24/08/2008 (Daily Times), Karachi - The importers made around 150,000 metric tonne deals in palm oil future trading contracts for September, Pakistan Vanaspati Manufacturer’s Association (PVMA) said Friday.

“This future deal is done due to higher consumption in August-September 2008 and depleting of inventory stocks besides stable import cost for the importers, former senior vice chairman PVMA, Mehboob Ali said.

He said, “Rising dollar, increasing cost of production, packaging material and heavy taxes on imported edible oil will further the price of ghee and cooking oil by around 5 to 10 percent in coming days”.

The end user will bear the price brunt especially during Ramadhan, when the consumption increases by 25 percent, besides higher cost of import on rupee/dollar parity, Ali added. “Import increases around 10 percent three months before of Ramadhan on the back of growing domestic demand and consumption”, a senior member PVMA, Nasir Ibrahim said.

Pakistan imported around 86,400 metric tonne palm oil during July 2008 against 189,720 metric tonne in June 2008.

“The import was made due to decline in Malaysian prices and piling stocks for next four to five months”, he added.

“Palm oil products export from Malaysia has seen surge around 8.5 percent during August to 904,650 metric tonne” Nasir added.

Imports are made under Malaysian Palm Oil Concessionary Trade Agreement (MPOCTA), like free-trade agreement (FTA), he added.

The importer has to pay around 45 percent duty on import value besides paying 50 percent import landing tax to the government, he added. Pakistan imports mostly Malaysian palm oil and olein to meet domestic demand of 1.99 million tonnes, as locally produced cottonseed satisfy the demand of around 0.59 million tonnes. Edible oil import costs more than $1 billion.

Due to higher import cost, the manufacturers of vegetable ghee and cooking oil are unable to control the prices and there is no option other than reducing taxes.