24/04/2009 (Daily Times, Pakistan), Karachi - The local edible oil and ghee manufacturers have increased prices of their products following the price increase of palm oil products in the international market.

The Pakistan Vegetable Oil Mills Association, Pakistan Edible Oil Refinery Association and owners of various branded ghee and oil mills said keeping in view the rise in international price they have just made an adjustment in the price.

“The impact of increase of around $200 per metric tonne in the international price of palm oil products has affected the local producers of oil and ghee,” a senior member of PVMA, Nasir Ibrahim said. The international price of refined bleached deodorised (RBD) reached $800 per metric tonne while the price of palm oil touched around $815 per metric tonne on Thursday.

The export of Malaysian palm oil products also witnessed an increase around 1 percent during April 1 to 20, 2009 to 747,575 metric tonnes.

He said the local prices of vegetable ghee and cooking oil would come down if the government levied regulatory duty instead of present fixed customs duty on imported edible oils.

He asked the government to rationalise the customs duty and other taxes on imported edible oil.

He said due to higher import cost, the manufacturers of vegetable ghee and cooking oil were unable to pass on the maximum benefit in case of any slight decline as they were facing multiple problems including power and gas load shedding and production loss.

He said the Import Tax Price (ITP) duty should be increased or decreased in proportion to the changes in the price of imported edible oils in the international market. The PVMA proposed for a reduction of Rs 3,500 per tonne in the customs duty on the RBD palm oil and palm olein, which is around Rs 9,000 per tonne.

Ibrahim said the rates of sales tax levied at 16 percent and withholding and FED tax charged at the rate of 2 percent on the imported palm oil should also be decreased.

Presently, he said the total duties and taxes paid by vanaspati manufacturers were around Rs 28,000 per tonne.

The PVMA proposes the government to fix the FED on imported edible oils at the level of C&F prices of RBD palm olein as of July 2006.

He said in case the government increased customs duty on imported vegetable ghee to discourage its import and to encourage more production in the country, the prices would come down even more.

The customs duty should be from Rs 10,800 per tonne to around Rs 16,000 per tonne on vegetable ghee import.

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

Chairman KWGA, Anis Majeed said, “In absence of an effective check and balance mechanism on commodity prices, the cooking oil and ghee manufacturing companies unilaterally increased the prices.” A 16 kg tin of ghee is now available at Rs 1,765, which was priced at Rs 1,370 in December 2008. Similarly price of a 16 kg cooking oil tin is Rs 1,900 while it was available at Rs 1,550 in December 2008.

Pakistan imports mostly Malaysian palm oil and olein to meet domestic demand of 2 million tonnes, as locally produced cottonseed meets around 0.60 million tonnes of the demand. Edible oil import costs more than $1.1 billion annually.