Ghee prices still high despite palm oil dip

Monday, November 03, 2008

By Jawwad Rizvi

LAHORE: It seems the federal government’s decision to fix ghee price at Rs 98 per kilogram is not being observed as low quality ghee brands are still being sold for Rs 100 and famous brands for over Rs 110 per kilogram, The News has learnt. Sources from different agencies collected data of prices for official use across the country which revealed that the no decline in the prices of ghee had been registered. The ghee manufacturers have not lowered down the prices of ghee across the country as they have left the prices of their products according the open market mechanism. They said there had been no decline in the prices of ghee even after the decision of the federal government.The Pakistan Vanaspati Manufacturers Association and Pakistan Solvent Extractors Association cheated the government officials by announcing to reduce the ghee price, but factually, the members of the both the associations refused to accept the new price and conveyed their respective associations that they would follow the open market price mechanism. The federal government, three days ago, fixed ghee prices at Rs 98 per kilogram after consulting with the industry’s stakeholders when the international palm oil prices and domestic ghee prices saw a declining trend.The sources said that ghee prices in Karachi ranged from Rs 110 to Rs 135 per kilogram, in Lahore from Rs 105 to Rs 135 per kilogram, the twin cities from Rs 108 to Rs 140 per kilogram. Similarly, in the small cities of Punjab, the ghee price is varying from Rs 108 to Rs 140 per kilogram and Rs 102 to Rs 138 per kilogram in different cities of Sindh. Interestingly, new official price of ghee was not observed in any makeshift markets organized by the City District Government Lahore (CDGL). In the open market of the city, price of famous ghee brands started from Rs 112 per kilogram and reached 135 per kilogram while that of local brand price ranged from Rs 102 to Rs 110 per kilogram. The government has taken decision of reducing ghee prices keeping the declining trend of international palm oil prices in order to rationalize ghee prices locally. Currently, international palm oil prices were decreased to $550 to $565 per tone from over $1000 per tone. Thus almost over 90 per cent decline has recorded in the international palm oil prices. Similarly, the future trend of the international palm oil prices shows that further decline is likely which will bring down the production cost of ghee at local level. The government decision of fixing ghee price at this time seems unwise decision as market dynamics is predicating a further decline in the international palm oil price. The decrease in the prices will bring down ghee prices locally. There is tough competition among the ghee manufacturers and they are compelled to bring down their prices once international palm oil prices decline.Meanwhile, Chairman Task force on Essential Items S A Hameed instructed the District Coordination Officers to ensure the sale of Ghee at Rs 98 per kilogram. He said that DCOs had also been instructed to take action against the shopkeepers involved in overcharging of ghee. He said that mill owners should also ensure the supply of ghee to retailers at new prices. He said it was the moral duty of ghee mill owners to reduce the prices of ghee after the decrease of palm oil prices in the international market to provide relief to consumers.

It was publihsed on Monday November 03 2008 in The News Lahore City pages.