Due to a lack of raw materials, about half of the ghee and cooking oil-producing operations in Pakistan have ceased or slowed production.
On Monday, the industry informed Secretary Ministry of Industries and Production Imdad Ullah Bosal of the grave situation.
The ghee and cooking oil industries were responding to the ministry’s notification about providing information about the cost of vegetable ghee and cooking oil in accordance with the price control and profiteering order 2021.
In a statement, the Pakistan Vanaspati Manufacturers Association (PVMA) called the ministry’s attention to a series of meetings held on the ‘Prime Minister Task Force on Edible Oil’ forum, as well as an exclusive meeting with the Minister of Industries and Production.
Although the core agenda of successive meetings was depleting domestic stocks in light of Indonesia’s unilateral ban on palm oil exports, factors such as low domestic stocks of edible oil, depreciation in the value of the Pakistani Rupee, increases in the price of other inputs such as electricity, diesel, and packing material, the upcoming finance bill 2022-23, and many other compulsions adversely affecting the price movement on the sidelines of meetings included factors such as low domestic stocks of edible oil, dep
The PVMA stated that the ghee shortfall would be controlled using available raw material stockpiles and other (finished products) in route within the supply chain. It was also communicated that replenishing transit stockpiles and building up dwindling national inventories to 250,000 tonnes in order to restore normalcy would take at least 2-3 months, or by the end of September at the earliest.
At the moment, shipments are arriving from contracts signed in March/April at a price range of $1,750 – 1,850 per tonne. The US Dollar was at parity with the Pakistani Rupee of 182 when the L/Cs were opened; currently, the Pakistani Rupee is as low as Rs 210 versus the US Dollar.
Many importers and manufacturers were hesitant to place new orders because of the above-mentioned unprecedented and very unpredictable situation. Industry participants, however, have begun placing orders in the national interest, despite the obvious uncertainties and significant financial risk factors.
Because the country’s foreign exchange reserves are in such a precarious state, commercial banks are wary of accepting our L/Cs, which are a high-volume, high-capital-investment enterprise.
According to the PVMA, about half of the manufacturing units have paused or delayed production, indicating that they may not be able to meet the current costing criteria. As a result, it requested that the notification be postponed until domestic stockpiles have stabilized, the budget has been established, and market forces have been stabilized.