Expensive cottonseed oil triggers a rise in edible oil and milk prices

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LAHORE – Prices of edible oil and milk have surged due to expensive cottonseed oil and a further rise is likely if cotton prices are not controlled, Pakistan Today learnt on Monday. Banola oil and cattle feed are produced from cottonseed (banola), price of which has increased 160 percent in the last one year. It was sold for Rs 50 per kg in March, 2010, however, prices have now jumped to Rs 130 per kg, triggering fears that prices of edible oil would rise. Banola oil is extracted from cotton seed and is used by various ghee and oil producers in the country.
Prices of cotton have registered a sharp rise in the last one year. Price of cotton touched Rs 12,620/37.32kg in March 2011 compared to Rs 5,540/37.32kg in the same month last year. “Expensive cotton has resulted in high prices of cottonseed and, ultimately, prices of its oil are increasing,” said Agri Forum Chairman Ibrahim Mughal. He added that cattle feed (khul) prices have also increased due to the expensive cottonseed. Pakistan used to consume two million tonnes of edible oil annually, while 74 percent of the total consumption is imported in the shape of palm oil. According to government figures, around 1.4 million tonnes of palm oil is imported, 0.5 million tonnes is produced from cottonseed, while 0.1 million tonnes is produced from various other seeds.
The Economic Survey of Pakistan 2009-10 revealed that local production of edible oil stood at 684 thousand tonnes during 2008-09, accounting for 24 percent of the total availability in the country. The residual 76 percent was available through imports. During 2009-10 (July-March), 1.246 million tonnes of edible oil, which amounted to Rs 77.78 billion, was imported. Palm oil prices are also expected to rise in international market due to the expensive petroleum products.
Edible oil prices have already increased by 25 to 30 percent in the last three months. Ordinary ghee was available for Rs 120 to 130 per kg in December, 2010, however, it is being sold for Rs 160-170 per kg. “Looking at the current level of cottonseed oil prices, we can predict that ghee and oil prices could increase further,” said a Banaspati ghee producer. Similarly, prices of khul (oil cake) have also exhibited a sharp increase. A 50kg bag of oil cake was available for Rs 750 in March, 2010, however, its price has swelled by over 70 percent and reached a massive Rs 1300.
Cattle used to eat one bag of oil cake in one week and produced around 40 to 45kg of milk. “Oil cake is major feed for cattle and buffalo and if its prices follow an increasing trend, milk could get more expensive in the coming days,” said Ibrahim Mughal. He added that the government should seriously think about controlling prices of edible oil and milk and should opt for immediate steps, as milk prices have surged by 30 to 40 percent in the last one year.