02/04/2025 (Dhaka Tribune) - Mill owners have once again proposed an increase in edible oil prices, especially soybean oil, citing the expiration of government tax exemptions on Saturday, while reportedly taking advantage of the holiday period to raise prices preemptively amid uncertainty over an extension.

According to industry insiders, they have devised a "blueprint" to increase prices during the Eid holiday.

They say that as the country is on Eid vacation, preparations have been made to hike soybean oil prices by Tk18 per litre.

To facilitate this, owners submitted a written proposal to the Bangladesh Trade and Tariff Commission on the last working day before the holiday, said a commerce ministry source.

The government had previously provided tax exemptions on edible oil imports, which expired on Saturday.

While the government has not yet announced an extension, mill owners have reportedly taken advantage of the holiday period to raise prices preemptively.

Even though stocks are sufficient, businesses are pushing for price hikes, claiming increased import costs if tax exemptions are not extended.

According to data from Bangladesh Bank, the Office of the Chief Controller of Imports and Exports, the Tariff Commission, and port authorities, 1.095 million tons of soybean and palm oil were imported into the country by January 5 of the current fiscal year. This includes 384,080 tons of crude soybean oil and 711,444 tons of palm oil.

Between November and January, 232,000 tons of crude soybean oil were imported via Chittagong port – 69% more than the same period the previous year.

Additionally, 300,000 tons of soybean seeds were imported in January alone, marking the highest import volume in the past year.

Industry experts report that another 421,966 tons of oil were already in the import pipeline and arrived during Ramadan, and given these supply levels, there should not have been a shortage of soybean oil.

To maintain price stability, the government on December 16 granted 100% exemptions on import duties, regulatory duties and advance income tax, while VAT was reduced from 15% to 5% – valid until March 31.

Even if the exemptions were lifted on the first day of April, newly imported soybean or palm oil would take at least 45 days to arrive and an additional three to four days for processing before reaching the market.

This means any price adjustment should logically take effect after May 15.

However, traders are calling for raising prices immediately from the beginning of April, using the Eid holiday as an opportunity.

With the expiration of import duty exemptions on March 31, traders have proposed a price increase of Tk18 per litre for bottled oil and Tk13 for loose oil.

This proposal was submitted to the Bangladesh Trade and Tariff Commission on March 27, the last working day before Eid.

However, since the country went on holiday shortly after, no decision was made by the Ministry of Commerce or the commission. Offices will reopen on April 6.

While the government has yet to announce whether the duty exemption will be extended, refinery owners have already declared price increases.

Traders argue that if the exemption is extended, prices will remain stable, but if removed, higher import costs will make price hikes inevitable.

The Trade and Tariff Commission had recommended extending the duty waiver until June 30, but the National Board of Revenue (NBR) extended it only until March 31.

As per regulations, tariff changes require government approval, so traders informed the government of price hikes just hours before the start of the Eid holiday.

Shortage

When asked about the issue, Mobarok Hossain, a wholesale trader at Kawran Bazar, said companies had been creating a supply shortage of soybean oil even before Ramadan, and the situation still persisted.

“Despite no real supply shortage, the distribution has not yet normalized, and I have no idea when it will stabilize… the market remains unstable.”

On the other hand, Amitava Chakraborty, adviser to City Group, claimed there was no supply crisis in the market and that the group’s operations were running as usual.

However, he pointed out that if the government did not extend the duty exemption after March 31, higher import costs due to increased duties and VAT would inevitably lead to price hikes.

This is why the millers’ association proposed a price increase, but the final decision rests with the government, he added.

Md Abdur Rahman Khan, chairman of the National Board of Revenue, said no decision had been made yet on whether the exemption would continue beyond March 31.

Demand

The annual demand for edible oil in the country is 2.3 to 2.4 million tons.

Of this, 250,000 tons are produced locally, while the remaining 2 to 2.1 million tons have to be imported.

During Ramadan, the monthly demand rises to 300,000 to 350,000 tons.

https://www.dhakatribune.com/bangladesh/377773/mill-owners-plan-edible-oil-price-hike