Edible oil prices need not be fixed, says refiner
Bangladesh Edible Oil Ltd (BEOL) yesterday urged the government not to fix up the edible oil price in branded segment, saying that it will hamper brand building in the country.
"We urge the government not to put a price ceiling on branded oil," said Shoeb Md Asaduzzaman, head of sales and marketing of BEOL, "because most of the consumers of this segment are the comparatively rich, which buy nearly 17 percent of the total."
The top brand's spokesperson argued that the spike in prices of packaged oil does not affect the common people, who buy 83 percent of cooking oil as loose oil.
Asaduzzaman also claimed that the domestic price is less than in the international market, where edible oil increased by nearly 49 percent in the last six months.
Asaduzzaman called the packaged market competitive because nearly 30 brands are available on store shelves. The government should let the people set the market price of these, he said.
BEOL, which sells Rupchanda brand soybean oil, urged this because the government promised to fix a maximum retail price of containerised soybean oil today in a meeting with refiners.
The government fixed the retail price of loose soybean oil at Tk 91 per litre on Monday.
Branded products sometimes rely on higher prices to reflect or to suggest higher quality. This becomes impossible with a price ceiling, so the brand equity of the most costly brands will fall.
The company's profit margin is 3.5 percent after last month's price hike, Asaduzzaman said. A tonne on the international market costs $1,172, and the company now spends Tk 4.4 per litre on advertising to build its brand.
On why they raised the price by Tk 13 a litre at one go, he said the price hike would have been more gradual if they could have increased the price before Eid.
Globally, the price of soybean oil and palm oil soared since the middle of this year amid fears of a fall in output in major growing areas, such as the US. Strong demand in China and diversions to produce biofuel added to the price hike.
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