After a Tk9 increase in the price of per litre of soybean oil, the second price hike in 10 days, the product registered a 40% increase in price compared to the corresponding period of 2020
With another hike in prices effective from today, consumers in Bangladesh will now spend from 40-75% more on their cooking oil budget compared to what they used to spend exactly a year ago.
After a Tk9 increase in the price of per litre of soybean oil, the second price hike in 10 days, the product registered a 40% increase in price compared to the corresponding period of 2020, according to the Trading Corporation of Bangladesh (TCB).
State-run TCB says the highest retail price of a 5-litre soybean oil bottle was Tk520 in May 2020. Following the Commerce Ministry’s latest approval, the same volume would be sold at Tk728 from today.
Palm oil prices had already registered a 75% hike on a year-on-year basis, said TCB’s market price report yesterday.
Huge import dependency
Each year, Bangladesh pays a whooping import bill of $2 billion dollars to meet its edible oil needs. Her domestic production of oilseeds and edible oil is nominal.
It is about time Bangladesh better employs all possible measures under its disposal to increase its capacity to produce more cooking oil at home, and experts say that it is possible.
The Bangladesh Bureau of Statistics data (2019-20) shows that the country’s current oilseed production is less than half a million tons (mustard – 360,000 tons, soybean – 100,000 tons and sunflower, sesame and groundnut oils – roughly 100,000 tons).
On the other hand, according to the April 2021 projection of the United States Department of Agriculture (USDA), Bangladesh’s current yearly demand for soybean oil stands at 1.3 million tons and that of palm oil at 1.6 million tons. USDA projected a rise by another one million tons in demand in Bangladesh by 2025.
Bangladesh’s per capita oil and fat consumption saw nearly 100% growth in eight years, from 11.8 gram in 2013 to 22 grams this year, said the USDA.
With 0.8 million tons of yearly crude soybean oil imports, Bangladesh stands behind only India and China among top oil and oilseed importing countries. Its main source country of soybean is the USA, while over 90% of its soybean oil imports come from Argentina and Brazil.
Two countries – Indonesia (80%) and Malaysia (20) – cater the whole yearly imports of palm oil for Bangladesh.
Competing crops limit land availability
Bangladesh is a land-starved nation and over 70% of its current arable land is occupied by staple rice. Being a number one producer of the world’s finest quality natural fibre – jute – Bangladesh can’t grow jute seeds at home owing to land scarcity and imports the seeds from India.
Farmers in Bangladesh get hardly 3% of the total arable land for cultivating oilseeds – predominantly mustard oil (70%). Competing crops limit the available area for soybean and other oilseeds.
Oilseeds have to compete with Boro rice and other high value crops for land.
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USDA estimates show that Bangladesh is likely to grow 150,000 tons of soybean on about 80,000 hectares of land this year, but farmers in the country are still predominantly using (in 70 % of cases) a soybean variety – Shohag – released in 1990.
Although the Bangladesh Agricultural Research Institute (BAR) has developed better breeds like BARI Soybean-5 and BARI Soybean-6 in recent years, their coverage area is still low at 30% due to non-availability of pure seeds of these newer varieties.
What is the way forward?
Dhaka Tribune asked Agriculture Minister Dr Muhammad Abdur Razzaque what Bangladesh can do to reduce its import dependency on edible oil.
Dr Razzaque said his ministry and allied departments were trying to promote the growing of mustard among farmers in the country. Better mustard breeds are being made available and efforts are underway to provide farmers with shorter-duration mustard and shorter-duration rice varieties, so that they can grow more oilseeds in between cultivating rice in the Aman and Boro seasons.
The agriculture minister, who conducted his doctoral research on oilseeds, believes private entrepreneurs can play a major role by investing in mills that would extract one of the best quality cooking oil – the oil from maize.
Dr Razzaque said Bangladeshi farmers have found huge success in maize production over the last two decades, whereas there was no maize cultivation in this country before.
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“If oil can be extracted from maize, Bangladesh’s dependency on oil imports would reduce,” he hoped.
According to the Bangladesh Wheat and Maize Research Institute (BWMRI), over 120,000 tons of corn oil worth Tk4,000 crore can potentially be produced from over five million tons of maize now grown in this country.
However, in a disheartening development, a recent initiative of the Nasir Group of Industries to produce and market corn oil faced a setback.
Nasir Starch, Oil and Animal Feed Limited in Tangail started producing corn oil two years ago, but when Dhaka Tribune inquired about its current development, factory manager Mahabub Alam yesterday said they have stopped producing oil and selling corn germ (oil producing component of maize) to feed mills.
He said: “You will find imported corn oil in our super shops but we couldn’t market ours, despite its good quality, as we don’t have a marketing mechanism of our own and the wholesalers that we had provided the product to failed to market it.”