KARACHI: Prices of ghee and cooking oil have surged by Rs30-50 on a five-kilogram carton in the provincial capital, with retailers blaming manufacturers who in turn blame costlier palm oil and an appreciating dollar.
In contrast, the average increase in prices of the two commodities all over the country came to Rs12-15 a kg during the past year, said an official of Pakistan Vanaspati Manufacturers’ Association (PVMA). The increase was based on current price of palm oil at $710-720 a tonne (free on board) as compared to $610 in April 2015.
Retailers say manufacturers have made it a practice to raise prices each year ahead of Ramazan and then offer discounts during the holy month. A manufacturer, however, rejected this impression saying palm oil and exchange-rate parity were the key factors for shaping prices.
PVMA’s Secretary General Umer Islam Khan said the issue of pricing was more severe in Punjab where the retail price has been fixed at Rs114-180 (depending on the brand) since April last year through a notification.
At that time, the price of refined, bleached and deodorised (RBD) palm oil was $600 a tonne on the international market and the dollar was equal to Rs102, Mr Khan said. The situation has changed now as palm oil rate has increased to $720 a tonne while the greenback trades at around Rs105. “It has become difficult to import and manufacture vegetable ghee/cooking oil in the presence of price notification barrier,” he said.
The PVMA has urged Punjab Chief Minister Shahbaz Sharif to quash that notification since the market was competitive and independently regulating prices and supply of products.
He said there were more than 100 manufacturers and importers in the market at present, of which 30 were based in Punjab. “The competition is so intense that none of the manufacturers has more than three per cent market share. There’s no monopoly here.”
At existing high rate of palm oil, the importers were reluctant to buy edible oil for Ramazan, he said.
He said Mr Sharif has now asked the association to hold a meeting with the secretary industries and sort out the issue.
Punjab-based industries also have to pay higher transportation charges for bringing palm oil from the Karachi port. Transporters charge double fare on the excuse of returning empty from Punjab after offloading the commodity.
The PVMA official said the industry-held stocks of palm oil have fell to 140,000 tonnes from 176,000 tonnes on April 11. Daily consumption of palm oil is 4,000 tonnes and jumps to 6,000 tonnes in Ramazan.
According to figures of the Pakistan Bureau of Statistics (PBS), the landing price of palm oil has declined in the last nine months.
The commodity’s imports in terms of quantity crawled up by 20pc but fell 7pc in value July-March 2015-16.
The import bill for bringing 2,073,035 tonnes of palm oil stood at $1.24 billion in July-March FY16 as compared to $1.34 billion spent on the import of 1,733,122 tonnes a year ago. The per-tonne price for the nine-month period came to $598 compared to $773 in the same period of last fiscal year.
Soya bean oil imports in July-March FY16 swelled to 132,055 tonnes ($151 million) compared to 38,178 tonnes ($37 million) a year earlier. The per-tonne price rose to $1,140 from $977.
The production of vegetable ghee in July-February FY16 increased 5.6pc to 826,154 tonnes from 781,969 tonnes in the same period a year ago.
Cooking oil production in July-February FY16 also went up by 8.8pc to 258,942 tonnes from 237,923.
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