28/02/2008 (The News - International, Pakistan), Karachi - Malaysia has refused to allocate export quota of RBD palm olein to Pakistan raising fears of an impending shortage of edible oil in coming days, an industry official told The News on Wednesday.
Imports for the month have slumped to 40,000 tons against an average of 100,000 tons, said Sheikh Amjad Rasheed, former chairman Pakistan Vanaspati Manufacturers Association (PVMA).
Despite a 10 per cent duty cut extended to Malaysian exporters by Pakistani government, surety of supplies is not forthcoming, he said by phone from Kuala Lumpur where a global palm oil conference is underway.
“We are ready to buy palm olein at prevailing international prices but quota is not available,” he regretted, urging the government to obtain some relief in exchange for the duty cut it has offered to Malaysia under a free trade agreement.
Pakistan’s annual consumption of edible oil is close to 3 million tons and it imports 1.3 million tons of palm olein from Malaysia and Indonesia to meet the demand. Ex-refinery price of a 16kg tin of ghee surged to Rs2,000 on Wednesday from Rs1,700 earlier in the month amid soaring international palm oil rates, which are near $1,335 per ton, up from $1,190 on February 14.
According to PVMA, a fixed customs duty of Rs9,500 per ton and a variable sales tax of 15 per cent on the import of palm olein greatly contribute to the cost of edible oils. It maintains that reduction in government taxes on the import of palm olein is a possible way to contain trickle down of price hike to consumers. However, the government has rejected the idea citing losses to the national exchequer.
With a continuous surge in palm olein prices on the back of strong demand from India and China, the price of edible oil in Pakistan has inflated by 100 per cent over the last 12 months. “Palm olein price will go up to $1,600. There is no sign of any respite,” Amjad said, citing the long positions the investment fund managers have taken on future contracts.
He said now was the time the government ought to look at ways to increase domestic production of edible oil seeds. “Government must come up with a far-reaching policy. For instance, it could set a reasonable support price of canola and sunflower seeds.”