Positioning MPO as More Lucrative to Bangladeshi Palm Oil Importers

Bangladesh annually consumes about 3 million tonnes of edible oils of which about 1.5 million tonnes is palm oil, on an average. Other two oils are soyabean oil and rapeseed/mustard oil. Average consumption share of these three oils in total consumption are respectively 53%, 42% and 5%. Palm oil is leading edible since 2003 mainly because of its price competitiveness, versatility in its uses and compatibility in preparing local dishes. Due to insufficient indigenous production country is mainly dependent on import in meeting its annual requirements of oils and fats, which varies in between 85% to 87% depending on local annual production.

Bangladesh has emerged as one of the economic power house in South Asia. While many countries are experiencing negative growth economically due to Covid-19, Bangladesh is reportedly enjoying positive economic growth and that has been a discussing issue in the media in many countries. It is expected that by 2025 annual import quantity of palm oil in Bangladesh would reach to about 1.9 to 2.0 million tonnes at present growth rate. 

Considering the aforesaid facts, Bangladesh is an important destination for MPO. It may be mentioned here that Bangladesh market was a soyabean oil market and this market has been changed into a palm oil market through the relentless efforts rendered by Malaysia through MPOC Bangladesh office since 1995. Until 2006, Malaysia was the major supplier of palm oil in Bangladesh occupying on an average 55% market share of total annual import volume of palm oil. Eventually IPO entered into the market and managed to overtake MPO very quickly mainly with its competitive price. Bangladesh is a price sensitive market and mostly price influence every purchase decision. As for example, in 2020, just because of competitive price of MPO performed very well in April and May and in Aug. and Sept. period, when import of MPO was higher compared to the other months of 2020.

Considering the prevailing situation in Bangladesh market, it is believed that following measures could contribute in positioning MPO as more lucrative to Bangladeshi palm oil importers compared IPO.

STEP 1:

  • As Bangladesh is a price-sensitive market and almost every purchase decision is influenced by price, only a competitive price of MPO would contribute to changing the present scenario, which favour IPO. Any sorts of price support policy just to keep the MPO price at par with that of IPO, would contribute greatly in more intake of MPO by Bangladeshi importers. There is no doubt that Bangladesh importers would opt for MPO at an at par price of MPO with that of IPO. Because Bangladeshi importers are fully aware about the reliability, commitment, and effective trade services, which Malaysian suppliers are used to provide.  

STEP 2:

  • Traditionally Bangladeshi importers give values to mutual relation and usually such mutual relations contribute to some extents in performing/developing any business. Although in regards to reliability, efficiency and services, MPO suppliers are preferred by local palm oil importers, still MPO suppliers are lagging behind compared to IPO suppliers in the Bangladesh market because of lack of interactive relation.

Accordingly, effort could be rendered towards increase the interactive relation between MPO suppliers and local palm oil importers through organizing reciprocal market visits. Such visits would ultimately contribute to increase of interactive relation between MPO suppliers and Bangladeshi importers and finally that would contribute in increase of MPO market share in Bangladesh.

Aforesaid steps, coupled with the product quality and the competence of MPO suppliers would provide an edge for MPO suppliers over IPO suppliers and would contribute greatly in regaining MPO’s market share in Bangladesh market. 

Prepared by Fakhrul Alam 

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