Myanmar Times (07/01/2019) - Peanut and sesame oil manufacturers are facing the “palm oil and mixed oil brick wall challenge”, as palm oil is the dominant player in the edible- oil market, a regional industry leader said.

U Thein Tun, general secretary of Mandalay Region Edible Oil Dealers’ Association, said imported palm oil and mixed oil constitute 90 percent of local market, making it difficult for local entrepreneurs to expand.

He said palm oil is three times cheaper than pure peanut and sesame oil even as the production costs of pure peanut and sesame oil are increasing yearly due to increases in the price of raw materials. The stable price of palm oil is also compounding the problem.

“Most people are not likely to buy higher priced cooking oil,” he said.

Bean prices, the raw material for peanut oil, have been rising gradually and peanut oil, which used to cost about K2200 (US$1.42) per viss (about 1.6 kilogrammes)  in 2008, now costs up K6000 per viss today.

Over the same time frame, palm oil prices have not changed and remain at K2000 per viss.

As consumers opt for imported palm oil, just about quarter of nearly 300 oil mills in Mandalay city remain in operation, according to the Mandalay Region Edible Oil Dealers’ Association.

“Palm oil entered the Myanmar market in 1993 and its prices have been unchanged since 2008. At present, palm oil accounts for about 90 percent of the market,” said U Thein Tun.

Deputy Commerce Minister U Aung Htoo said that in order for sesame and bean oils to compete with palm oil, there needs to be an increase in crop yields for the raw materials and there should be a comprehensive research on how to reduce production costs. 

“To reduce the price of local bean and sesame oils, we need to increase productivity and use good seeds to increase productivity per acre,” he said.  “We must also be capable of producing high-quality edible oils. The Edible Oil Dealers Association is trying to do that and we will increase the production area of sesame and beans to 1.2 million hectares (three million acres) in the near future.”

Myanmar Edible Oil Dealers Association Chairman U Khin Soe has been visiting other countries such as Taiwan, Italy, and China, to learn more about the best practices for producing edible oil.

The association is also working on getting the existing edible oil factories certified by the Food and Drug Administration (FDA). The association hopes to increase the number of FDA-certified factories by 2020 and hope to produce 50pc of local oil demand, according to U Khin Soe.

“We just need a market now. Although the market is large, we are under the shadow of the palm oil,” he said.

He also urged the government to come up with better regulations and go after fake edible oils in the market, which is further depressing the prices of local edible oils.

“We are ready to compete, however, if unfair competition overwhelms us, we will never succeed,” said U Khin Soe.

The country imports about one million tonnes of edible oil yearly, causing losses in much needed foreign exchange.

Industry Minister U Khin Maung Cho underscored the need for greater cooperation among government agencies in order to improve regulations in the edible oil business. 

U Zaw Myint Maung, the chief minister of Mandalay Region, said after its crackdown on chemical dyes, the regional government will next focus on fake and unhealthy edible oil, adding that they will also look for ways to help the local edible oil industry improve its market share.

“We are ready to carry out the program, and when we do we will need the state’s contribution,” he said. “We will cooperate with responsible ministries such as the Ministry of Industry, the Ministry of Commerce and the Ministry of Health.

Read more at https://www.mmtimes.com/news/local-edible-oil-producers-seek-help.html