After soybean, mustard oil to be dearer
The 5 % regulatory duty imposed on the import of rapeseed may cause the cost of mustard oil to shoot up and exceed the purchasing power of consumers, millers said.
The hike will affect the consumers at the same time when low and middle-income people are already struggling to cover soybean oil, whose price has truly gone up five times within the last five a few months, and other essential items.
While placing the budget for 2021-22 in parliament on June 3, Finance Minister AHM Mustafa Kamal imposed the regulatory duty on the import of rapeseed or mustard seed.
The import duty on oil cake, a feed that is produced through the extraction of mustard and sunflower oil, has been cut, a approach that may hurt the domestic industry, said millers.
"If the work is imposed on mustard seed in this manner, everything will walk out reach of folks given the way soybean oil rates are rising," explained Biswajit Saha, director for corporate and regulatory affairs at City Group, among the largest oil processors.
Each year, 2.5 lakh to 3 lakh tonnes of mustard seed are imported, and about 1 lakh tonne of oilseed is manufactured locally. One kilogramme of oil can be obtained from every 2.5 kg mustard seed. Presently, the annual demand for mustard essential oil stands at 1.5 lakh tonnes.
Due to latest improvements, mustard oil will be imported by paying duty, whereas oil cake could be brought without the duty.
"Doesn't it appear discriminatory?" Saha stated, adding that your choice would eliminate the domestic industries.
If the regulatory duty is levied on mustard imports, the work will be about 15 % per kg of mustard oil since one kg oil is extracted from 2.5 kg of mustard seed, he said.
Nowadays, many people use mustard essential oil for preparing purposes as the cost of soybean essential oil is skyrocketing.
The Bangladesh Veggie Oil Refiners and Vanaspati Makers Association hiked the price of branded canned soybean oil to Tk 153 per litre because of the rising prices in the international market segments.
The brand new price, which is more than 42 per cent greater than a year ago, came into influence on May 2. The price of loose soybean essential oil was established at Tk 129 per litre, up from 43 % a year earlier.
"Due to regulatory duty, the price of mustard oil will rise," said Saha.
The Bangladesh Oils Mills Association wrote a letter to the National Board of Earnings on Sunday, requesting it to withdraw the regulatory duty.
"The regulatory duty will improve the selling price of mustard oil produced locally. On the other hand, the reduced amount of the import duty on cake oil will bring about the destruction of the domestic industry."
No regulatory duty has been imposed on the import of sunflower seed and natural cotton seed. "That is discriminatory to any sector," the association said.
Accordingly, in the interest of the domestic sector and keeping the price tag on mustard oil at a tolerable level, it's important to withdraw the proposed tax over the imported mustard seed, the millers said.
Millers purchase mustard from local farmers and import rapeseeds to produce oil, reducing the reliance on the imported soybean and palm essential oil.
They also produce poultry and fish feed through the extraction of mustard oil. The domestic industry creates jobs for approximately 5,000 people, millers say.
Mohammad Jahangir Alam, an agriculture economist, explained the proposed regulatory duty in mustard import might raise the price of mustard oil a bit.
"But it won't have much impact. Alternatively, it will encourage native mustard growers, and they'll benefit somewhat," explained the professor of the section of agribusiness and marketing at the Bangladesh Agricultural University.