Cooking Oil Prices Surge Amid Global Supply Chain Disruptions, Government Steps Up Monitoring

Kathmandu. The price of cooking oil has risen abnormally in the last month. Traders have increased the price by NPR 20 to NPR 50 per liter, citing the rising cost of raw materials in the international market due to the ongoing conflict in West Asia.

Sunflower oil, which was available for NPR 250 to NPR 275 per liter towards the end of Magh, has crossed NPR 290 per liter by mid-Falgun.

However, the state-owned Food Management and Trading Company Limited stated that it is currently selling oil slightly cheaper than the market price. On the company's website, soybean oil is available for NPR 240 per liter, sunflower oil for NPR 275, and mustard oil of various brands from NPR 255 to NPR 360. Nevertheless, the price hike is significantly higher in private retail shops.

Why did the oil price increase?

Bibhor Agrawal, a working committee member of the Nepal Rice, Oil, and Pulse Industry Association, cited the increase in the dollar's value in the international market and disruptions in transportation routes as the main reasons. He stated that major problems have appeared in the import process from foreign countries, directly impacting the Nepali market.

According to Agrawal, large ships carrying crude oil from countries like Argentina and Indonesia are currently halted mid-route. “The dollar price has increased in the global market now, and all vessels are stuck midway because the transportation routes are blocked,” he said. He claimed that such disruptions in the supply chain have created scarcity and caused transportation costs to skyrocket.

He clarified that while paddy and rice can be easily imported from neighboring India, Nepal is dependent on third countries for edible oils. He added that Nepali consumers are facing inflation due to the impact of international wars affecting shipping services and increasing the cost of raw materials.

Crude palm oil is currently trading between $950 and $1,000 per ton in the international market. Similarly, soybean oil prices have reached between $980 and $1,050 per ton, and sunflower oil is around $900 to $950. Data published by Nepal Rastra Bank for Magh also shows a 7.61 percent increase in the price of ghee and oil. This rate of increase is projected to be even higher in Falgun.

Commerce Department Intensifies Monitoring

Following increased complaints about uncontrolled price hikes and black marketing of edible oils, the Department of Commerce, Supply, and Consumer Protection has intensified its activities. Department Director Narhari Tiwari informed that monitoring has been accelerated to control the abnormal price increases.

According to Tiwari, the department is currently conducting detailed studies and 'verification' to ascertain the facts behind the price hike. “Although it is claimed that there are disruptions in the international supply chain, we are studying the depth of this issue,” he said. Asserting that the stock of edible oil in the market is sufficient, he warned that no one creating artificial scarcity or increasing prices through cartelization would be spared.

“The stock of edible oil in the market is sufficient; no major problem is apparent,” Tiwari said. “However, action will be taken against those creating artificial scarcity or increasing prices through cartelization. The department is currently inspecting the market, focusing specifically on oil prices and stock levels.”

Consumer rights activists, however, are demanding that the government take strict action, pointing out the trend of selling even existing oil stocks at new, inflated prices before the international market prices rose.

Which Countries Import Oil From?

Nepal imports various types of oils from diverse countries around the world. Argentina, Indonesia, and Ukraine appear as major suppliers for the import of edible oils such as soybean oil, sunflower oil, palm oil, olive oil, and mustard oil.

According to customs department statistics, edible oil worth NPR 93.7546 billion was imported in the first seven months of the current fiscal year (up to the end of Magh 2082 BS). Of this, NPR 78.1962 billion worth of exports were recorded.

Among these, Argentina dominates the import of crude soybean oil. Soybean oil worth NPR 372.427819 million liters was imported from Argentina alone, which is a large portion of the total import. Additionally, 157.399911 million liters of crude soybean oil were imported from China, 33.884023 million liters from Brazil, 14.327801 million liters from Thailand, and 2.206132 million liters from Ukraine. Small quantities were also imported from China, India, Kuwait, and Oman.

Soybean Oil Import Status:

Source: Customs Department

Sunflower Oil: Ukraine and Argentina are Main Sources

Ukraine and Argentina are the main suppliers for sunflower oil imports. Crude sunflower oil worth 17.1370102 million liters and non-crude sunflower oil worth 54,594 liters were imported from Ukraine. Crude sunflower oil worth 47.488049 million liters was imported from Argentina. Sunflower oil and its derivatives were also imported in various quantities from India, China, Kuwait, Malaysia, Qatar, Spain, Turkey, and the United Arab Emirates.

Sunflower Oil Import Status:

Source: Customs Department

Palm Oil: Dominance of Indonesia and Malaysia

Indonesia and Malaysia dominate the palm oil import market. A total of 37.515243 million liters of palm oil products, including crude palm oil, refined and bleached palm oil, and olein, were imported from Indonesia. Malaysia exported a total of 15.312563 million liters of palm oil products, including 12.985012 million liters of crude palm oil, refined palm oil, olein, and stearin. Crude palm oil was also imported in large quantities from the Philippines and Thailand.

Various types of olive oil are imported from Bahrain, Cyprus, India, Italy, Kuwait, Oman, Qatar, Saudi Arabia, Spain, Turkey, Tunisia, and the United Arab Emirates. Spain accounted for the import of 34,657 units in total, including 17,039 kilograms of extra virgin olive oil and 17,618 liters of olive oil. Imports of olive oil from Turkey are also significant.

Mustard oil and its derivatives are imported from India and China. A total of 68,652 liters of mustard oil were imported from India, while 73 liters were imported from China.

In addition to these major oils, cod liver oil is imported from the United States; animal fats from India and Thailand; fish oil and fat from Australia, Hong Kong, Saudi Arabia, and the United States; coconut oil from India, Malaysia, Qatar, the United Arab Emirates, Indonesia, and Sri Lanka; corn oil from Malaysia and Turkey; andiroba oil from India, Spain, and the United Kingdom; sesame oil from China, India, Japan, the Republic of Korea, Qatar, and Singapore; and various other vegetable fats and margarine from China, India, Indonesia, Israel, Kuwait, Malaysia, Qatar, the United Arab Emirates, Italy, and Sri Lanka.