The Pakistani government increased the ratio of buffalo butter and cooking oil to unprecedented levels 208 and 213 to an all-time high of 555 and 605 per liter as of today, June 1. As reported by Dawn News, ghee prices fluctuate between 540- 560 per liter in water.
General Secretary of the Pakistan Vanaspati Producers Association (PVMA) Umer Islam Khan hinted that retail prices for dairy and cooking oils will soon be on par with Utility Stores Corporation (USC).
USC is a state-owned enterprise of Pakistan that operates across the country and provides basic goods to the public at a subsidized rate.
Khan says dairy/cooking oil producers have stopped providing products as credit to USC because the company has not paid off its debt. 2-3 billion for manufacturers.
Pakistan has seen cooking oil and dairy prices increase by 300% in the past six months. Pakistan depends on palm oil from Indonesia. The country imports more than 85% of goods from Indonesia.
The problem of transporting palm oil exports from Indonesia is now the main concern behind the soaring prices of cooking oil and dairy in Pakistan.
Khan, General Secretary of PVMA said that despite Indonesia lifting the export ban on palm oil on May 23, not a single cargo ship is at sea or at an Indonesian port to transport to Pakistan.
According to the Dawn newsletter, the usual tax rate for imported crude palm oil is 8,000 per ton while Free Trade Agreement (FTA) / Preferential Trade Agreement (PTA) imports from Indonesia and Malaysia are 6,800 per ton. In either case, imports are then subject to an additional 2% customs duty, 2% withholding and 17% normal sales tax.
The business community has asked the Ministry of Commerce of Pakistan to remove the additional customs duty of 2% on palm oil imports from Malaysia to offset the high cost of Malaysian palm oil, which is 15-20% more expensive than Indonesia.
Pakistan’s consumer price index (CPI) alone rose 13.8% in May from a year earlier, the country’s statistics agency said on Wednesday. This compares with a 13.4% increase in April from a year earlier. CPI in May increased by 0.4% compared to the previous month. The inflation figures come days after the government partially scrapped costly fuel subsidies in an effort to unlock much-needed funding from the International Monetary Fund (IMF).