Thursday September 28, 2023

Ghee producers earn Rs300bn in six months

June 25, 2022

LAHORE: Ghee manufacturers have whooped in profitable delight over making more than Rs300 billion by jacking up rates on account of price-hike of international edible oil, petroleum products and dollar fluctuation in six months from Jan-June 2022.

To satiate their hunger for making extra buck, they keep shifting the burden on to consumers on one pretext or the other but never lower ghee prices no matter edible oil and petroleum products’ rates drop or dollar gets stable. In the international market, the price of RBD Palm oil price from Jan 1, 2022 to June 24, 2022, ranged between $1312/ton and $1495/ton while it touched a maximum of $2048/ton on March 2.

The ghee manufacturers made extra profits with the increase in international RBD Palm oil price by linking the hike to domestically produced items. The cycle of import is normally 30-45 days. In case, an L/C (Letter of Credit) for a RBD Palm oil consignment opened on Jan 1, 2022, is likely to have delivery in next 30-45 days (from Feb 1 to Feb 15, 2022.

The manufacturers, who opened L/Cs in January at $1315/ton, should have sold ghee/cooking oil produced from it at the import price but the situation was otherwise. They instead of selling it at import price sold it at $1450-1570/ton rates. Thus, they made almost $255/ton extra money.

Average monthly consumption of ghee/cooking oil in Pakistan is around 350,000 ton. The industry gets Rs150/kg extra profit each month by jacking up rates on account of international RBD Palm Oil, POL price-hike and dollar fluctuations. Thus, it earns an extra profit of Rs150,000 on per ton and the figure touches Rs52 billion on 350,000 ton.

The ghee manufacturers kept on increasing prices during the last six months without fear besides demanding the government reduce duty/tax rates to help bring down the rates of ghee/cooking oil.

Now, RBD Palm Oil prices in the international market are on the decline. But the manufacturers are still following the same formula they adopt while increasing ghee/cooking oil prices. Rather, they claim that ghee/cooking oil being sold in the domestic market is produced on costly RBD Palm oil.

When contacted, Pakistan Vanaspati Manufacturers Association Chairman Tariqullah Sufi said that the local ghee/cooking oil prices had already started declining. He said the prices had gone down from Rs6 to Rs8 per kilogram in the last few days. He, however, made it clear that the prices of ghee/cooking oil would not come to the previous rates. Replying to a question about justification for the price-hike despite a decline in RBD Palm oil prices, he said the situation would normalise in 15-20 days. The RBD Palm oil prices will come to January 2022 level, he said, adding that it will not impact the domestic price. “If the price of one thing goes up in Pakistan, it never comes down again,” he remarked.