In spite of a considerable decline in international palm oil prices, the branded oil and ghee manufacturers are still going with old rates and making high profits, say market players.
International palm oil prices have declined by at least $200 per ton over the last few weeks but oil and ghee manufacturers have yet to pass on the impact of falling prices to the consumers.
Pakistan Vanaspati Manufacturers Association (PVMA) Chairman Shaikh Muhammad Ikram, commenting on the issue, claimed oil and ghee prices have dropped by Rs100 on the 16kg tin after the fall in international prices. However, prices for 5kg tins and 1kg packs, preferred by most of the consumers, have not been reduced.
“Prices of branded products are uneven. We have discussed the matter with branded oil and ghee manufacturers, who have assured that prices will be reduced from April 1,” he said.
Despite accepting that the branded product manufacturers should reduce prices, Ikram said the rising cost of production is the cause of high rates.
Replying to a question, he said the price of 16kg tin is Rs2,520, which could have been Rs2,800 had companies not reduced prices in line with the international market.
PVMA former chairman Khawaja Arif said international palm oil prices have dropped to $1,175 per ton from $1,375 per ton and this downward trend is reflected in the local market.
A manufacturer of oil and ghee said on condition of anonymity that the retailers are actually charging higher prices for different brands.
However, retailers said in their defence that branded manufacturers have not reduced prices over the last four months when the international market started declining.
A wholesaler and retailer from Karachi’s Saddar market informed that one kilogramme of oil is being sold for Rs162 in the open market while branded manufacturers priced their products at Rs185-190 per kg.
“The prices of branded products are still the same when the international market was hovering at $1,350 per ton which means the companies have not passed on the relief to the consumers,” he said.
Last month, the Competition Commission of Pakistan (CCP) initiated an inquiry into anti-competitive practices in the edible oil and ghee sector. CCP is gathering evidence for alleged involvement of PVMA and Pakistan Edible Oil Refiners Association in unfair market practices.
Published in The Express Tribune, March 31st, 2011.
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