CRUSHERS and Edible Oil Refiners Association (CEDORA) director Aubrey Chibumba says cooking oil prices are expected to continue rising.
In an interview, Thursday, Chibumba said the reintroduction of VAT on cooking oil was a major contributory factor to the recent sharp increase in the price of the commodity.
“Last year, we had VAT on cooking oil zero rated. It was zero rated and prices came down between 15 to 16 percent. And then on 1st January this year, the government reintroduced VAT on cooking oil and that’s when prices started to increase. What you the consumers did not know is that through a good part of 2021, international edible oil prices started going up but because of the zero rating, we were able to keep them basically under control, we were not passing on the full cost of that pricing system,” he said.
“However, there has been several shocks which has happened internationally, weather related, which started projecting oil feed crops were going to be severely affected by the weather mostly in China, Brazil, Argentina all those places. That started pushing upward prices of international edible prices. To give you an example, around mid January the price of pump oil which is the cheapest oil in the world was at US$$1,350. Before the war in Ukraine started, that price had already increased to about US$1,850 a tonne and this is just due to international oil feed being affected by the weather. Then now we have got the Ukraine war that has come in.”
He said the war in Ukraine was likely to compound prices of cooking oil and wheat, among other things.
“Ukraine is the largest producer of sunflower oil, it produces 49 percent of the world’s sun flower and we have got war there. It is also a major producer of maize or corn which is about 75 percent of the world’s corn, it produces about 15 percent of the world’s wheat. All those are going to be affected by this war in Ukraine. It means effectively that seedling in Ukraine which is normally exported especially to Europe and into Africa is not going to be available. So now that is going to put up huge pressures of cooking oil because there is that 49 percent of sun flower that will not be available. It’s going to push up the prices of wheat, it’s going to push up the prices of corn,” he said.
“If this war does not end, then we are going to get even in a deeper hole. So we are in for a very, very rough time and I have been reading some projections that there is going to be a 30 percent decrease in basic grain because of this war. So you should be expecting that prices should go up even further. So all those are effects which have caused these price increases.”
Chibumba said there was need for government to initiate a plan that would mitigate some of these effects.
“We need a plan as a country on how we can be dealing with these global effects. We have targeted that we want to hit one million tonnes of soya beans, we want to hit 500 tonnes of cotton and 500 tonnes of sunflower. As an association, those are our objectives but we need the supporting policies from the government which will allow us to get to those numbers. But believe it or not, even if we get to those numbers, we are still not going to be about 85 percent of the current demand and remember, the population is increasing. So we need a plan and need a plan like yesterday,” said Chibumba.
A check at some super markets found a 1 litre container of Ole cooking oil selling K79.99 while D’lite 5 litres was fetching at K289. Other brands included Zamgold 5 litres selling at K269.99 with a 2.5 litre of Ole selling at K199.99.