Bangladesh faces edible oil crisis, prices skyrocket as supply vanishes ahead of Ramzan

The edible oil market in Bangladesh is facing turmoil as rising prices, supply shortages and regulatory measures create widespread concern among consumers. With the holy month of Ramzan approaching, market volatility has intensified, raising questions about whether the crisis is real or artificially induced.

Government imposes 25% regulatory duty on rice bran oil exports

In a bid to tackle the ongoing edible oil crisis, the government has stepped in by imposing a 25 per cent regulatory duty on rice bran oil exports, aiming to stabilise domestic supply. However, stakeholders remain divided on the actual causes of the crisis and the effectiveness of the proposed measures.

According to the Dhaka Tribune, a gazette notification issued on Sunday stated that this decision was made under the Customs Act, 2023, in consultation with the National Board of Revenue (NBR). The directive came into immediate effect.

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The move is aimed at ensuring an adequate domestic supply of edible oil, especially in the lead-up to Ramzan, when demand soars. However, industry experts and market analysts argue that the regulatory duty on rice bran oil alone may not significantly impact the larger crisis, which is primarily driven by the pricing and availability of soybean and palm oil.

Skyrocketing prices and supply shortages

Consumers in Dhaka and other cities are grappling with soaring edible oil prices. In local kitchen markets, unpackaged soybean oil is being sold at Tk 170-175 per litre, while packaged soybean oil is priced at Tk 175-178 per litre. A five-litre bottle of soybean oil now costs Tk 850, marking a sharp increase. Similarly, palm oil prices have surged to Tk 170-175 per litre, the Dhaka Tribune said.

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Retailers attribute this price hike to a decline in supplies from distributors. Many refiners have reduced the availability of packaged oil to mitigate losses as local prices have not been adjusted in line with global market rates. The Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association has petitioned the Trade and Tariff Commission for a price adjustment, citing higher import costs.

Adding to the crisis, global edible oil prices have increased by approximately 25 per cent due to supply chain disruptions caused by adverse weather conditions and geopolitical tensions. As a result, traders are struggling to maintain stock, while consumers bear the burden of inflated prices.

Conflicting reports: Is the crisis artificial?

Despite consumer grievances, officials and refinery owners claim there is no actual shortage of edible oil. According to the Bangladesh Trade and Tariff Commission (BTTC) as reported by The Daily Star, the country has sufficient stock, and the perceived crisis is largely artificial. Customs data indicates that edible oil imports increased by 35 per cent between December 2024 and January 2025, with letters of credit also rising at the same rate.

However, the situation on the ground tells a different story. During a meeting at the BTTC, refinery owners admitted that edible oil was being sold on the condition of purchasing other products, the Prathamalo reported.

This practice has created an illusion of scarcity and led to an uneven distribution of supplies. The commission acknowledged these concerns and warned of legal action against those engaging in conditional sales.

While officials deny a supply crisis, consumers and market observers report otherwise. Many retailers and consumers allege that oil is being stockpiled by middlemen or repackaged into loose oil to fetch higher prices. Weak market monitoring has allowed such practices to go unchecked.

According to Prathamalo, a key issue raised in the BTTC meeting was the smuggling and informal trade of edible oil across Bangladesh’s borders. Given that prices are higher in neighbouring countries, there is growing suspicion that a portion of the local supply is being illegally exported.

Authorities have instructed district administrations in border areas to investigate and prevent such activities.

Additionally, BTTC data revealed that annual edible oil demand stands at 2.3-2.4 million tonnes, but demand during Ramzan spikes to 3 million tonnes. To address this, ships carrying 150,000 tonnes of edible oil are waiting to dock at Chittagong port, expected to replenish supplies soon, a Prathamalo report said.

Increased supply but persistent bottlenecks

Refiners argue that they have ramped up supply significantly compared to previous months. City Group, one of Bangladesh’s leading food grain importers, reported that it supplied 50,700 tonnes of edible oil in January 2025, including0 22,242 tonnes of bottled oil. This was a substantial increase from 14,262 tonnes of bottled oil in the same month in 2024.

Similarly, Meghna Group supplied 47,668 tonnes in January, including 15,000 tonnes of bottled oil, compared to 25,000 tonnes in the previous month, the Pratham Alo said. TK Group also reported a 24 per cent year-on-year increase in bottled soybean oil supply.

Despite these figures, consumers still struggle to find affordable oil in the market. Many traders claim that supply constraints at the distributor level are to blame. There are allegations that some field-level traders may be hoarding stock, while others are converting bottled oil into loose oil for higher margins.

A tricky situation for the government

While the government has taken steps to stabilise the edible oil market, their effectiveness remains questionable. The authorities have also increased market surveillance, warning traders against price manipulation and illegal sales practices.

However, consumer advocacy groups argue that stronger intervention is needed.

The edible oil crisis in Bangladesh is however is not a new one but a recurring one. In 2022, Bangladesh faced a severe edible oil crisis, driven by a combination of global supply chain disruptions, the Russia-Ukraine war and market manipulation by local traders.

As a major importer of soybean and palm oil, the country struggled with soaring international prices, leading to sharp domestic price hikes and periodic shortages. Panic buying further worsened the situation, while allegations surfaced of hoarding by businesses aiming to exploit the crisis.

The government intervened by imposing price caps and increasing market monitoring, but enforcement challenges persisted. The edible oil crisis in Bangladesh is a complex issue with multiple contributing factors. While the government and refiners claim there is no real shortage, market conditions suggest otherwise. Rising prices, conditional sales and suspected hoarding have fuelled public frustration.