Soybean Oil Supply Crisis Intensifies Ahead of Ramadan

As Ramadan approaches, a nationwide shortage of soybean oil has left consumers in a difficult situation. Retailers claim that while oils from lesser-known brands are available in the market, renowned brands are almost missing, particularly one- and two-liter bottled oils.

Open soybean and palm oil are being sold in the markets, but bottled soybean oil supply has been disrupted for the past month. Despite the government’s reduction in VAT on edible oil, supply improved briefly but has decreased again in the last week, according to market observations.

Retailers in Dhaka’s Rampura, Badda, Mohakhali, and Joar Sahara markets confirmed the supply shortage.

Humayun Kabir, a grocer in Badda, said, “I used to get oil from 5-6 companies regularly, but now only 2 companies supply oil, meeting only 10% of demand. The distributors from other companies say they have no oil. Earlier, three companies provided me with about 20 cartons of oil weekly, but now they don’t supply a single carton.”

Customers often inquire about oil first when visiting shops and hesitate to buy other items if oil is unavailable. Retailers allege that companies are creating this artificial shortage to raise prices.

Nazma Akter, a shopper at Joar Sahara market, shared her frustration: “One-liter bottles are completely unavailable in the market. A few shops have five-liter bottles, but they are costly. I was forced to buy loose oil today.”

However, some buyers expressed concerns about adulteration in loose oil, stating they avoid purchasing it due to health risks and unfamiliarity with its quality.

An official from a leading edible oil supplier in Chattogram, speaking anonymously, revealed, “We are not getting any support in opening letters of credit (LC). Multiple LCs have been canceled, which has significantly reduced our market supply.”

To stabilize the supply, the government recently reduced the VAT on imported edible oil from 10% to 5%. Earlier, on October 16, a 15% VAT at the local production stage and a 5% VAT at the trading stage were waived for refined and crude soybean and palm oil, leaving only a 5% VAT at the import stage.

According to Trading Corporation of Bangladesh (TCB), loose soybean oil currently sells for BDT 165-168 per liter, while palm oil is priced at BDT 157-159 per liter. Bottled soybean oil costs between BDT 167 and 170 per liter.

Khalilur Rahman Sajal, executive director of the Consumers Association of Bangladesh (CAB), criticized companies for not increasing supply despite the VAT reduction. “If urgent steps are not taken to resolve this crisis before Ramadan, the situation could deteriorate further,” he warned.

He added that while loose oil is available in the market, many consumers avoid it due to fears of adulteration. Consequently, loose soybean oil cannot meet the demand for bottled oil.