the rupee would further raise the prices, he said.
The international market is now witnessing a rising trend for the last 15 days and hike in price is imminent.
The current stocks are sufficient and arrivals are encouraging as well. Buying for November and December was almost complete, creating price stability in Pakistan till end of the current calendar year, he hoped.
Manufacturers have calculated less than Rs2 per kg/litre cut in the prices. In some cases, the manufacturers have kept the prices static and some have increased the rates by Rs5 to Rs10 for one kg/litre pouch of ghee and cooking oil, citing different reasons.
Pakistan had extended a 15 per cent Margin of Preference (MoP) over the standard tariff to Indonesian palm oil products, similar to what was extended to Malaysian palm oil products under the Pakistan-Malaysia Free Trade Agreement (FTA).
The commerce ministry said last month that the PTA would help in decreasing prices of vegetable ghee and cooking oil.
Chairman Pakistan Vanaspati Manufacturers Association (PVMA), Sheikh Abdul Razzak said, "In line with the PTA, the customs duty has been reduced by 15 per cent on import of palm oil products from Indonesia. The cumulative effect of this reduction — including customs duty, federal excise duty and income tax — comes to Rs1,700 a tonne or Rs1.70 per kg."
The import duty was Rs9,050 a tonne before Sept 1.
Pakistan used to import 70pc of palm oil-related products from Malaysia and 30pc from Indonesia before Sept 1. After the PTA, the share of import from Indonesia was expected to rise to 60pc, he said.
Since major inputs like raw material (edible oil), Tin Plate for packing, chemicals consumed in refining and bleaching, additives like vitamins 'A' and 'D', etc — consumed in manufacturing of vegetable ghee/cooking oil — are importable items, the increase in the dollar from Rs98.50 in July to over Rs106 in inter-bank market has raised the import bill of the industry.
He said palm oil rate in world market had declined from $1,170 a tonne in the first quarter of fiscal year 2011-2012 to $1,025 a tonne in the first quarter of FY13.
In the last 15 days, palm oil prices have surged by around $30 a tonne to reach $850 a tonne.
However, consumers could not benefit from the fall as devaluation wiped out the impact of falling price.
The edible oil stocks available at Port Qasim and Karachi Port are around 150,000 tonnes. These stocks have sufficiently absorbed the hike in dollar exchange rate, resultantly the prices of vegetable ghee/cooking oil are still stable in the market, he said.
Mr Razzak said the price of 1kg ghee of top brands is Rs178-182 (excluding wholesaler, distributor and retailers margin) and that of cooking oil is Rs184-190. The market share of these leading brands is only around 15pc due to high prices.
Whereas, other brands with a market share of around of 30pc are available at a price of Rs164-169. Others sell in the range of Rs150-155. Similar prices were witnessed in August and September this year, PVMA chief said.
The edible oil — extracted from locally produced oil seeds like cotton, sunflower, rapeseed and canola — is stagnant for the past five years and hovers around 600,000 to 700,000 tonnes against the national consumption of 3.2m tonnes a year. As a result, around 2m tonnes of palm oil products and 1m tonnes of oil seeds are imported each year to fill the gap.
The PVMA chairman added that the rise in energy and POL price had increased pressure on manufacturers of this staple food item.
The cushion provided by the PTA was being utilised and any further increase in international market or devaluation of the rupee would further raise the prices, he said.
The international market is now witnessing a rising trend for the last 15 days and hike in price is imminent.
The current stocks are sufficient and arrivals are encouraging as well. Buying for November and December was almost complete, creating price stability in Pakistan till end of the current calendar year, he hoped.