LAHORE: Ghee makers rejoiced to earn more than Rs 300 billion by raising rates due to rising prices of international edible oil, petroleum products and fluctuating dollar in six months from January to June 2022.

To sate their thirst for making extra money, they keep shifting the burden onto the consumers under one pretext or another, but never lower ghee prices no matter the prices of edible oils and petroleum products drop. or the dollar stabilizes. On the international market, the price of RBD palm oil from January 1, 2022 to June 24, 2022 varied between $1312/tonne and $1495/tonne while it reached a maximum of $2048/tonne on March 2 .

Ghee makers have made additional profits with the increase in the international price of RBD palm oil by tying the rise to domestically produced items. The import cycle is normally 30-45 days. Just in case, a letter of credit (L/C) for an RBD palm oil shipment opened on January 1, 2022, is likely to be delivered within the next 30 to 45 days (from February 1 to February 15, 2022.

The manufacturers, who opened L/Cs in January at $1315/ton, should have sold the ghee/cooking oil produced from it at the import price, but the situation was different. Instead of selling it at the import price, they sold it at rates of $1,450 to $1,570/tonne. Thus, they earned nearly $255/tonne of additional silver.

The average monthly consumption of ghee/cooking oil in Pakistan is around 350,000 tons. The industry gets an extra profit of Rs 150/kg each month by raising rates due to international RBD palm oil, rising POL prices and dollar swings. Thus, he earns an additional profit of Rs150,000 per ton and the figure touches Rs52 billion on 350,000 tons.

Ghee manufacturers have continued to raise prices over the past six months without fear, in addition to demanding that the government reduce duty/tax rates to help drive down ghee/cooking oil rates.

Now, RBD palm oil prices on the international market are falling. But the manufacturers still follow the same formula they are adopting while raising the ghee/cooking oil prices. Rather, they claim that the ghee/cooking oil sold in the domestic market is produced with expensive RBD palm oil.

When contacted, the President of the Pakistan Vanaspati Manufacturers Association, Tariqullah Sufi, said local prices for ghee and cooking oil had already started to fall. He said prices had risen from Rs6 to Rs8 per kilogram over the past few days. He, however, clarified that ghee/cooking oil prices would not return to previous rates. Responding to a question about the rationale for the price hike despite falling RBD palm oil prices, he said the situation would normalize in 15-20 days. RBD palm oil prices will reach the January 2022 level, he said, adding that this will not affect the domestic price. “If the price of something goes up in Pakistan, it never goes down,” he remarked.