Consumers in Pakistan are grappling with soaring prices of branded ghee and cooking oil, despite a notable reduction in global palm oil costs. This discrepancy has left many questioning the reasons behind the hike and whether prices will stabilize soon.
Why Are Prices of Branded Ghee and Cooking Oil Rising?
Despite the declining cost of imported palm oil, branded products have seen price hikes of up to Rs. 100 per kg/litre. Here’s why:
1. Palm Oil Price Trends
- Global palm oil prices dropped from $1,285 per tonne to $1,185 per tonne.
- Locally, this resulted in a decrease in palm oil prices to Rs. 16,500 per maund, down from Rs. 19,000.
2. Small vs. Branded Manufacturers
- Small/Medium Manufacturers:
- Dominating the market with over 95% share, they have reduced prices by Rs. 40 per kg/litre after an initial hike.
- Branded Manufacturers:
- Representing only 5% of the market, these producers cite longer distribution and marketing timelines as reasons for delayed price adjustments.
3. Supply Chain Complexities
Branded manufacturers face additional costs in:
- Extensive printing and packaging requirements.
- Nationwide distribution networks.
- Marketing campaigns.
The Role of Imports in Pakistan’s Ghee and Cooking Oil Market
Pakistan’s reliance on palm oil imports underscores the current price fluctuations:
- Import Volume:
- Over 90% of palm oil is imported from Indonesia, with the remainder from Malaysia.
- Annual Consumption:
- The nation consumes about five million tonnes of ghee and cooking oil annually, requiring 3.5 million tonnes of palm oil imports.
- FY24 Data:
- Palm oil imports reached 1.319 million tonnes ($1.26 billion) in the first five months, slightly up from 1.248 million tonnes ($1.17 billion) during the same period last year.
What Lies Ahead for Consumers?
Sheikh Umer Rehan, Chairman of the Pakistan Vanaspati Manufacturers Association (PVMA), assures that branded product prices will eventually align with market trends. However, the pace of adjustment remains uncertain.
In the meantime, consumers can expect:
- Gradual price reductions in branded products.
- More competitive pricing from smaller manufacturers.
